Learning together makes things easier

September 30, 2021

Sami Benchekroun – TALKS WITH PETRI

Sami Benchekroun talks about the three phases of startup growth from bootstrapping to scaling and raising over €20m in funding. We discuss the role of mentorship and finding the right type of investors but also some French puns are involved.

Learning together makes things easier

Bio

Sami Benchekroun is the Co-Founder and CEO of Morressier, the virtual conference provider and platform for the scientific community. Sami has over ten years of experience in academic conferences, scholarly publishing, and entrepreneurship. He drives Morressier’s vision forward and is dedicated to increasing the impact and reach of professional and scientific conferences. A frequent industry contributor, Sami serves as a scientific communications lecturer at the Technical University of Berlin. He has a background studying management at ESCP Europe.

Website | LinkedIn | Twitter

Show notes

  • Bootstrapping and VC funding
  • How it all started and the learnings along the way
  • Early-stage science research and its discovery
  • Initial idea sold as a product
  • The early success and positive cash flow while bootstrapping
  • Customers started to call and the demand potential was discovered
  • Go out and expose yourself to innovation
  • Talking to VCs in Web Summit changed the course of the company
  • Even if the product works your business model may not scale
  • Expensive trial-and-effort that failed with friends, family’s and fools’ money
  • How right angel investors and mentors make a difference
  • Professional communities and the role of conferences
  • Choosing the target customer
  • Where your market approach is rather unique
  • How to make money in the research field and provide value
  • The Project Ice Cream (Matrix 4)
  • From conference posters to data teams and content analysis
  • Building a startup with family life and small children
  • Support network for founders
  • Entrepreneurship as a fast marathon
  • Role of honesty and vulnerability
  • Mentorship
  • Listening to other people’s advice and experience is not evident
  • Entrepreneurs’ Organisation for founders
  • What COVID-19 changed in personal life and in the company
  • Raising a VC round in Corona times
  • What changes in later funding rounds

Show links

https://websummit.com/ (Web Summit)
https://hub.eonetwork.org/ (Entrepreneurs’ Organisation)

Rudeboy makes people feel the beat

September 16, 2021

Ville Virtanen – TALKS WITH PETRI

Ville Virtanen talks about what happens when you are hit by Sandstorm and how to cope with expectations, success and stay relevant over time. This episode is totally out of control so just feel the vibe and tune in.

Rudeboy makes people feel the beat

Bio

Famed for the global platinum-selling smash ‘Sandstorm’, Darude is recognised as one of the most influential artists to emerge from the dance scene. With a DJ style that is a mixture of progressive and uplifting trance, fused with elements of tech, breaks and house, Darude’s music delivers a dynamic energy that gets any dance floor moving.

With over 15 years of heavily touring North and South America, as well as leading shows in Asia and Australasia his resume of accolades is a testament to the exponential growth of his profile as an international artist. Over the years he’s appeared on TV channels such as BBC, NBC, CNN and MTV, as well as having won several prestigious awards such as 2 x German Dance Awards, Dance Star Award, USA Golden Turntable DJ Award and he is a 3 x Finnish Grammy Award winner. His name has also appeared in numerous public-voted polls with previous entries in Top 100 DJs Poll and Americas Favourite DJ.

Website | Twitch | Twitter | InstagramLinksWikipedia

Show notes

– How Darude became an Internet meme
– Sharing your knowledge with others
– Showing vulnerability in your work
– Streaming in the 2020s (Twitch, Instagram, FB, TikTok)
– IRL and online communities
– Revenue streams for music creators
– How to cope with corona times without performing live
– Balcony Darude as a Corona time phenomenon
– Meaning of success
– How it all started and the making of Sandstorm
– Ville’s career aspirations and his early rejections by labels
– Storytelling in the marketing of Sandstorm
– JS16 and the Finnish Denniz Pop & Max Martin
– Agile development in music-making
– Creating music and making hits based on audience responses
– Expectation and influence management
– Changes to music due to COVID-times
– Skateboarding and TikTok
– Distractions in the creative process
– Changes in the listening behaviour and technology over the decades

Show links

https://www.youtube.com/watch?v=y6120QOlsfU (Darude – Sandstorm)
https://www.instagram.com/p/CK6YoeHBo6V/ (Elon Musk’s tweet)
https://www.youtube.com/watch?v=1QSNGL53J8M Parvekedarudet (balcony darude)
https://www.instagram.com/p/B-y_gGSFYw1/ (Ironing it out)
https://trends.google.com/trends/explore?date=all&q=darude%20sandstorm (2014 Google trend)
https://www.youtube.com/watch?v=l-JeMcfeLTE (The Story of Sandstorm)
https://www.netflix.com/ee/title/81050786 (This Is Pop, Netflix; Stockholm Syndrome episode)
https://www.instagram.com/p/BT5jFerh4RX/ (Robert Miles)
https://www.instagram.com/p/aOFhuquIC2/ (Rejection letter – Poko)
https://www.instagram.com/p/aOFVgjuICm/ (Rejection letter – Sony)
https://www.instagram.com/p/aOEn-duIB0/ (Rejection letter – EMI)
https://www.reddit.com/r/Music/comments/4updgu/ama_im_darude_ask_me_anything/ (Reddit AMA)


(photo credit Nana Simelius)

Remote-first work

August 23, 2021

Work has changed for many. It’s not any more remote or office work but just work in different places. Often, in the location you choose and where you can be the most productive and also at the most convenient time.

Last year, I was writing about these changes and it’s clear that the adaption of the new is becoming normal. Yet, in some other way, we are just at the beginning like with the forthcoming metaverse. Today’s technology looks like the computer games in the ‘80s. Cute but still very primitive compared to the capabilities and hyperrealism later in this decade.

Just do the work

Fully decentralised teams and companies are different. It changes the dynamics of the underlying structures. Who cares where you live as long as you do the work? Time zones matter but the rest is pretty much your private business depending on your personal preferences, needs, requirement and life situation.

This unlocks a lot of potentials. New physical locations become attractive. Some prefer nature and quiet life next to nature. Others enjoy a good climate or other benefits. If you can do the work from anywhere it becomes viable to optimise your cost structure, too. Why pay high taxes and living costs if there are good alternatives?

The talent buffet

When you’ve practically an unlimited supply of talented people worldwide you should do fewer compromises in your recruitment. Previously, it was not realistic to find the exact match for your needs from a given local area where your office happens to be. This limits your options even though some people are willing to re-locate. The friction is real and for some re-location is not an option.

Suddenly, employees and employers have drastically more options. You can become very specific with your needs and wishes. This is a huge opportunity for everyone, and some are utilising it by questionable means.

Tectonic changes in the appeal of geographical locations

Legislation, public services and local attitudes react slowly. Employee laws may not treat remote workers with the same rights and benefits as the locally employed. Taxation, company law and governance have many aspects that are lagging behind and you hit tons of potholes while trying to operate in this new environment.

Some locations are becoming unattractive for these reasons. If you happen to have an unattractive climate, bureaucratic heavy infrastructure and business environment or you tax labour uncompetitively based on the past local preferences it’s easy to become out of sync with the times.

Politicians care about local votes and popularity. Global competition may stay hidden for long where people are voting with their feet globally. There are no massive campaigns or outbursts. You’re just missing new opportunities, there are fewer companies choosing your location and people are preferring to live elsewhere.

The global supply and demand work both ways. If some location becomes too unstable or unattractive it’s just easier to leave. No point in trying to convince the local ecosystem to change for the better.

The winners are countries, cities and local places that are dynamic and see opportunities. It takes guts to try something new. Change is often unpopular among the electorate. There’s a chance you can massively change things for good but the time perspective is longer than your re-election cycle.

It’s easier to protect the incumbents and resist any changes than shake the status quo.

City vs countryside

If you can work remotely why should you live in a city? It’s cheaper to be outside of densely populated areas. This is a personal preference but expect people to start making moves that were rather incomprehensible just a few years before.

Technology enables last-mile deliveries with omnipresent e-commerce that does not care too much where you live. Currently, there’s a worldwide shortage of semiconductors but also construction materials such as timber. Our current housing needs may not reflect the needs of the near future, and this will be reflected in the real estate market.

Times, they are changing. Ready, Player Two?

New iMac M1 2021 with multiple screens

July 23, 2021

You can use the new iMac (2021) M1 4.5k 24” with more than one external display. This is what I discovered and it convinced me to jump on board and stop waiting for the larger 27-32” iMac coming out sometime soon (or not).

My old iMac 27” served me well for the last ten years with slight modifications along the way.

A larger screen is always nice but you can compensate for that with many screens. Also, it’s pretty nice to have your apps always open in separate screens when you get used to it (and their state stored with Stay).

My current setup is using five screens at maximum. Two 27” external displays (e.g LG 27UL850) are the basic setup combined with Atem Mini Pro and Sidecar iPad Pro when needed. The Atem is used for video conferencing / streaming and iPad for drawing with Apple Pencil (e.g. with Apple Notes or Google Jamboard).

How can you have many external screens with iMac that supports only one?

You need a bit of help from DisplayLink software, and the rest is easy. This method was first discovered last year and it works with all the new M1 Apple computers. It has taken some figuring out and cycling through docking stations but the short answer is that get a DisplayLink supporting hub (e.g. Dell D6000) and then it’s just plug and play. There are some resolution limitations though (i.e. 4K resolution).

Last year I did a post about home office / video conferencing setup. This is my current setup where I have eliminated external illumination stands, upgraded to more stable camera and mic stands (they are monitor mounts but easy to convert to multimedia purposes).

It’s surprising how many cables and adapters you need that are not compatible with each other. Mr Murphy will make sure that your existing cables are not the right type or grade (e.g. USB-C for power only) or they have the wrong plug. Another learning was that the actual devices are either thinner or smaller than the power source with USB-C devices. Be prepared to stack multiple brick-sized (yes, those red analogue thingies) power adapters that emit their fair share of heat. For things I have not mentioned here you may find them in Recommendations.

You will also learn the differences between Thunderbolt, DisplayPort, HDMI, USB 2/3 (and C), and their mini variants. Have fun!

If it’s smart it’s vulnerable

May 15, 2021

Mikko Hypponen – TALKS WITH PETRI

Mikko Hypponen talks about how to protect your company against security threats, why ransomware is so common, the future of cyberwars and why you should trust the cloud. He also reveals how he crashed his customer’s brand new car.

If it's smart it's vulnerable

Bio

Mikko Hypponen is a global security expert. He has worked at F-Secure since 1991.

Mr. Hypponen has written on his research for the New York Times, Wired and Scientific American and he appears frequently on international TV. He has lectured at the universities of Stanford, Oxford and Cambridge.

He was selected among the 50 most important people on the web by the PC World magazine and was included in the FP Global 100 Thinkers list.

Website | Linkedin | Twitter

Transcript

(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri: Hello Mikko, welcome!

Mikko: Hello Petri, and thanks for having me!

Petri: It’s so great to have you here. I think it’s almost like ten years when we’ve seen each other eye to eye.

Mikko: Yeah. Time flies, that’s the way it goes. And they tell me it’s only going faster year by year.

Petri: Maybe we’re getting old?

Mikko: Oh no, no. Don’t say that!

Petri: How many of the Fortune 500 companies are being hacked right now?

Mikko: I know exactly how many.

Petri: Well, tell me!

Mikko: 500 of the 500 are being hacked right now.

Petri: How’s that possible?

Mikko: It’s pretty easy, actually. One of the main challenges we have in information security is that complexity is the enemy of security. The more complex your networks are, the harder they are to defend, the bigger your networks are, the harder they are to defend.

Every single Fortune 500 company has more than 100 000 workstations. If you have a hundred thousand workstations, I can tell you what you have. You have a breach and you have it right now. You simply cannot control every single one of your laptops, desktops, and servers at the same time without having at least a minor breach somewhere at every time.

Petri: That’s quite depressing, isn’t it?

Mikko: It is and it isn’t. It’s a good example of the attitude change that we strongly need in the world of computers. Especially, large companies, there’s massive investment being put into trying to secure the data due to fight against data leaks, against data breaches, against hacks. When you’ve invested hundreds of thousands or millions into your security systems and firewalls and intrusion prevention mechanisms, the last thing you want to think about is that those would fail.

And that’s exactly what you should be thinking about. You should be thinking about that how will you detect when your defenses fail? How do you detect that you have a breach because that changes your mindset from trying to keep all the badness out at all times, to realising that there will be a beach and you will have to be able to detect the breach very quickly if you want to be able to react to the breach.

Petri: That reminds me of Netflix and their philosophy that all of their servers are failing and they have to be resilient.

How viable is this for smaller companies like startups? In Fortune 500, they have a bit more resources than a company with a hundred, fifty, or twenty people.

Mikko: It’s a little bit different, but I suppose there are some general truths about trying to protect your data and trying to protect your privacy, which applies at all levels all the way from enterprises to small companies, to medium-sized companies, to startups, to individuals like things that speed is the enemy of security, which is another truth.

Complexity is the enemy of security. Speed is the enemy of security. And especially with startups, this is a very common pitfall. The faster you move, the faster you develop, the first that you deploy, the less time you have for bug checking or quality assurance or testing. And that is just something you have to take into account whether you like it or not.

Petri: What are your top tips for startups? Let’s just take a regular startup, which is not, well, every company is a software company, but I mean that they may not exactly be just building software, but just general security in a company. Then we can go more into a software development company.

Mikko: First of all, starting a startup has changed so much from the technology point of view to what it used to be like. I know it feels funny nowadays, but starting a startup used to mean that you bought a server. One of the first things you did is that when you start hiring people, you get the facilities where you can work from then you buy a server, so you can have email.

Of course, nobody runs their own email server. This is a great example how cloudification has made it so much easier to start new companies. You don’t need infrastructure. You don’t need to own anything. When you grow, since everything is in the cloud, it’s just a punch of the button to have more resources for file storage or websites or service.

My tip here is to trust the cloud. Cloud works. Most startups choose to go for AWS or Azure or Google Cloud Engine. Not just because they give you this versatility, but also because they are more secure. Microsoft, Amazon and Google invest millions and millions to secure these cloud networks.

Normal companies can never afford the same level of security. So, it is a good idea to use the cloud, but of course you have to use it, right. If everything is in the cloud, then the crucial part is the authentication. What kind of password mechanisms and authentication mechanisms you use? Do you share passwords with users?

Do your users use the same password everywhere? Things like these. Technology can enable so much good, but you have to be able to use it right.

Petri: Does this apply only for the big guys, Google and AWS? You don’t see what’s happening in the other end. Where’s the limit? When should you really do some DD to the suppliers? Can you trust the smaller service providers?

Mikko: This is a very tough problem. How did you know that your suppliers do what you want them to do? Not just what they promise to do. One of the biggest problems we’ve seen in practice over the last year in information security has been widespread supply chain problems. Some of these have made general headlines like the SolarWinds saga. SolarWinds is a US publicly listed company, which makes IT-management systems for very large networks.

The idea in supply chain attacks is that if the attacker wants to break into an organisation’s network, but can’t because the organisation has protected them themselves good enough. Then they find another way in. They figure out the technology the target is using and hack the providers of that technology instead.

For example, in the SolarWinds’ case, we don’t know exactly which US agency was the target. But the Chinese wanted to break into a US agency and couldn’t do it. So, then they hacked SolarWinds and simply waited for the target to apply the latest SolarWinds’ software into their network. And those were backdoored by the Chinese, which meant they gained the access indirectly. This is a hard problem to solve.

In fact, if you follow these steep enough, eventually, you end up discussing about the security of the microcode in our CPUs. How do you know exactly what Intel is doing inside the latest CPU, which you run in your computers? Or what’s inside Nvidia GPUs? The fact is these have become so complex that nobody knows anymore.

Petri: This was actually one question a friend of mine wanted to ask and it’s related to exactly this hardware thing. Your phone is supposed to be the most secure device you have compared to your computers and laptops. That’s what I learned by doing a bit of research. But can you really trust your Android?

Because most of them are done in China and the hardware level there. Is there a secure Android phone in a sense that you can be sure that there’s no backdoors or is the data always piped to some government agencies or some other parties?

 Mikko: There’re no guarantees. But that applies to everything. There’s no guarantees your Apple is a hundred percent safe either, or your iPhone is completely free of all possibilities of backdoors. We don’t know. There’s so many components coming from so many different suppliers. We just have to hope for the best.

Regardless of that, your Android device is massively more secure than your Macbook laptop or your Windows desktop. A traditional computer, real computers are not nearly as secure as these toys, these mobile phones. This is not the way we typically think about it. We think about that real computers have real security.

Then we have these mobile devices, which are just mobile devices. Actually, the operating systems like Android and iOS or iPadOS are massively more secure than your Windows 10 or your latest version of MacOS. This is because they are more restricted. This is a trade-off between restrictions and security.

This isn’t so easy to see. Especially, from the point of view of a normal end user. If you give someone a brand new M1 Macbook and a brand new iPad Pro with an integrated keyboard, they’re basically the same device. The iPad has a touch screen, but otherwise it’s the same.

You can do everything with both of them. They are very powerful. You can browse the Web. You can play games. You can use Photoshop. You can do everything with both of them, but there is one crucial exception, which is that Macbook is a computer. If you are a programmer, you can sit down and write a program for your computer.

Once you’ve written your program, then you can run your program on your own device, and you can give you a program to your friend and he can run it on his device. You cannot, you are not allowed to do this on your iPad. You’re banned from doing this. This is forbidden. The only way you are allowed to run your own program on your own iPad is that you write the program and then you send it to Apple, to California to be approved.

And if Apple agrees and approves, and blesses your program, then, and only then, you get the right to run it on your own device. And this is a very, very restrictive model, but it’s also a very secure model. It’s the same model we see elsewhere like in your PlayStation or in your Xbox. That’s the same model.

Those are also very, very restrictive environments. They are computers just like any other computer, but it’s a computer, you, the owner don’t have the right to program and you can only run the programs , which have been approved by the vendor. The fact is Microsoft, one of the largest operating system manufacturers on the planet, the most secure version of Windows that they are shipping right now is inside Xbox. It’s inside a goddamn games console. Isn’t that weird?

Petri: Well, that’s quite funny. Now, I understand why some are having business meetings in some of the multiplayer games.

Mikko: Yeah. I’ve actually seen someone was doing meeting inside Fortnite. If you disagree with someone else in the meeting, you can just shoot them.

Petri: Yeah. I heard that sometimes it’s an unintended consequence. But maybe sometimes it’s just a bit of venting, chill out.

How about then, if you’re building a software startup and you need to basically own the cloud for the other people. You’re responsible of the data. How do you secure that data? What are the other measures you need to take into account when you starting from scratch, maybe it’s yourself and a dog?

Maybe you building a new company, Mikko? You start to build from scratch. But you’re planning to make it to 20, 50, 100, 500 people and more. How do you do it right the first time and how do you scale it? Are there different steps as well?

Mikko: Well, how would I know. I’ve always been working at the same company and it’s not my company. I haven’t grown a startup from a man and a dog…

Petri: You were there pretty much from the beginning, weren’t you?

Mikko: Yeah. I was an early employee with F-Secure, but it’s not my company. That’s not really the same thing, is it? But…

Petri: Yeah, that’s true. But I guess you’ve seen quite a lot.

Mikko: I’ve seen the company grow. I’ll give you that.

Sure, sure. We’ve done so many mistakes over the years with F-Secure. I think that’s one of the best ways to learn really. One thing I think is a universal fact, is that don’t try to invent stuff which has already been invented. Nowadays, with all the access to shared open source code and things like GitHub and Stack Overflow and well documented and understood libraries make this possible.

A perfect example on avoiding pitfalls when you’re trying to build services for others, is that don’t try to implement complex things like encryption algorithms. That’s going to fail. You will not get it right. And we do have known tested, trusted algorithms, which do get it right. That’s the perfect way of thinking about this.

It’s also a question about when you see an opportunity, you don’t always have to take it. You should really consider it. I remember very well in the early years of F-Secure, back then when the company was still called Data Fellows, when the Web started growing, and Netscape, the browser, invented this great new innovation SSL encryption, which we nowadays call TSL encryption.

That’s the HTTPS connection between between different services. Initially, it was only meant for online shops. If you wanted to buy something online, you needed a way to encrypt your credit card numbers. That’s the initial use case for SSL and HTTPS. And I remember we realised that, Hey, there’s a new business here. Because for this encryption to work, there has to be a certificate.

And a certificate has to be issued, basically sold by someone. And in practice, that certificate is just a text file. It’s just a text file. You’re selling nothing. You’re selling trust. Certificate vendors, sell trust that you can trust us to safeguard these certificates and make sure they are issued to the right parties.

We considered, whether we should go, whether F-Secure should go into this certificate, vendor business. Whether we should start selling these. We realised early on that there might be a business opportunity there. Because if you’re only selling trust, Finland is one of the most trustworthy countries on the planet, according to different institutions.

We already had been around for a couple of years. We considered ourselves to be a trustworthy partner. We did consider going into this business. However, after doing some thinking about it, then we decided not to do it. We wanted to stick with endpoint security solutions and software security solutions we’re not going to do.

Of course, in hindsight, we lost millions and millions in money. They were very few vendors in the business at that early time back then. One of the biggest success stories started next year. They started, well, not from one of the least corrupted countries in the world.

They started from South Africa. That was the company called Thawte, which later sold itself to Verisign for a billion dollars. And the founder, Mr. Mark Shuttleworth went on to start Ubuntu with the money he made from that business deal.

However, no hard feelings. We did not miss that opportunity. We saw the opportunity. We saw here is something we could do, and we thought it through and we actively decided not to do it. I would have a much bigger remorse if we would have missed that opportunity. We didn’t miss it. We decided not to pursue it. And that might have been the wrong decision, but I have no regrets about it.

Petri: Do you think it’s still possible to build a startup who is in the security business and your main clients are big corporates because you need that trust and you need to build somehow that credibility? Or is that established companies game nowadays?

Mikko: It is possible to start new startups. We see it happening all the time. But the challenge you mentioned is a very real challenge and a typical way startups try to tackle that nowadays is by building advisory boards and bringing in known and trusted figures who can vouch for the company, go through the technology and then use their reputation to vote for it.

That seems to work to some extent. But it’s a little bit weird seeing new startups entering this picture with completely different business models than what I used to know and think. I had a very eyeopening meeting maybe three years ago. I was at Google in California.

There was this Google Cloud Engine meetup. During the lunch break, I ended up sitting next to these two Dutch guys and they had this startup from somewhere close to Amsterdam. They had taken in gazillions of VC money and used the money to hire PhDs in AI, which, of course, are very hard to get, but you get them if you have the money.

They had spent all of their investment to hire these brains. What they were doing didn’t make much sense to me at all. Because they were building these machine learning mechanisms to detect anomalies inside processes, inside Google Cloud Engine. I couldn’t figure out how they would make any money with that.

Obviously, it was a very expensive operation to run and I couldn’t see how they could make it profitable. So, I asked the guy, the founder. Okay, what exactly is your business model? And he told me that, well, we have no business model. We’re just trying to get acquired by Google.

Petri: Wow.

Mikko: I haven’t checked lately, but I’m pretty sure they did get acquired by Google.

Petri: Well, that’s a high bet strategy if you’re just doing it for Google.

Mikko: What’s the downside? Your company doesn’t succeed. It doesn’t get bought by Google and then VCs will lose their money.

Petri: And, you will lose your time building the company.

Mikko: Yeah, okay. That’s true. It’s not that easy, isn’t it? But it was a really eye-opening discussion. I tried, for the life of me, to figure out how do they make any money with this. And the answer was they weren’t trying to make any money.

Petri: This reminds me of another conversation you had. Was it also with Google? Was it even in the same lunch where you made the parties really silent, then nobody wanted to talk anymore?

Mikko: I know what you’re referring to, but that meeting wasn’t that Google California. That was actually at Google Switzerland. I managed to crash the mood of a lunch meeting. We were having lunch with maybe ten Google engineers and chit-chatting about this and that and games and TV series, and what have you.

Then I started talking about nation states and attacks against players, which stored the world’s data, the big cloud providers. The thought I just floated was that isn’t it so that the biggest intelligence agencies on the planet wouldn’t be doing their job if they weren’t already trying to get moles to work inside the biggest cloud providers on the planet, like have their own employees recruited to work inside AWS or Azure or Google.

Everybody was nodding their heads. Yeah, yeah, yeah. Sounds right. Yeah, that’s correct. Yeah. They probably are trying to do that. Yeah. Yeah. Which means there probably are foreign intelligence agency moles working inside Google. Then everybody started looking at each other around the table back and forth, and everybody went awfully silent.

You end up in a really paranoid situation where you start to suspect your workmates to work for a foreign intelligence agency.

Petri: I would imagine that you didn’t kill just the lunch, but probably that’s something you’re going to erase ever from working on those companies and in that field because how can you? Because that’s what happens and isn’t that actually what’s happening more and more nowadays?

How can you describe the situation nowadays that there’re government agencies actively hacking companies and doing stuff, and they trying to find all the possible cyberware available to find these hacks and exploits, but then there’s also the temptation to utilise that for the gain of the private companies as well? So, there’s a lot of people knocking on your doors, at least virtually.

Mikko: That’s correct. And the whole idea of government writing malware would have been so hard to believe early on during my career. When I started analysing malware in the early 1990s, all of the viruses were being written by teenage boys for fun. It was sort of like a fun game that we were playing against them.

We would find a new virus and we would try to decode it. And of course, the virus writers were trying to make it hard for us to figure out how the code worked. They had encrypted it and there’s all kinds of booby traps. And we would find all of them and decrypt their riddles and solve them and named the new virus and that detection.

And then excitedly, we were waiting for the next case. Sort of like playing a game of chess against an unknown enemy. But anyway, again, that’s what it felt like in the early days, even though it was a business. We were selling anti-virus solutions, but this is how it felt like. But then slowly and surely it’s changed and all these happy hackers of yesteryear have disappeared.

Nowadays, it’s all about organised crime gangs, making tons of money with ransomware and banking trojans and keyloggers, or it’s what you were just referring to governments, intelligence agencies, militaries, which use offensive cyber power for espionage and for sabotage and in extreme cases for waging war as well.

It has totally changed the nature and the value of software vulnerabilities or exploits that target software vulnerabilities.

Petri: Is this sort of the theme of this decade now that it’s getting more like an ordinary thing and another type of thing we have to take care of? So, it’s not just ransomware, which is quite dominant nowadays, but also that if you building something, which has potentially high value that you have to be quite paranoid. Now, I start to understand the CEOs who are running their business just from their mobile phone, or maybe from their Xbox.

Mikko: I don’t think any executive is running their business from their Xbox yet, but it might not be a stupid idea. But, if you think about cyber weapons, whether you use it for espionage or sabotage, they make a lot of sense. Cyber weapons make a lot of sense from the point of view of the attackers, from the point of view of nation states, when you compare cyber weapons to traditional weapons. Cyber weapons are effective, affordable, and deniable.

You have a weapon which is affordable. It’s cheap. It gets the job done, and you can deny that it wasn’t us. This is something you cannot do with traditional weapons, like a B-52 doing bombing runs, but you end up with comparable end results. For example, if you think about Stuxnet from 2010. Provably United States and Israel were able to delay the uranium nuclear enrichment program by maybe 18 months, purely with software attacks.

They could have done a physical attack. Instead, they could have done a B-52 run and bombed down the Natanz enrichment plant or its supporting facilities around it. But it was probably cheaper and more effective to do it with a piece of malware and the best part is it’s deniable. We know it was The United States and Israel.

They are still denying it today and there’s no way for us to prove this.

Petri: What should you do as a CEO, as a company owner, or a private party trying to do your business, and then there are these huge resource available for the government agencies and other parties who are trying to knock on your doors not in a nice way?

 Mikko: You should realise that you, as a business leader, have limited resources to fight against them. You should put your resources into the right place. And that means you have to do your threat assessments correctly. You have to understand who is likely to attack you. Who are you fighting against?

Because you don’t want to use your limited resources to fight against an enemy, which is never going to attack you. Should you worry about nation states? Is your company a target for foreign intelligence agencies? Do you have to worry about activists? Do you do something which will make people angry at your business?

For example, if you pump oil out of the ground. People will have very strong feelings about that now. Whereas people might have very strong feelings about mining cryptocurrencies, for example. That will create attitudes against your organisation. And you have to, in some cases, fight attacks done by those people.

Or do you have to worry about criminals? People who are interested in stealing from you? Or do you have to worry about corporate espionage? Do you have to worry about parties, which might make you to look bad or embarrass you? Do you have enemies? And the answers to these questions are different for different organisations.

If you have a company which delivers food. That’s a very good target for financially motivated attacks, but it’s unlikely to be a target for foreign intelligence agencies. There’s nothing interesting in there from the point of view of foreign intelligence. They don’t need to know who ordered which pizza at what time. That’s not the most important piece of information.

They would much rather target governmental targets or military targets or military contractors or targets like that. But it all starts from understanding who are you? What is your business? What do you do? Who would like to hurt you? Who would like to steal from you? And when you have an understanding of that then, and only then, you can start to put your limited resources and limited budget into the right place.

Petri: Are there countries, geographical locations, which are better, if you have sensitive security stuff or data. You have a limited resources, maybe you’re not a big corporation yet, but is there some governments who are more friendly to support you and lend their resources and actively be the big brother for you in a positive way against these other big brothers, who are trying to knock on the door or do we just need to be suspicious of anyone who is trying to help you?

Mikko: I don’t really think that any government is doing a good job in defending their citizens or the companies in that country against foreign threats. If this is going to happen, it’s it’s yet to happen. I had a very interesting discussion here in Finland with one of the generals of the Finnish military.

The question I had was okay, who defends Finland against cyberspace attacks? And he told me that, well, he is not sure, but definitely it’s not them. It’s not the military. It’s not their job. They defend Finland’s independence against foreign attacks, but in their mandate there’s nothing about defending against attacks in cyberspace.

Petri: Yeah, It’s a foreign attack still if it’s done by a foreign party. So, I think it’s semantics in a way.

Mikko: No, no. They have no mandate to work there at all. They can’t give orders. They don’t have the resources. It’s not their job. And this seems to be a pretty common story around the world. Geopolitics, definitely, play a part. We see this being a vendor, F-Secure as a vendor in this space.

We’re one of the biggest computer security vendors out of Europe. Which sounds fancy, but it’s not saying much because Europe doesn’t have very big security software vendors at all. There’re basically a handful. Some companies you might know. Some companies you probably don’t know, companies like Sophos and Avast and Avira and F-Secure.

But the really big players come outside of Europe. They come from the United States, they come from Asia and they come from Russia. Then when we go into the global marketplace as a European vendor, especially as a Finnish vendor, this sometimes does matter. I’ve been in discussions where companies are interested in consulting services or software security services, but they don’t want to buy Chinese and they don’t want to buy Russian and they don’t want to buy American.

Then you have much less options left. Finland as a neutral country, pretty neutral, actually, even the fact that Finland is not part of NATO has been in some of these discussions. And again, one of the least corrupted countries in the world, this has at some discussions been to our advantage.

Not always, obviously, but sometimes it does matter. This is something which, I hope we would be able to use more to our advantage. Overall, I’m really disheartened by the lack of technology leadership out of all of Europe. When we look at the biggest technology success stories, which come out of Europe, we have pretty much nothing.

When we do have the rare success story, it’s almost always fairly quickly sold either to the West or to the East, as we’ve seen. We really should be doing better. One of the most demoralising lists I’ve seen recently was the list of publicly-listed like stock exchange listed technology companies out of Europe. The first two entries on the list were Accenture and Prosus.

Accenture is headquartered in Ireland, but I don’t really think it’s a European company. Most people don’t think about it as a European company. And second of all, I don’t really think it’s a technology company either, but it was the biggest based on stock value.

Number two, Prosus. That’s actually South African company, not a European company at all. It’s just listed in Amsterdam Stock Exchange and their valuation doesn’t come from anything which has anything to do with Europe really. Their valuation comes from the fact that they were early investors in Tencent, maybe in Alibaba as well.

It doesn’t get much worse than that, does it? The European success stories are South-African companies investing in China.

Petri: It puts me to think that maybe that’s also one of the strategies: buy them early before they become too big. You can get them to the US or Chinese or whatever jurisdiction you want to have them.

Mikko: Yeah. And I think jurisdiction and regulations and rules, maybe are part of the problem. Europe doesn’t have a unified common marketplace like United States, for example. But then again, Europe is much bigger than the United States. In fact, it’s quite remarkable when you look at the amount of Internet users and then different regions of the world, the United States, when you look at the amount of Internet users is so tiny, it doesn’t even matter.

There’s much more users coming from Asia. More users coming from Africa. Twice as many Internet users in Europe than in the United States. There’s more Internet users coming from South America yet all the services we use outside of local media are US services. US cloud, US operating systems, US search engines, US social media.

It’s remarkable how well they’ve been able to rule and become the kings of the Internet. This might now slowly be changing. If you look at, for example, Alexa, which lists the most visited website in the world, out of the top 15 websites in the world, eight are now Chinese and seven are from the United States.

Petri: We have examples like TikTok policies, the data security or non-security and there’s a lot of these things where Europeans have already, for some time, being the ones who are taking whatever is given. The Americans also are starting to experience this now that there are things that are built in Asia and China and the other parts of the world, and you are not telling what to do or you’re feeling not so comfortable and probably things are not customised.

How do you see the future in this field?

Mikko: This is exactly the reason why we’ve seen the US leaders, especially Trump, react with these knee-jerk reactions when they realise that suddenly the most downloaded mobile application in the world is not American. In fact, it’s coming from China. Well, then they have to do something. Then they have to ban it. Or, when they realised that vendors like Huawei or Xiaomi are becoming a very real threat to the local US-based mobile phone vendors, they have to artificially restrict access to these technologies. And I think Xiaomi is a great example and Huawei as well. If you forget about the infrastructure and base station and 5g discussion for a while, and just think about handsets. You look at the most sold mobile phones in Europe.

You look at the top 10 lists and you have OnePlus, Xiaomi and Huawei on every list, pretty much in every country. Then you go to the United States and you won’t find them in the top 30 at all, because you can’t buy them. You have to jump through hoops to find them in any meaningful way.

That’s not natural at all. Obviously, there are worries about national security, but I think there’s also very strong hints about trade war, where USA is realising that China is very much rising. The same reaction we see from USA now against applications like TikTok. That’s the same situation where we Europeans have been for years and years. The technology and the applications and the solutions we use are not local.

They’re being built in far away places by regimes, which don’t care about us and our rules and our traditions and our legislation at all. And who won’t it down to discuss these details with us at all. That’s what we’ve been working with in Europe for four years and years. And now, when the Americans, for the first time, are faced with the same situation, it seems to be a very tough lesson for them.

Petri: You did an experiment sometime ago that you tried to live without Google. How did that go?

Mikko: Oh, it failed spectacularly. It’s not possible. I’m not challenging anyone to try it because you won’t succeed. Sure, living without the search engine, that’s doable. But that’s not Google. Google is everywhere. if you want to live without Google, you have to avoid all of their services.

Gmail, Google Docs, Google Analytics, Google Ads. Every website you visit is loading Google Analytics and using that to track you. You can try to find your ways around that, but it’s hard and painful. Then you have services like YouTube. This is what broke my back. People sending me links like, hey, this is very important. Check out this video and it’s on YouTube. What the hell am I supposed to do? The only way I can watch the video is use Google services, YouTube, to watch the video, or I choose not to watch the video. And that simply was not an option in some of the work cases I had. So I gave up. Google has become too big. You cannot cannot avoid it anymore. It is everywhere.

Petri: A related question, is it actually possible to browse the web even by refusing all the cookies, refusing all these trackers? I think technically that’s possible, but is it like that you’re just reading basically text files, which are just garbage?

Mikko: You can do it. Nobody really does it, but it is doable. Sure. There’s so many ways of tracking you. If you couldn’t reload any other content than basic text to do it, which pretty much nobody does. If you want to find a balance of what makes sense, like where’s the balance that you can actually protect your privacy at the basic level, but still use all the good resources we have online we have to accept some level of tracking. There’s no turning back anymore. We did have a time. We did have a chance of monetising the online services, which would not have involved any kind of tracking but that’s too late now. If you remember when first web browsers became common, like Netscape 1.0n made its breakthrough and suddenly everybody started browsing the web.

Petri: Those were the good times!

Mikko: Absolutely the best times!

I remember the mystery in the early days to me was how are we going to pay for all of this? Because when Gopher was going away and we got HTTP and it was so easy to use. We had graphical user interfaces. We had images. You could click on links.

I realised that this is going to be huge. Everybody will be using this and we will have so many services online. We will have websites with information with news, with weather reports, maybe one day we will have, I don’t know, movies on the Internet. That’s what I thought around 1994/1995. But then, I realised that hold on if you’re going to have all these, valuable services online how exactly are we going to pay for them? For example, newspapers or TV channels are not going to move their services from the current business model to the Web, if there’s no way for them to get paid. I was thinking about this and I came to the conclusion that surely Netscape and other browser manufacturers will integrate a payment button into the interface.

Like you go to read a piece of news and there’s a popup say, hi, do you want to read this? This cost you two cents and there’s a button and you click the button and you pay two cents and it somehow deduct it from your credit card or some online payment system. And then you get to read the thing. I was imagining micropayments. Obviously, this is the way it’s going to be.

There will be micropayments built in the browser and we will pay for content as we need, as we wish. And now it’s 2021 and we still don’t have the micropayment button in browsers.

Petri: 404 instead of 402!

Mikko: Yeah. I mean, you’re right. There is a protocol for that. We could. It’s all in theory there. And even the rise of electric currencies or virtual currencies and blockchain solutions, even that hasn’t made this reality. Nowadays, the closest we have to that is the Brave browser, which has the BAT currency payments built in.

But that’s not in Chrome or in Safari, which is what everybody’s using. So, instead of paying for content with money, the history made this weird turn and we ended up into this world where we are living today, where we pay for content with privacy. We don’t pay for content with money. We pay for content with privacy.

If I want to watch cat videos on YouTube, I can’t pay money for that. I have to let Google to profile me, build dossiers of me and what kind of videos I watch and what else am I doing elsewhere on the Web. Who is my friend and who is my enemy? And then sell that information, sell that profile, sell that dossier to advertisers or in extreme cases to sell it for election campaigns. They can use that to target people who vote. We were close. We could have chosen a different future. But we failed to do it and it’s too late.

Petri: Was it really an option in the early days or was it just the laziness of the people and it’s too difficult to pay for everything?

Mikko: I totally think it was an option. I think we just failed to capitalise on that. There were some early attempts, DigiCash, for example, in the early 1990s was trying to get this off the ground. One of the problems back then was that there were so much opposition from banks and credit card companies, which hated the idea early on, but clearly users were taking all these brand new technology into use for the first time.

And if part of the onboarding process would have been to include your payment information so you can pay for the content online I think people would have done it. It wasn’t simple to build the current infrastructure where all this profiling is being done and turned into money and nobody would have believed how much money there is in this online profiling business.

Nowadays, when you look at the revenues of Google and the likes of them it is a massively large amount of money, which is being done with this profiling today.

Petri: You mentioned somewhere that our generation will be remembered for what did we did: we killed the privacy.

Mikko: Yeah, we did. We were given a free and open Internet. Like you and me, Petri. We were given a free and open Internet. That’s what we got. And the question is, what kind of an Internet are we leaving for the future generations? Will it still be free? Will it still be open? And it doesn’t look very good.

The biggest innovations of our time, the Internet and the mobile phone and all these digitalisation revolution, have given us so much good and so much bad. I believe the Internet is the best and the worst innovation of our time.

Petri: I think we may have a second chance. That’s what some call the web 3.0, the decentralised world. Many of these people who are building it now are from the generation of our age, who experienced the open source movement and the early open Internet as well, because the protocols are back and now they’re happening in cryptos.

There’s still some hope. But maybe that’s just the pendulum going from the centralised to decentralised. Do you have any insights on the decentralisation move or trend? Because certainly, it looks like that you can trust anybody with your own data because it will be leaked. It’s just a matter when it’s not if it’s going to be leaked. We need to keep very tightly to our private keys, or how does it work?

Mikko: I think most of the users online are lazy and they will go through the path of least resistance and use the services that they know and are used to using. Since users have been online on Facebook for 15 years now, I think they will be online on Facebook forever, regardless of new innovations we see happening.

If there will be web 3.0, it is on the shoulders of the next generation. They are the ones that have to build it. They are the ones that have to start using it instead of the old services being built by the gorillas of the Silicon Valley. I do believe there is a real and important innovation in the space of the centralised systems and also in the space of blockchain.

And I know blockchain has a really varied reputation. Some people believe in blockchain solutions like religion and others are certain that any project which involves anything to do with blockchain is just a scam. I think the truth is somewhere in the middle. I do believe that the innovation of modern blockchain, especially the blockchain as described by Satoshi Nakamoto in 2008, that is one of the big innovations of our time.

I know how to detect, how to tell, when an innovation is big and important. An innovation is a major innovation when you explain the innovation to someone else and they are like, huh, is that it? That’s pretty obvious. That’s exactly what blockchain was. It’s just a list of transactions built so that every transaction is unchangeable forever and public forever.

That’s it. That’s the innovation. You can say it in one phrase. When you explain it, people are like, huh. Well, that’s pretty obvious. Well, yes, it is pretty obvious now that it’s been invented, but it wasn’t obvious before it was invented. This is how you can tell that it’s a big innovation when once someone invented it’s obvious, but it wasn’t before.

The solutions that you can build with transaction lists, which are public and unchangeable forever are so much bigger than just financial services. There are so many other things we can build with these things, with blockchain based solutions, which we still have to innovate, but the basic building block is there. I’d like to believe that the future is decentralised.

Petri: What’s your take on nifties or NFTs?

Mikko: It’s really, really interesting, but it’s not quite there, yet. We’re missing some piece of the puzzle and I can’t articulate what it is. But those of you who’ve played any games where you collect things, you know how valuable those things become, even though it’s completely virtual.

Even if there’s no real money payment involved at all. If you play some RPG and you finally managed to collect something, to build a really rare sword, and you know that in the whole global game, there’s only like three of these sword and you have one that’s really valuable. In fact, if you could, you probably would pay real money for a sword like that. When you combine that mindset and the collectibility…the fact that we like to collect things and hoard things it’s built into us when you combine that with math, which can prove that you are the only owner of a digital good I do believe there’s something there. But it’s probably still a couple of years into the future until this really makes the connection. Then we have another problem to solve, which applies to almost all blockchain solutions, which means it applies to almost all NFT solutions, which is the impact on environment.

Petri: Indeed. But for the environment part I have been thinking also that it’s easy to save the cost of electricity and that’s obviously there. But the other question is that, what is it replacing? What does it take to actually have the physical? Maybe not in the games, but if you’re doing physical art, and you have to get all those resources.

There’s a lot of logistics involved. Maybe you need to heat the buildings to have the galleries and people are doing traveling to get there. Then they are shipping those things. These are not so easy to see. My hunch feeling is that probably these are actually more because when it’s digital there’re no atoms involved. When you have atoms, you have to transport them and, use a lot of energy to move them around or manipulate them.

Mikko: I have two points about an environmental impact of technology. Especially, about mining and all that. The first thing is practical, which is traditional mining for proof of work involved in blockchain solutions. It’s pretty obvious that the one with the cheapest energy wins.

The solution is pretty easy. We just have to tax non-renewable energy a little bit more. So, it’s a little bit more expensive. A tiny amount more expensive than recyclable energy. And every miner will naturally automatically migrate to the renewable sources. Taxation in the short run is the easy solution for the environmental impact.

The long-term impact is more ideological. Every digitalisation idea uses energy and clearly we don’t want to go backwards. We don’t want to steer away from new innovation in technology. Yeah, sure. Watching Netflix movies is bad for the environment, but we still want to do it.

Doing Google searches is bad for the environment, but we don’t want to get rid of Google. Mining for proof of work is bad for the environment, but all of these, I’m confident, can be solved with technology itself. So, steering away from technology, steering away from digitalisation is the wrong answer. In fact, if we want to do anything, we should double the stakes and put more effort into technological advancement because that’s going to be the thing which will save the planet.

Now, there will be an innovation, with technology, which will allow us to reverse global warming one way or another, whether it is directly extracting carbon from the atmosphere and getting rid of it safely or whatever it will be, it will be technology which makes this possible. We don’t want to go back to where we were a hundred years ago.

No, we want to go to where we will be in hundred years in the future. We must not try to limit technology. We must use technology to save the planet.

Petri: I’m just thinking now coming a bit more fun stuff for awhile…

Mikko: You don’t think saving the planet is fun, Petri?

Petri: It is a thrill when you’re building new companies and that’s what I doing basically as a living, building the future. So yeah, it is a lot of fun. I’m just thinking that in order not to just talk about these things, more heavier, deeper topics and wanna have some fun for awhile, because I think it’s a few minutes we’ve been laughing. Well, you just did.

One of your first projects, you forgot something when you needed to demonstrate, and you did something which usually would get people fired. Can you tell what happened to the Saab 9000 Turbo?

Mikko: One of the biggest practical failures of my career, in the very beginning of my career, the very first job I had when I joined F-Secure had nothing to do with security. Early on the company was doing lots of custom projects for clients and I was in charge of a factory automation project for a large Helsinki-based factory. The project was late and overdue and it wasn’t progressing as we want to.

Petri: Just a regular software project, wasn’t it?

Mikko: Yeah, like they always are, but this was my first. I was late and inexperienced and I was very junior at the time. This was my first Windows project as well. They wanted to completely renew the systems they used inside the factory to run on Windows 3.0, which was the latest and greatest at the time.

Petri: No Internet.

Mikko: Obviously, no Internet, yes. 3.0 still didn’t support Internet even with outside drivers. Windows 3.1 then supported Winsock Trumpet, which then changed the world. But the CTO of the company got fed up with the late project. He called me and said, he wants to see a demo. He wants to see where we are. He’s going to invite his group together. He wants me to come over tomorrow and do a demo to show where we are.

I worked very late in the evening to try to get it as done as possible. Then I went to the office early in the morning. Our offices at the time were in Hietalahti. And then I jumped on tram to drive from Hietalahti to Arabianranta to show the demo. And when I get there, I go to the meeting room. They’re all there. The CTO is sitting at the end of the table and I’m 22, I think at the time.

I opened up my bag and I realised that I left the floppy disk with the demo at the office. I can’t show the thing that I worked on for weeks that I worked through the night. Because I forgot the floppy disk in the disk drive, which is at the office. The CTO was furious. He didn’t believe me. He thought I was just buying time.

He was confident I had nothing to show and I was just trying to cancel the meeting and that it’s just a story. So I told him, no, no, no. I do have it. It’s just at the office. So he said, okay, fine. We’ll wait. We’ll sit here in the room and we wait for you to pick the floppy and you come back with it.

And I told him, yeah, sure. I’ll do it, but I don’t have a car. So it’s going to take, I don’t know, an hour and a half for me to drive through the city with the tram. So, he gave me his car keys. I got into his brand new Saab 9000 to go and pick up the floppy. And as soon as I get out of the parking lot. I crashed his car.

Petri: So, within five minutes of going out of the building?

Mikko: Yes, yes. And I remember I told this story to someone and,he was just horrified and he asked me that, Oh my God, how on earth did you ever get another job in software industry again? And I answered him that actually I didn’t because I’m still working at the same company today.

Petri: How did you actually get the floppy?

Mikko: I didn’t crash the car so bad it wasn’t undrivable. It was a fender bender, but trust me it was bad enough.

Petri: Yeah, I can imagine. But usually, if there’s another party, unless you just went to whatever wall, you need to sort it out and that takes time.

Mikko: No, I crashed into a parked car and I left a note and carried on with my fender bender Saab 9000 Turbo.

Petri: Well, those things happen. I guess like the other time you were sort of too eager to do an update on the website.

Mikko: Oh yeah, that was another great example of failures early on. I don’t know if you know this, but F-Secure had one of the first websites in Europe. Definitely, one of the first websites in Finland. This was in April, 1994. And I know these because I set up the first website for the company.

Petri: Was it running on a Netscape server?

Mikko: It was actually running on a Solaris’ custom server at the time. HTTP servers were fairly easy to implement if you had a very small site, which is what we did. I think we had like three pages and a couple of images on the first site. But a fun fact about the same Solaris server, which was also our file server and our email server. If someone would have broken into our website, they could have gained access to our emails as well, which is pretty horrifying to think about, but, hey, that’s the way things were in 1994.

I was maintaining the system partially from the Solaris system itself and partially from my MS-DOS based PC, which was running PC TCP-drivers. And those drivers did not support symbolic links or they did, but they turned symbolic links into hard links. Which basically means if you delete a folder with symbolic links if you do it from the Solaris side, it just deletes the link. If you do it from MS-DOS, it actually follows the link and delete everything underneath the link as well. After we had been running our website for a couple of months, I was doing some cleanup because I had a full hard drive on my MS-DOS computer and I deleted a temporary folder.

It had a soft link to our website, which ended up deleting the whole site. So, I deleted our website and we had no backup. Yeah. I remember going to Risto, that’s Risto Siilasmaa, and explaining to him that, yeah, sorry, Mr. CEO. I’ve deleted our website and we have no backup.

Petri: The e-commerce business is down now!

Mikko: Well, I don’t think we had e-commerce at the time. But it was pretty bad, but, Hey, I’m still working here today!

Petri: Risto is a really forgiving man!

Mikko: Yes, I can’t thank him enough!

Petri: He wrote an excellent book a few years back, and I think that’s one of his principles, isn’t it? That you have to give a try do a lot of things and make some mistakes as well.

Mikko: At all times you have to keep your paranoid optimist thought in order. That’s the way he thinks. And that’s, I think one of the reasons why I’m still employed there today.

Petri: Is there anything else you would …because I really loved Risto’s book and if somebody hasn’t read it, I recommend to read it. It’s at least one of the best books, or maybe even the best book I have read about board work as well and corporate governance. It’s a bit of a thriller as well, and also how to save Nokia and what happened in Nokia as well. So, there’s a lot of things happening in that book. It’s warmly recommended.

Mikko: One of my favourite details in the book is going through the actual practical dealings when Nokia mobile phones was sold to Microsoft. It’s just fascinating to read the descriptions about the really physical armies of lawyers getting together at a hotel in New York where you have board rooms filled with paper contracts stacked meter high and going through of signing every contract and double checking that every patent is mentioned that everything is in order.

Then the board members join and do the actual signing. When you do business exchanges, which mattering in billions of dollars, that’s the way you actually do it in practice. I rarely remember reading about that from anywhere.

Petri: This reminds me of the terms and services. So, have you read them?

Mikko: Okay. Yeah. Well, Sometimes I do. As you know, it takes forever. The fact is even our terms and services are full of godawful things like our F-Secure software includes clauses like even if there is a bug in our code, which deletes all of your data by accident, and you tell us about it, we don’t have to do anything about it.

We don’t have to fix, and you’re in charge of all the costs. And we know people don’t read terms and conditions. We tested this. We set up a free wifi hotspot in downtown London on Piccadilly Circus a couple of years ago called F-Secure free wifi. And, and we got dozens of people signing up for free internet access and accepting our terms and conditions, which were the usual ten pages of legalese, which among other things mentioned that if you use our wifi, you will have to give your firstborn child to F-Secure. And if you don’t have children, then we will take your favourite pet.

Petri: How many pets you have in the office?

Mikko: We did have a discussion that we actually should go and pick up a couple of kids, but I was voted down. We never did any of that, but we would have had the right.

Petri: How do you handle a security crisis if that happens to your company?

Mikko: If it’s the first time I would recommend getting outside help and getting it immediately. In fact, I would recommend getting outside help for both the technical part and the communication part. These are hard to do and they’re hard to do at the same time. It’s also the reason why I recommend companies rehearse this. That companies take the time from their busy schedules to do trial runs being run most likely by an outsider who will run it like a war game.

Here’s the situation, this is what’s happening. What are you doing now? Okay. You did that. Here’s the new situation. Here’s how it affected the situation. What are you doing now? Because that’s the only way to learn about things that will affect the environment when you are inside of a crisis.

I’d like to think I have a lot of experience in working in the middle of information security crises, because I was running our labs through all the massive malware outbreaks of the early 2000s. If you remember 2001 and 2002 and 2003, we regularly saw Love Letter and Blaster and Slammer and SAS are these outbreaks, which started from an initial infection and then within a couple of hours affected the whole world. That meant my phone was ringing at 2:00 AM or 4:00 AM. Then I was working 24 hours trying to put out the fires. When we got the technical fixes in place, then I spent the next hours answering phone calls from CNN and MSNBC and BBC and explaining what just went down.

I think we built pretty good processes and infrastructure into handling big cases. It’s very stressful, but I can’t deny it’s also exciting. You do feel very much alive when the phones are ringing off the hook and the whole world is on fire. And you know that you and your team has the skills and the tools to put down the fire.

Then when you are able to do it, in most extreme cases, you shut down the crucial server used by the attackers and the whole attack stops. It does feel very good. You have the adrenaline flowing in your blood and it’s exciting. But of course, it’s exciting only for a limited, like when you get the fourth 2:00 AM wake up all during the same week it’s less and less exciting and more and more tiresome. I’m glad I lived through the virus years of the early 2000s. I wouldn’t give them up for the world, but I’m also very happy that time is now behind me.

Petri: You once said that security is like Tetris: your successes disappear, but your failures pile up. When everything’s working, you don’t get any recognition. And when obviously things are in red alarm, everybody’s concerned about things. And it’s like what happened to one of the biggest ships a few weeks ago: you are even visible from space.

Where should you start? I think it’s too late when you have a ransomware attack happening and you start to think about, okay, I need to Google someone. Oops, Google doesn’t work.

Mikko: Yeah. That’s why I so wholeheartedly recommend testing your defenses and doing trials and doing rehearsals. And I also recommend penetration tests. One of the best ways to figure out where your vulnerabilities are, is to attack your own network. And if you don’t have the know-how to do it yourself, you can hire an outsider, a good hacker, to hack your systems, and then they will tell you how exactly they got in.

And if you want to test your physical security, they will be able to do that as well. This is something we do quite a bit, both physical penetration testing, like basically trying to walk into companies and see whether we can gain access to data centers or confidential data, or what have you, or hacking the networks of the systems.

The thing there, which is remarkable is that our success rates are very, very high. Even when we do a repeat test, like we hacked into a network, then we tell the company what we did, they fix the shortcomings and then to make sure they fixed everything, they hire us again. Then we break in again maybe finding some new mechanism. But in a way, it’s also good to remember that most attackers are not like penetration testers.

Most attackers are after the low hanging fruit. They’re looking for money. Most attackers are in it for money. Most attackers are not nation states or someone who has a beef with you and wants to make you look bad. Most attackers just want money. Which means if your protections are just a little bit better than the average, then the attackers will go after the easier targets.

You don’t have to have perfect security if everyone else has poor security. This means that when you do a penetration test it’s actually much more closure to testing against a targeted attack. Like an intelligence agency, because they won’t go after an easier target. They have a target and they will go after that target only, which is what we do when we are hired to break into a network. Even if your network is well protected, we’re not going to look for an easier target because we are hired to hack your network and your network only.

Petri: So that gives us a bit of comfort, but the world is a big place, so it’s relative the security and maybe you are the weakest link in some exploits.

Mikko: Then you will find out.

Petri: Eventually, at least.

There’s bit of an anniversary Brain.A. It’s not the first computer virus I think that award goes the Apple users but it’s pretty early on and pretty famous and you made a bit of a world tour as well.

Mikko: Yeah, that’s true. Brain.A makes history as being the first PC virus. That’s important because I mean, PC viruses are still today the biggest problem. That’s where most of the malwares problems today are, and PC problems started 35 years ago. Pretty much, exactly, 35 years ago in 1986.

The thing you’re referring to is the trip I did 10 years ago on the 25th anniversary of Brain.A. Because we had a meeting maybe six months before the 25th anniversary of the first PC virus. Our marketing and PR teams invited me to an internal meeting where they wanted to discuss whether we should do something about the 25th anniversary.

They had ideas like we could have some awareness campaigns to tell people about malware problems. I thought all that sounded really boring. My input into the meeting was that why don’t I just try to go and find the guys who wrote the first PC virus? And if I find them, then I can go and talk to them and ask why did they do it then and how do they feel about it and all that. The reason why I brought this up is that I remembered that there’s an address inside Brain.A virus. Brain.A, the first virus for PCs from 1986 has a text hidden inside of it, which is a street address in the city of Lahore, which is in Pakistan.

Petri: And the simplest thing would be to go to Google Maps and check the address and the knock on the door and say, hey, what would like to have an interview? But that’s 1986 and Google Maps was not available at the time. And I guess that was even before your time in the security business. So, a long time, but what are the odds? What happened next?

Mikko: Yeah, the odds were quite surprising because what I learned was that indeed the same street address in Allama Iqbal Town in Pakistan still twenty-five years later hosted the same guys. The guys, Basit and Amjad, the two guys who wrote the first PC virus. They are still there today, even today, 35 years later because I keep in touch with these guys. They’ve never moved away from the place where they were living back then in 1986, when they wrote the first PC virus where they put the street address inside the virus. When I went to visit them, they were there. They’re still there today.

Petri: In the text, when the virus was printed, it says: “Beware of this VIRUS… Contact us for vaccination.”

Mikko: That’s right. The answer to my biggest question, why did you write this, Basit and Amjad, why did you write the first PC virus? The answer was that they wanted to prove how insecure these new IBM PC computers were because these guys had a background from mainframe computers, which had user accounts and security restrictions. Then comes out the 8086 IBM PC, which has no restrictions. There’s no user accounts, no nothing. And they were horrified. So they proved just how easy it would be for someone to write something like this. And it became the biggest outbreak of its time, spreading all over the world, including computers in every city in Europe.

Petri: But it only spread with floppies.

Mikko: It’s spread at the same speed as, for example, COVID-19 is spreading right now. That’s the speed of people traveling. The only way you can spread a human disease from one country to another, is that someone travels from one country to another. Same thing with Brain.A and all the other early floppy based viruses. It required people to travel. You couldn’t spread these over networks. You couldn’t spread them over BBS systems or modems. You had to physically take a floppy and fly. Yet, Brain.A went worldwide. Eventually, Brain.A was even found from the Antarctica South Pole research stations.

Petri: it didn’t even freeze to death.

Mikko: No, it survived everything.

Petri: Like the Bluetooth stuff that happened in the 2000s when people were running around with their mobile phones infecting people. And that’s like the digital COVID-19, wasn’t it? You needed the close proximity to other people and then the only choice was basically to say yes.

Mikko: That’s true. Just like in order to get COVID-19, you have to be within a couple of meters of someone else. The first Bluetooth viruses for the Nokia Symbian devices, they were the same. You have to be close enough to an infected device with your device to get infected. And I remember when these early Bluetooth viruses were a very real problem, viruses like Cabir and Commwarrior. A very typical reaction from people who heard about the problem was to blame the users: “stupid users, why do you accept the incoming Bluetooth transmission? You could just decline and you would be fine. What an idiot getting infected with these Bluetooth viruses.”

It wasn’t like that at all. The early Bluetooth user interface was very confusing. If you were close enough with your own clean phone to someone who had an infected phone, you couldn’t use your phone. You couldn’t do anything with your phone because the other device would constantly send you over and over and over again this request to accept an incoming file transmission.

If you took your phone from your pocket to make a phone call, you couldn’t. The only way you could do anything with the phone would be to accept the incoming transmission so you could get read off this query. Or the other option, which wasn’t obvious, you could just walk away. You could leave the premises to go far away from the infected device, but that wasn’t obvious at all.

The reason why people got infected with these early Bluetooth viruses was a user interface problem. A UX issue. Finally, in Symbian version three, the user interface was changed and this basically killed the whole Bluetooth problem. And we haven’t seen Bluetooth viruses since.

Petri: In a way I think that history is just repeating itself over and over and over again. It’s just different technology, but the gameplay is the same and it’s getting more sophisticated. You can get CEOs paying some non-existent bills and the cons are just longer and more sophisticated, but the basic principles are more or less the same. Just go through the history and find some good classics and rinse and repeat.

Mikko: We can look at every single data breach or data leak or malware outbreak. When you look at the root cause it’s always the same. It’s always either a technical problem, like an unpatched system or a human problem, like a user opening the wrong attachment or clicking the wrong link. And that’s the two root causes we will always find.

Petri: Till we replace the human interface from there and just let the computers write the code.

Mikko: I can’t wait for that. I do think it’s going to happen. One very good way of understanding the intelligence explosion is to think about programs, which program. Like if you have a program which understands its own code and can rewrite itself, it’s pretty easy to understand how that would very quickly turn into something that you and me couldn’t understand anymore. And which would clearly become better and the performance of this program would get better and better until we couldn’t understand the slightest what it does. This is what we speak about when we speak about intelligence explosion.

Petri: In some small, tiny way this is happening already now with all these AI systems or machine learning systems. But obviously it’s not something where they are self-conscious and can describe exactly what they doing and explain it, and then build a better versions.

Mikko: Even GPT-3 knows already how to program, which is pretty remarkable. Even the basic query interface of GPT-3, where you can like give it a prompt and it continues your prompt, if you speak German to it, it continues in German. If you speak Swedish, it continues in Swedish. If you speak in Finnish dialect, like Savo, it continues in Savo. If you speak Pearl to it, it will continue in Pearl. When I saw this for the first time myself, I was really blown away. You don’t even have to tell it that, Hey, this thing that I’m writing is in English or in Japanese, it just knows. It’s awesome and scary at the same time.

Petri: When can we expect security work like that? Nobody does anything and it probably happens in milliseconds and it’s already over, like in high frequency trading. There was a security threat and it was already analysed and neutralised.

Mikko: Security software has been at the front of AI and machine learning for quite a while. We started our first machine learning project in 2007. So 14 years ago, and today none of the large scale research laboratories could do their work without machine learning. There’s just so much data to be analysed.

So many samples, so much network traffic. We try to put as much effort into machine learning for security purposes as possible. It has been a great success story. The best part is that, maybe a bit surprisingly, we are not seeing the other side, the attackers, using machine learning yet, which is remarkable.

Clearly they could. They could be using machine learning to create malware, which is able to rewrite its code or code to avoid detection or phishing attacks, which would detect what works, what doesn’t and adjust accordingly. But we aren’t seeing that. I guess the reason why it’s not happening yet is that if you have the skills to build machine learning systems, you don’t need to go into life of crime.

You can find a very well-paying job because there’s such a lack of scale in machine learning space today. But obviously, that is only going to help us for a little while. Eventually, using machine learning systems will become so simple any idiot will be able to do it. And then we will start seeing malware using machine learning as well.

Petri: How do you see the future in 5, 10, 15 years? What are the things you excited about and what are the things you not so excited about?

Mikko: Every time I walk the corridors of Slush or some other startup event like that I get filled with this buzz of happiness about how clever the upcoming generations seem to be and how they are thinking about the world differently and how there’s so much innovation still to be done and how the digitalisation revolution is only in the very beginning.

We’ve only seen the very beginning. Unfortunately, we’ve only seen the very beginning of the problems as well. I see a bright future and a future where we are more and more dependent on technology. When technology becomes good enough our societies won’t work without that technology. Digitalisation and the Internet is on its way of becoming mandatory.

It’s not there yet, but it will be in the future. And that is going to be one of the big weak spots of the future. But nevertheless, I’m an optimist and I think future looks great, but we also have huge problems ahead of us.

Petri: It’s kind of crazy to think about if we go back to the 1880s, electricity was just coming. Then in the 1920s, a hundred years ago, thinking electricity and how it was changing the society. You could maybe make an analog, compare to the Internet as well. We are like in the 1920s of electricity.

Mikko: That’s right. That’s a very good comparison in the sense that when technology is good enough, like electric grid is very nice. It’s so nice that today it’s mandatory. No modern society survives without electricity. And if we get an extended power cut, like six months without electricity, nothing works.

The whole society would crumble because we wouldn’t be able to feed ourselves. We wouldn’t be able to heat ourselves. We wouldn’t be able to move. We wouldn’t be able to communicate. And this is what’s about to happen with Internet connectivity. That’s how crucial it will be. We’re not there yet.

And right now it might sound a bit far fetched that a cut on Internet connectivity would crumble our societies, but that’s, what’s going to happen. That’s how mandatory it will be in 10, 20, 30 years. And in fact, it’s going to be so mandatory that eventually it’s going to work the other way around because today when power goes out, obviously Internet goes out as well. Eventually, when Internet goes out, it’s going to cut power as well.

Petri: If it’s smart, it’s vulnerable.

Mikko: That’s the Hyppönen Law and it’s a very pessimistic law, but it’s also very true.

 Petri: What is your favourite word?

Mikko: My favourite word is hack. Hacking works. Hacking saves the world and hacking is also one of the biggest threats to the world. When I said earlier that the Internet is one of the best and worst things during our time, this is exactly what it means. But, I’m often asking if I’m a hacker myself and I guess I am, but I don’t really portray myself as a one because I know the word comes with heavy connotations and some people automatically assume that hacker means a criminal, which is not true. We have good hackers and bad hackers, and if I’m a hacker, I’m a good hacker.

Petri: What is your least favourite word?

Mikko: My least favourite word is complexity. I’m a big fan of simplifying things or simplifying technology or simplifying thoughts. Complexity is the enemy of security. The more complex our systems are, the harder they are to secure. And if that’s true, then it’s pretty obvious what we should be doing.

We should be trying to remove functionality with every new release of every piece of software. And that’s not what we’re doing at all. We are doing exactly the opposite. Every new version of every operating system and every application and every mobile app has more functions, more features, more layers, more protocols, making it harder and harder to secure our systems. So that’s my least favourite word.

Petri: A startup idea for someone: your complexity is my margin. What turns you on creatively, spiritually or emotionally?

Mikko: Sleep is very important for me emotionally and creatively. I’m happy to report I’m a good sleeper and during normal times I travel a lot. I live in different time zones. I always sleep well. And I think that’s my superpower. It’s very important for me.

Petri: What turns you off?

Mikko: Meanness or mean people, mean thoughts. it’s just unnecessary and unneeded and such a turnoff. Yeah, meanness.

Petri: What is your favourite curse word?

Mikko: Oh, that’s easy. That’s perkele! And I think Finnish swear words are very international. I think everybody understands that perkele means what it means.

Petri: What sound or noise do you love?

Mikko: I’ll play it to you. I’m a big nerd for old technology and old games. So it’s the hyperspace sound from Williams’ Stargate from 1982. That’s my favourite sound.

Petri: Wow! What sound or noise do you hate?

Mikko: It’s very simple. It’s the sound of alarm clock. And that goes back to my superpower of sleeping.

Petri: Are you demonstrating that as well?

Mikko: I’m not because I hate the sound.

Petri: What profession, other than your own, would you like to attempt?

Mikko: If my profession today is I’m a security expert, I’d like to try to be a professional game developer. It’s probably not nearly as much fun when you do it professionally. Maybe a hobbyist game developer, maybe that’s something I’ll do when I retire. I used to write games in the 1980s. I even got some of my games published back then on those home computer systems. So yeah, maybe that’s the one.

Petri: What profession would you not like to do?

Mikko: Well, I wouldn’t like to be a priest. That’s pretty much as far as away from me that I could think of.

Petri: Are you sure? You’re like a security priest, aren’t you?

Mikko: I’m not a security priest. Take that back right away!

Petri: If you could be a co-founder of any startup in any era, which one would you choose?

Mikko: If I could choose any era, any company, I would definitely choose 1972 Atari. That’s such a heroic time that changed the world. Atari had a really lousy fate, like many of the early game companies, but during the first 15 years, it must have been like magic. So, yeah, that’s what I would choose: Atari 1972 with Bushnell designing the first video games, the games, which would change the world.

Petri: It must have been a really magical place to work at the time.

Mikko: I recently visited the old Atari headquarters. I have a lot of old Atari games. When you read the manual for the coin-op, the full-sized games, they have at the back page the street address where the game were built. So I actually went there. I was visiting Apple and I had my rental car. I drove 15 minutes from the current Apple headquarters to the address where Atari used to be. It’s now empty. It was for rent. The building is still there. It’s the same building but nobody’s using it at the moment. I just walked around the building like a pilgrimage to see where magic was done all those years ago. I’m happy I did. I got nothing out of it, except I saw where the world was changed so many years ago. I’m not a priest, but, maybe I did get some kind of a mental feeling of togetherness with the feeling they had all those years ago.

Petri: And even Steve Jobs was doing nights sifts there.

Mikko: Even him. Yeah, that’s right. He was working there. I believe he was not that same building. They were probably still some garage back then, but yeah, it all comes together. Doesn’t it?

Petri: Indeed. Small world.

Mikko: It is.

Petri: Any final words for the audience?

Mikko: It’s all going to get better. I think we should be considering ourselves to be very lucky to be alive during these years. The human mankind has been around for 200 000 years. We happen to be alive during these defining years when we stopped living part of our lives in the real world and started leading part of our lives in the online world. And that will be the norm forever. This change is happening right now and we get to see it, so, exciting times!

Founder non grata

April 15, 2021

Jaakko Villa – TALKS WITH PETRI

Jaakko Villa talks about co-founding a successful growth company Idean and running it for many years but what happens when the co-founders part ways and his legacy is nowhere to be seen anymore. We also cover how to transform from direct sales to digital sales processes and what is an ethical design agency.

Founder non grata

Bio

Jaakko Villa is a Finnish customer experience serial entrepreneur. He is currently managing Puheet customer community engagement SaaS business. In 2020, he co-founded Alpha Design Partners and already in 1999 the UX design firm Idean. At leisure time, he enjoys motorcycling and sports, especially basketball and badminton.

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Transcript

(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri: Why is equality in ownership not a good idea?

Jaakko: If you have equal ownership, everything goes into the trash from so many different perspectives. One of the examples is that if you have, you have the general meeting, you have the board of directors, the management team and the operational team present at the same time. It’s if not fully impossible, it’s nearly impossible to have anything that is under the argumentation to be decided and then move forward. The roles, everything…it’s very difficult to manage the company.

Petri: Sounds like you have some personal experience. Can you elaborate?

Jaakko: One of the first companies I was involved with we had equal shares, 20 per cent each, at the time the difficulties started. I was the CEO for about seven years. When we didn’t have anything, equal ownership was just okay. But when we had the business booming or growing steadily, sometimes faster, sometimes a little bit slower, difficulties started.

One of the reasons was that as a CEO, I wanted to do some things according to the strategy that we had decided. Let’s say I called the management team together, and then we decided to do something. But if in the management team there were opposing opinions or opinions from the owners that they didn’t want to do, according to what I had decided as a CEO or what we thought was the best from the strategic perspective they could do it.

There were no tools, nothing to guide them or direct them or order them to follow up what has happened with the decisions that we’ve made in the management team meeting. That’s one of the issues. And then in general, I would say that in startups and scale-ups, it’s always better to have a master’s voice, somebody who can make the final decision and who has the final go or no go decision in different decisions to be made. If it’s all too equal, it’s very difficult. It’s random. It doesn’t have a dynamic view to the company’s present or forward-looking operations.

Petri: Is it because of the background of the people or can it actually work in some instances? For example, if you split the company between two founders, 50/50, and then you start to take investors and other people on, or is it because those founders are basically in all the roles at the same time? They are on the board and they are owners and they have a shareholders’ agreement and it’s basically the same stuff. Or is it because of the different backgrounds and roles of the people in the company that some are more involved to the business side and some are into other aspects and there’s sort of a discrepancy between the understanding and agreement on how to grow the company, or can you be a bit more specific in what circumstances it works and in your experience as well, what is the setup you would like to do now knowing everything you know?

Jaakko: I think it is a mixture of everything that you’ve mentioned and probably some other things, too. What I would like to have, and what I have practised after that is that there has to be somebody who has always the final say. The final say can not come from the chairman of the board if he or she owns as many shares as, let’s say, the CEO or the management team. Organising the operational structure in the company is very difficult, if you have several owners who own the same amount of shares and to you face-to-face, they say that, okay, let’s do this, but they know that they have always the opportunity to do something else if they want.

Petri: Did something happen because I feel there’s more to the story? Can you maybe walk us through a bit of how did you get started with the company? You were there for seven years as a CEO and building the company, making it international, and you managed to put an impressive list of clients, global companies. I’m sure there’s a lot of stories you could tell us and probably some turmoil as well.

Jaakko: Yes, definitely. We started the company in ’99 with the name Suomen Oujee Oy. We were four very novices, how would I say, youngsters without true professions. I was the only one who had already quit the university and had my master thesis done. I was working just the previous two years in the Theater Academy of Finland, the higher education centre there.

Then one of the three other guys called me and asked me to join a meeting in Jyväskylä, Athens of Finland, to talk about an idea. They had this intriguing and fascinating idea to build a company called Suomen Oujee and start doing educational training, mostly in the Ostrobothnian area of Finland for the municipalities and local entrepreneurs. I thought that this is a crazy enough idea for me to join because I have always thought that if there’s only one thing that you can fully rely on it is yourself. And, with that type of a company, I thought that, yeah we definitely can do something and it might be fun.

I had been doing training and education in Theatre Academy, and I knew how to do it. So, I joined them. And actually in the beginning, in the very first months, we didn’t have equal ownership in the company. If I remember correctly, I had 14 per cent or something. Then we started doing the training programs in Ostrobothnia. We were sort of happy with that because we gained some customers and we gained better revenues than we thought in the first place.

We decided that we will change the ownership so that every one of us four guys had the same amount, twenty-five per cent. That’s what we did. Soon after, let’s say, it was one year after the founding of the company, one of the co-founders, called Mikko-Pekka, came by train from Tampere to Helsinki and I was waiting for him in the Helsinki railway station.

He literally had shivering hands and a shivering voice. He came to me and said that I had this excellent discussion with a guy I met on a train and he’s from Nokia. He’s an executive in Nokia. We have this fruitful discussion and he said that maybe in the future we could do something together. And I said to Mikko-Pekka that now call him immediately and try to arrange a meeting.

It was less than a month when we started doing project work for Nokia. Maybe at the end of the first project, maybe three months or so, Nokia told us that, Hey guys, you have an excellent approach in your work and what you are actually doing is usability testing and usability work.

We didn’t even know such a term existed at the time. They asked us to do some research with some users and give them prototypes of new digital mobile services and that is what we did. Because of our education as teachers, our approach to the users already at that time was full. We wanted to understand why they behave, where they come like they do. Where do they come from? What are the internal motivations, what they like about it, what they would like to see in the new prototype service? We decided to report that to Nokia and they thought that this is a new approach. It’s interesting. It’s fruitful. Nowadays, you might call that approach service design or participatory design. There are many names with that nowadays. Twenty-something years ago there was no domain for that and no terminology. And we didn’t know exactly what we were doing, but it was beneficial for them.

Our business started to move from educational training with Suomen Oujee for the Ostrobothnian entrepreneurs towards commercial design projects with Nokia, and soon after other customers in the booming digital wave that we had 20 years ago.

Petri: You were pretty lucky with the timing. It was booming around 2000. You went probably together with Nokia with your internationalisation?

Jaakko: Yes, we did. Yes. One of the learnings that I have is that timing is everything. It means everything. You can have the best idea for your business. You can have the best team to execute anything. You can have the funding. You can have everything, but if the timing fails, your business most likely fails.

There’s some evidence also supporting that you probably do remember a guy called Guy Kawasaki. He made research regarding the biggest reasons why startups and scale-ups fail. And surprisingly the biggest reason is the timing of the business. And we were very lucky. We definitely were very lucky in so many different things.

Not only timing-wise, but also that Mikko-Pekka was in the train and started talking opposite to a person who was interesting and open to discuss with 23-24 year young entrepreneurs. Then we decided to take advantage of that discussion. And our first projects were successful and yes, we were very lucky.

Also after that, we went with Nokia to Singapore. I might remember this wrong, but I believe it was 2003 or 2004 soon after that to China in Shanghai, 2004 or 2005, and then to London. Then we had 2006, when I was still the CEO, we had subsidiaries in all those countries. In Finland, we had Jyväskylä, Tampere and the headquarters in Espoo. I believe a bit more than 70 consultants altogether. And the biggest reason is the timing and the willingness to utilise the opportunities that come close to you.

Petri: But it sounds like that your ownership structure didn’t prevent you from doing those things.

Jaakko: Oh, in the beginning? Definitely, no. When we didn’t have anything to share everyone was together. Everyone was united and unified in so many different ways. That’s euphoric, it’s ecstatic. You see an opportunity. You run towards it. You manage to solve problems and challenges.

You can accomplish huge things together with your key team. That was wonderful. Then when you have a little slower growth period, and the plans that you have made for fast growth don’t really happen as they are supposed to, or you have a lot to share in your company.

Let’s say you can share out some dividends, you can decide what you want to do with your budget. You can have a real strategy that is not only reactive. You can predict things and you can decide where you put your focus into. That’s when the voices that have been passive during the fast growth, because you had so many things to do, or they have been passive because there was nothing to share among the group.

Then those voices become much louder. When you have more volumes you can decide where to focus, what are the actions that you will do. I believe it was 2004 or something, we made a very small acquisition of a small design company. And the other owner of the design company became the fifth equal owner of Idean. It was no Oujee anymore. At that time it was called Idean.

Petri: Can you explain the name?

Jaakko: Yeah. There’s a story also behind that why we changed it,

Petri: I’m more curious about the story, how it came up in the first place.

Jaakko: You mean Suomen Oujee? First, I need to say that, but how do you call them? I believe there was Yahoo already existed at that time, but there was…

Petri: Jippii was the Finnish another one…

Jaakko: Yeah, but Jippii came after us, but soon Jippii and Yahoo can’t remember the other ones who had funny names like that.

They didn’t give us good karma if you want to say that. We also had some projects in the Midlands of Northern America and the way how they pronounced Oujee was very close to Ouija, the spirit board, and we thought that maybe this is not the best idea to have a company called Oujee from the credibility perspective or internationalisation perspective or from many other perspectives that we could imagine and we were discussing about them. It was Risto, who then came up with a new name called Idean. And we decided to go with that. It was much better.

It was easier to understand. It was easier to pronounce. It was shorter than Suomen Oujee. That’s the story behind Oujee. I don’t know where it came from in the first place. Maybe it was something that somebody said in the first meeting that we should have this new company. Oujee! Maybe that was the name.

Petri: And then you’ll make it national by calling it Finnish Oujee, Suomen Oujee.

Jaakko: Yeah. We had to because the Trade Register didn’t accept only Oujee as our name. There had to be something else for it to pass the registeration process. And then we decided, okay. It’s not only Oujee, which doesn’t actually mean anything. It had to be something else, Suomen Oujee.

Petri: Before we went to that name issue, did you take any external capital or did you grow with the cash flow?

Jaakko: Grow with the cash flow. Only with the cash flow or using other words, money from the customers. We were very cheap in everything that we purchased and everything that we did. We flew where we needed to fly at the time with the most cheap tickets possible.

We accommodated ourselves in the most cheap motels or hotels possible, even in the US. I remember that some of the motels I stayed in there were meant for the truckers. I wouldn’t go there alone nowadays by myself or especially with my family.

It was all with the customers’ money and as I said, as long as we didn’t have a lot to share, we invested everything. Every single euro we received from the customer, we invested in growth and building the business. And there was the timing again because there were so many customers, so many projects. So much to gain both domestically in Finland and internationally that it was an easy decision to invest in growth. But then there was some downturn and that’s when the struggling of the strategic decisions and doing things together started.

And this is moving to something else already, but I guess it’s, it’s okay in this type of free discussion. I hired a COO, chief operating officer, in early 2006, after having discussions with this man. Maybe half a year already before he joined Idean. The main idea was that this man, maybe five years older than the rest of us, who had been a lawyer, who had been taking care of the financials in many companies, who had been responsible for the human resources and all the bureaucracy that I didn’t enjoy that much at the time.

I thought, and everyone inside the company thought that this is a good match. And, he had been working in Andersen Consulting and at least that is what we thought he knew how to put more gas in the flames and how to grow us much faster than we had been able to do before him joining us.

But it was only a matter of some months when I started to realise that, Hey, now the general atmosphere at the office among us owners and the management team has somehow changed. In spring 2006, we ended up discussing about what to do because we had already some millions of euros in revenues and we could do some from focusing and investing in indifferent things freely with the money from our customers.

This new CEO had different ideas of how to grow the company. He was a great salesman to the rest of the owners. This is not a true fact because I haven’t discussed this with the rest of the owners, but I believe that he had so different thoughts about the strategy and how to build the company to the next phase. He said that we need a different type of CEO for the company for the next years. That’s okay. That’s definitely okay. The company needs a different personality CEO in different phases of their growth. That was okay for me.

In August 2006, after several discussions, we decided that, okay, let’s get a new CEO for the company. We chose a headhunting agency for that and started the process with them. After that it was maybe only two weeks or so when I realised, even though I had initiated the headhunting process, I realised that the process is not a real process.

Because the rest of the owners had already decided that this COO will be the next CEO to replace me. And when I realised that I called the general meeting for the company and explained my side of the story and said that, okay, it’s okay for me if we change the CEO, I can take a sabbatical leave and come back later on.

But if this COO, and then I explained what I had felt that he had done during 2006, if he takes my place, I will not work for the company anymore. After that, I took my sabbatical leave that was supposed to be three months or so. I had been maybe three weeks or so of which two weeks with my six-year-old son in Tenerife, I decided that I will never go back to work in that organisation because of what the rest of the owners, the equal ownership owners, had decided and how they handled the process. And, because I thought that the ideas that the COO I had brought to the company were stupid, to be honest. They were not something that I had any belief in. They were also somewhat unethical. I just thought that I have to stick with my ethical principles and still be able to see myself in the mirror every morning. I have to do something. Then in early 2007, I said that guys, now you can purchase my shares and I will leave the company.

Petri: Let me recap. You recruited a COO and then the other founders, the other shareholders, started to get some ideas that may be you need to be replaced. How did that make you feel?

Jaakko: When I realised that I thought it is something temporary and goes away. But it didn’t. And then I started talking about sharing my thoughts with the rest of the founders. The dynamics in the founders, we were five and had equal ownership, but the dynamics were such that there were two more dominating personalities amongst the five of us. I was the other one and then there was another person. I started discussing with the other person a lot. With the rest of them some discussions, but with this guy, quite a lot and we ended up in endless discussions about what should be done, what has been done.

As my style in the leader positions is that I don’t keep my opinions only to myself. I say them aloud and people know what I think about things. What I like, what I don’t like about then, of course, in that type of discussions all the old disagreements and the pain point, everything from the previous seven years started bubbling. First bubbling under and then coming to the surface. That was a terrible time I had.

I believe that we all had a terrible time in 2006, the second and third quarter, and maybe also the fourth quarter. No one wanted it, but somehow we ended up fighting and for me, that was terrible. I thought that the guys had sold their ethical standpoints to a new person who had been there only for a couple of months.

And they had somehow forgotten our successful history of building an internationalising company with only the customers’ money. And I thought that was terrible. I also believe that they didn’t like it, but they had made their opinion.

Then it was myself and the other dominating guy against each other. Even today, when we meet very, very rarely, but when we meet we don’t invite ourselves to visit our families or homes. Which reminds me again, this is a funny story from maybe five years back.

One of the founders, I met him in a Slush evening meeting, and I believe that he had been drinking a little and he came to me and we hugged. We were happily discussinghow life is great. It is a pity that we haven’t met with our families for so long and we should do that.

Why don’t we invite you to our house and great to establish the relationship again and everything? I thought, okay, this is nice. Now, we can fix all the broken relationships. Then it was funny, the next week, I don’t know what type of thing happened, but I happened to see him giving a speech about what had happened in Idean and what kind of growth story it had. He was lying to the camera and the live audience and recording about how everything started and who there were. He had left me out of everything. I couldn’t do anything but laugh. But then I sent him an email saying, Hey, we just met the previous week and we had this great time, 20 minutes. We decided that we should meet with our families soon again, and now you betray at least me in front of the audience. Why do you do this? He never replied. I think that’s a very poor thing for anyone to do. It’s not a very courageous thing to do. I can’t see why, but I’ve also noticed that in quite many stories that have been given about how Idean started, what has happened and how the success story really built itself, so to speak. They have systematically left me out.

I don’t care about it anymore, but I feel a little sorry for them. For us, four original, and then the fifth equal owner who were such a unified core team doing everything together. And then something happened then and one of them which happened to be me, but I’m afraid it could have been anyone else.

Then the person is non-existent also from the past. But I think the story is so good that if they decided they would have made a good story or of it. We had an early CEO who was able to grow the company up to that point when we hired the CEO which didn’t work so well. They had to actually fire the new CEO about a year after they had hired him first because his ideas were terrible and they didn’t work well at all.

But then with the last funding the company had, one of the original founders went to the United States and started business there. And then it really boomed everything, and the rest is history. I think it would have been a good story written like that, or spoken out like that.

Petri: What’s there anything, you obviously have been thinking this quite a lot, I would imagine. Was there any sort of warning signs? So if there’s someone in the audience who was thinking that, okay, Hey, I’m the CEO. I’ve been here like five years, six years. And is there something I should be worried about?

Jaakko: Good question. This is where it comes to the equal ownership structure. These types of things cannot happen easily if there is someone, one person, no matter who, if there’s one person who has the final say in everything. But if there’s an intervention coming externally, someone can make a great sales pitch. Some smaller group of owners buys the stories and the ownership structure allows it, then this kind of thing can happen. The warning signs that I noticed were that the COO, whom I thought I knew from the leisure life and from his previous corporations he had worked in, also started to act a little bit differently towards me and towards the rest of the owners quite soon after he had been in the company.

And that should be noted and should be cleared out immediately when in the management position, in an executive position in the company, you notice that your almost peer person who is in a key position, starts acting weirdly. There’s always a reason for that. You should talk about that before things like the processes I mentioned happen.

Petri: You mentioned in the beginning, you agreed that maybe there’s a need for a new CEO and you find some other role in the company and that’s perfectly okay. So that was not the case. I guess the company was already seven years going and it was like that we’ve been achieving quite a lot, so maybe we need some changes and shift gears.

And you also mentioned that there was some turmoil and something did not exactly go as planned. There was probably stuff happening underneath and just any change is better than no change. Then there was an opportunity which sort of emerged, and it took this shape.

Jaakko: Yes. In the beginning, I couldn’t even imagine that they would like to have a new CEO in the company. But when I realised that it was really difficult for me to swallow the idea that I’m not the best CEO in the company. But after long discussions with myself and the rest of the owners, I just thought that, Hey, that can happen, but I need a sabbatical first.

And then when I come back, let’s see what I can do. I had been responsible for the biggest customer that we had, Nokia, from the beginning and I can’t remember what, but I guess that it was even in 2006 about 50% of the total revenues. I thought that I’m still needed there and there were things that I could do. I couldn’t imagine it, but when I realised that I thought that a change in the dynamics, in the roles, is needed and I was okay with that.

Petri: What happened next? You left.

Jaakko: Yes, I left. I left the building and later in 2007, I started a company called Solutions Space. In less than six months, we opened a branch in Shanghai. I had some network there who were willing to buy our services, which were different from what what we had in Idean. Then in 2008, we opened an office in Japan, in Tokyo.

Petri: How did you structure the new company? You were the only founder and did you get some investment money or how did you get that started?

Jaakko: At the beginning that was one of the principles that I have. I will not own less than 50 per cent of a company if I’m the CEO responsible there. I had two other guys who are co-founders with me. They had 20 per cent in total, I believe. I had 80 per cent in the beginning. We didn’t have any external money before we had our first angel investor coming in.

Maybe that was in late 2007 or 2008. He invested some money and he had also good connections everywhere. He became the chairman of the board and everything went quite nicely there. Soon, we had customers and we decided to start growing the business.

Petri: What did you exactly do?

Jaakko: Even in Idean, I had this idea that there are big companies who especially, during those years, they did a lot of market research and user research for the products and services and business and business models and everything internationally, if not globally. And they didn’t do that systematically. They had consultants travelling from one location to the next location, doing the interviews, the studies there. And then after that to the third, fourth and fifth location, and maybe before they had gathered all the data from the markets and the interviewed all the users they want it. And after those two, three, four weeks, they came back, started doing the research report. Maybe two months after starting the project the customer had had the report and suggestions and everything.

And I thought that that could be done differently. And I started building in Solutions Space a network of independent agencies in different places who could gather the data in a well-thought out environment, almost like a lab type of environment. They would have the research subjects users or consumers ready and, and the customers could simultaneously operate the research project at the same time in different locations so that they could reduce the time, the throughput time of a project from two months to one week or so.

That’s what we started to build in the first place in Solutions Space in 2007. Then I sold that idea to some customers and started drafting software that would support that type of data gathering and also the management of the agencies even from the sourcing perspective and the qualitative aspects were all considered there. And then I went pitching the idea to Nokia and they thought that’s a great idea.

They invested some money into the software development and we piloted it in three continents and the results were great. I thought that, okay, this is a good business. Then I made them an offer for the next years. They said verbally to me that, yes, this is great. Let’s do this.

But unfortunately, that was the month when Nokia crashed in mobile phones totally. Maybe that was even the month when Stephen Elop had had his burning platform speech or the letter for all the people there. Even though it was verbally accepted already, the offer never realised. That was sort of a black swan for the business development at the time.

Petri: Did you pivot the business, fold it, or what happened?

Jaakko: I pivoted it after that. First, actually after realising that this will not happen with Nokia, I went to all the big mobile phone manufacturers and I visited them and said, Hey, we have this ready-made software for you for this purpose. And it has this type of data gathering methodology as part of it implemented it so that you can just take it in use and you will reduce the amount of time spent in this and this much and the amount of money with the sourcing elements it had and everything.

They said, Hey, this is a great idea, but we don’t follow the same methodology. They never accepted it, to my disappointment. That is, by the way, one of the learnings that you have asked previously: do not ever trust one single company as your customer too much. Have always backup plans and have something else boiling or sell it to other customers at the same time.

Because if that one company fails for some reason, external reason, like in that case, victorious Nokia mobile phone manufacturing globally crashed, then your business is part of the collateral damages.

Petri: Recently, when COVID hit, you were also doing a bit of a transformation, not pivot but a transformation from direct sales to online sales. Can you walk us through how did that go? And was there something for other people to learn?

Jaakko: Just to start with that is by the way, the same original company that was doing the software for Nokia. I pivoted it after the Nokia crash and we started doing online communities. It was easy to pivot the business into online communities because maybe 50 per cent of what we have there in the software were usable for these different online communities where you can ask different stakeholders to join a community.

There you can do innovation or testing or marketing inside gathering projects together with them with full interaction methods and you can analyse everything. We pivoted it into that direction. Well, we had to rewrite a lot of the code, but then we had quite good business starting about a year ago in early 2020.

We had many big, good companies who already had, or were about to start online communities with our saas software. But then the COVID happened and it became evident that the few big companies that I had been able to make the relationship with the big direct sales type of methodology were not enough.

Some of them passed the opportunity to start working with us, even though they had already said that, yes, let’s do this, but when the COVID hit, it hit also the big companies and they didn’t want to start anything new there. After analysing what had happened and what COVID or the pandemic does for the sales and for the company, I decided that now we need to change our sales model in full.

We went from direct sales, which had been enough into digital sales. I thought that, okay, it’s easy. It’s simple. Let’s start doing sales with more volumes. Of course, the devil lies in the details and it was not that simple and easy. We had to change everything. As an example in direct sales what you need to do is that you need to take care of your customers in sort of the old fashioned way. Just making sure that everything is right and they know everything that they need and they can do with your services. Everything that they want to do and oversee that the chemistry is okay.

But in digital sales where the volumes are higher, even if they are not higher, you need to take care of the processes, the digital processes that the customers are utilising: starting a new customer relationship or maintaining your customer relationship. When it is more in digital channels, whether it’s on one or multichannel process you have to focus a lot more on them and you have to organise your sales team, customer support team and customer care team around the digital sales processes. For me, who had been doing direct sales for the last 20 years, it was surprisingly different from what I had experienced and what I knew well to go towards digital sales.

Petri: What was the most painful thing and what was a nice surprise you didn’t expect to happen?

Jaakko: I think the most painful thing that there was is changing the culture from direct sales and only a few customers taking care of a few customers, knowing them well and their account managers or whatever they have there in the team, changing that culture towards higher volumes towards digital processes and then managing the digital processes.

The biggest nice surprise that I think came from that is the metrics. You can measure almost everything there. Every action that you do in your sales team, every transaction the customer has with your software. You can even develop different automatic processes. If a customer does something in their software, you can start an automatic process that takes care of that.

Asking what they could do better or taking care of that they can solve whatever that they have been doing there. The most painful in summary is taking care of the people, the change, the culture, and the nicest surprise is how measurable everything in the digital world is.

Petri: Before we went online, we also discussed this and you mentioned that it’s simple, but it’s not really actually simple. Can you remind me and tell the audience what was the simple part and what was the complex part?

Jaakko: Well, the simple part was to announce that now we go from direct sales to a more digital sales mode. But the difficulties become there when we have to decide about the details. How to organise everything, how to manage sales teams’ daily actions, how to create the reporting, how to set up the goals, the sales goals with contacting goals, objectives towards the customer success.

It’s always that conceptually you can announce things easily, but when it comes to the details, even with this, at least, conceptually simple thing of going from direct sales towards digital sales. The amount of details is surprisingly big and you’d have to do things systematically.

We started the process, the change process in maybe February last year. We ended up doing many things better by the end of August but in September, or maybe it was October we decided that we will start cooperating systematically with a company who does nothing but digital sales and digital marketing. We have learned how to do things systematically. Everything that you do, you need to A/ B test, which one is better.

Don’t use your emotions, use the data to always go with the better one and always have something for the A/B testing process. This company whom we have worked with is called Digital Boost 360. The founder is called Mika Heikinheimo, who is a serial entrepreneur. His personality is “cut the bullshit and do the work, execute it immediately” type of personality.

It’s very systemic. You have to do small steps. You have to focus on the smallest details but do it always. Do something every day. Even if the step is very short or baby step, if you do it for six months, if you do it for several years, you end up in a successful business. That’s what we’ve been practising now for a bit more than one year. We see the results. We even have contacts from companies and organisations that we have not even heard of. People read our newsletters quite much. They go into our recently renewed website and they read the blogs.

They do things that we hope them to do. They even reserve time from my or our sales persons’ calendars to get a demo. The volumes are slowly, in my opinion, but they are getting higher every month. I believe it is only because now we are doing things systematically. We focus on the details and we try to improve our digital sales methodology every day and every week.

Petri: What happens when we can fly again and travel and do basically say direct sales, do you change anything?

Jaakko: I don’t like to say that I will return back to direct sales or I will not do direct sales at all. I think that we will focus a lot on digital sales and do it even better every week, also in the future. We can most likely, if everything goes fine, we can start doing digital sales elsewhere from Finland, maybe at the end of this year, in six months, if everything goes fine. My understanding is that it will not happen with direct sales anymore. There will be a need to meet people face-to-face in some locations. I don’t yet know how I will structure digital sales in the future for international business. But I guess that it will be with the digital sales methodology that we now have: scaling the volumes. Even nowadays you can focus on certain areas with your critical marketing efforts and sales efforts and I believe that’s definitely the only way, almost the only way to go for us in the future.

Petri: How do you see the role of communities in business nowadays? Is it a competitive advantage? I was just reading David Spinks’ new book called The Business of Belonging, which just came out a few weeks ago and he talked about how to build businesses or how to build communities. He sees a lot of similarities between them that you have to treat your community as a business in the sense that it needs to be self-sustaining in order to thrive, it needs resources and dedication. It is more like a startup when you’re starting it.

Similarly, a company, when you start it, it’s like a community. You have a mission, you have a purpose, and then you’re rallying people around you. Then you start to build from there. You need resources as well. It’s not that much different, but when you already have a big company or you already have an ongoing business, you can still have a lot of these things and involve people. What are your thoughts on this matter?

Jaakko: Utilising online communities in the Finnish business climate is very poor. There are not many companies who have done it successfully and who know what to do with it. I would say that almost the only companies who do it well in Finland are some of the big consumer companies who just have so huge volumes that if they decide to start a community, there’s always some 10 or 20 per cent of their consumer customers who will join it. And of that amount, there are maybe 10 or 15 per cent who are active there.

To build a successful community online you need to act as a startup. It is definitely like that, but that is not the only perspective in the online communities. You might have an online community for, let’s say, research and development purposes.

It is more like you tell about your new features and new products and people give their feedback and you can do some testing and you can do some development and maybe even some product innovation with your crowd or with your community. You could have a more sales and marketing oriented online community where people get to see your latest fancy innovations. Maybe if they take part in that type of online community they receive something as incentives to be the first to purchase them. If you want to do it well, you need to…that’s, by the way, something that we have built into our community methodology, you need to have the purpose and the mission.

You need to know what you want to do with your online community. Then you need to organise your ideas, the themes in the community accordingly. You need to have there people who in the beginning create the content that is needed and who create the first interactivity for the smaller group that definitely, in the beginning, you have there in the community.

You need to have someone who is overseeing the online community from, let’s say, a startup entrepreneur’s perspective and trying to understand where are the trends, where are the most active discussions, how could I utilise them? Where are the next opportunities? Where I can go to and how I can build on something that has been brought up by a community member and how I can grab the idea and just utilise that for the core purpose that I have and the mission that I have in the community.

That’s probably one of the biggest reasons why many online communities fail. They don’t realise that they need to do their homework, so to speak, or the business plan for the online community in the beginning, when they start it.

Petri: You also have been founding another company just recently. You said that you paid a lot of attention to the values and that it is based on proper values. Can you elaborate on what you meant by that?

 Jaakko: I had to go back to the design industry. I’m fascinated by the design industry. I’m not a designer myself, but I value a good, great design and the designers and great products and designs that work for me and they look nice and they are easy to use and so forth. I have been in different industries for almost 10 years.

Then I had an opportunity to start a new business with a friend of mine who was one of my first customers in Nokia about 20 years ago. In his personal life, he had an opportunity to do something new and he wanted to do something new and then we ended up discussing the new idea of an ethically sustainable design company business model.

After some sessions, we decided to found one by ourselves. There are some principles that we would like to follow in this Alpha Design Partners company. One of them is that we should never do anything that is not good for us and for the customer. We have seen also design consultancies or agencies, who come, sell, make a great sales pitch, execute the project.

Once they have ended the project they leave and then the customer is left without any support and they should start implementing the new designs. It’s not a rare thing that the new design is shining and polished, but it has some elements that are difficult if not impossible to implement into the product.

That’s one of the things. Then from the consultancy professionals or the designers’ perspective, if they’re working in an agency it’s not really rewarding in the long-term if you do a project. You get excited, you get yourself and the team energised about doing yet another project, and then you do it with a huge amount of energy, a couple of weeks or months. Then when everything is ready to be implemented from your perspective, you leave and you’re starting another project.

We decided to change that structure a bit and it has worked well. We have already in these few months interesting both domestic and international customers and we are doing not only the fine-tuning of visible user interface elements or the pixels perfect stuff, but we are also doing a little bit more deep changes for our customers. Maybe the service structure or the product structure, and we are helping them to do a transformation towards a more modern style of design operations and design teams management.

It’s very interesting. I believe that the learnings I took from Idean at the time. The experiences coming from Solutions Space in Asia. We did also some design-related stuff there. Then building my own software company business. They all somehow come together in this new Alpha Design Partners venture that we have. So, it’s interesting. It’s really interesting.

Petri: What is your favourite word?

 Jaakko: I guess that I have mentioned it many times here. It’s probably for sure.

Petri: What is your least favourite word?

Jaakko: I don’t like world-class. I don’t like that at all. I think it doesn’t mean anything. World-class doesn’t mean anything. And for different reasons, I don’t like the word, honestly. Those are probably the two least favourite words.

Petri: What turns you on creatively, spiritually, or emotionally?

Jaakko: What turns me on, I think that the moments and eras of creating something new that solves a big problem that relates to many people.

Petri: What turns you off?

Jaakko: That’s easy. It’s two-folded. The other one is proofless negativism and the other one is backstabbing.

Petri: What is your favourite curse word?

Jaakko: There are many. I’m a heavy user of curse words. I use them on different occasions in different tones, but should I have only one?

Petri: Pick your most favourite one.

Jaakko: I guess that I use perkele a lot.

Petri: Can you tell what it means for the English speaking audience?

Jaakko: It’s the devil.

Petri: What sound or noise do you love?

Jaakko: At least something that I have now wanted to hear more is team sports, indoor teams sports noise. And the other one that I like more and more is silence.

Petri: What sound or noise do you hate?

Jaakko: Speed camera flash. It doesn’t probably make any sound into the car, but it is something that I had as a concept. It’s terrible.

Petri: What profession, other than your own, would you like to attempt?

 Jaakko: I’ve always enjoyed writing. I have always enjoyed travelling and getting to know new people and new cultures. I would say that it would be some type of nomad journalist. I don’t know if there is a profession for that.

Petri: What profession would you not like to do?

Jaakko: Politician. Definitely not a politician. I’ve seen and I know some politicians and political organisations and that is a game I would not like to be involved with. Probably, if you listen to this interview from the beginning, you understand the reasons.

Petri: If you could be a co-founder of any startup in any era, which one would you choose?

 Jaakko: That’s not an easy answer. That’s definitely not an easy one to answer. I would like to be in a startup company that would preach and practise some kind of expertise of versatile thinking skills. It would probably go somewhere…an easy answer would be religion, but I’m not a religious person. And I don’t like them so much. So, I wouldn’t say a church, but something that would help people in developing their thinking skills.

Petri: Any final words for the audience?

Jaakko: I think that being an entrepreneur is one of the best things a person can do. At least, as a style of living it’s exceptional to many others. You can experience the worst and the best parts of life during one day. And you can be part of them. For me, it’s really intriguing and fascinating.

The art of NFTs

April 12, 2021

Does your NFT exist if you mint or buy it but nobody sees it? It’s easy to focus on the technical aspects of something and forget where the real value is.

If you can do something it does not mean that you should or it’s worth the effort. When PCs first came out with the productivity tools they did not convert everyone into artists, writers or other creators even though they had access to word processors or photo-editing suites.

After the initial success of Beeple, 3Lau and other crypto early-movers there’s no shortage of others following the success. If the original Cryptopunks are too expensive, how about PicassoPunks or procedurally generated art or even just a picture of melon?

It’s trivial to mint NFTs after the initial learning curve of getting up-to-date with the crypto basics with wallets and the ecosystem players.

The bigger issues are conceptual mind shifts. What is value? How do you value something? Is physical better than something digital?

NFT as a term is a rather misnomer. A non-fungible token does not tell anything about the underlying functionality or value. It’s a descriptive term for something that is unique. Every purchase receipt is unique, too.

They can be as credible or fake as their digital counterparts. A public list of ownership of something is a powerful concept but in itself, it lacks context. Often, it also lacks content and purely just refers to the actual item (or not).

When everything unique is also an NFT what has changed? A lot, actually. But, the fundamental shifts happen in business models and enabling capabilities, not in the content itself.

When everything is a token value is where value has always been: in people’s minds and perceptions. Something has value only because we perceive it to be valuable. This can be a social function (e.g. fame, emotional like a shared moment or fandom) or with utility such as a store of value or means of exchange. Most of all, scarcity is at the root of the value concept.

Making something scarce more fungible can be called shared or fractional ownership. This is another aspect of tokenisation that is very interesting and have wide-ranging applicability from financial products to enabling larger reach and depth of inherently unique items such as the Mona Lisa painting.

Most of the people have seen either a picture of the painting or visited to see it in Louvre. Yet, there’s only one physical item but its social value is enormous because of its wide reach. The more it is shared the more valuable it has become.

This is an interesting aspect of the NFT phenomena. It’s no coincidence that the successful NFT sales have been done either by people who already have a large reach or by concepts that are widely known even if it’s a meme, famous essay or tweet.

The abstraction of value has just started. B.20 token is a good example of a new social currency that is not backed by a central bank but a digital art collection.

The experiments of value creation and derivation are running wild and now it’s not only the privileged and well connected that can practise it but everyone. Enabling creators to connect directly with the buyers is a huge shift that allows value creation, transfer and wealth to be more evenly distributed.

It’s possible to earn a living by following your creative path if you find your fans that are willing to support you on your journey. Thousand fans concept has been taken into another level where there are more revenue streams available in addition to the traditional subscription, donation, crowdfunding and publishing models.

Putting something out there does not mean that anybody pays any attention ­– a fact anyone with a social media account or blog knows. Most of the content is ignored. Only the highly valuable, desirable or something with a compelling context gets attention.

It’s all about storytelling and emotional connection. You need to move people. Authenticity takes guts. Often, it’s hard work and lots of labour of love for years. Ali Spagnola painted for 14 years and has produced over 2800 paintings. And she gave them away for free. Does it pay off now, finally? She has not done it for the money but she has a following and certainly, the 2800 painting holders have a vested interest to see her succeed (here’s mine).

Overnight successes happen at times but often it seems to take many years of traversing the path less travelled. That’s what makes these concepts and people unique, different, authentic, and at times successful.

Wrapping something in an NFT is not the important thing. It’s all about the conceptual context it represents. What’s the value of it?

The Business of Belonging

April 9, 2021

How do you build a community-driven business? David Spinks shares his practical knowledge and extensive experience in building thriving communities in his new book The Business of Belonging.

When features are easy to copy companies have been turning into other aspects that are harder to imitate for competitive advantage. Community-driven businesses have realised many benefits that go beyond raising the switching costs for customers.

Spinks describes the community-building process from the start and shows the reality that many are not willing to admit. It takes a lot of effort, hustling, trials-and-errors, silent or no response disappoints at first.

There’s no one way to build a community nor can you just read a manual and expect it to work. Yet, there are methods, guidelines and processes that make it possible to succeed in the endeavour.

Community-driven businesses can have higher trust, lower costs and scale in their operations that touch every part of the organisation. The trick is to treat the community as a startup or a separate business that needs its metrics, resources and dedication for success.

Giving up control and trusting the community is one of the first and hardest hurdles. The top-down approach and regarding the community as an extension of the organisation or outsourcing outlet yield limited results. Communities have the numbers that can really help companies to grow in scale that would be even impossible otherwise. The control should be pushed down to the lowest level possible where the problems need to be solved and where the people are the most familiar with the issues.

Building communities take time from 6-12 months or even longer for starting to realise some business value. Yet, focusing on the business aspects alone will result in inauthentic communities that most likely will not thrive. Each community should focus on how it brings value to its members but also for the business. Community members are looking for belonging and emotional aspects as well.

Spinks reminds us that a community is a business and a business is a community. Great businesses serve people and build amazing cultures. Great communities are also financially sound so that they can keep fulfilling their purpose. To thrive, both need a good reason for their existence (i.e. mission and values) and a sustainable business model for continued operations.

The biggest reason communities fail is not lack of engagement but lack of resources. If you cannot measure and show the business benefits it’s hard to secure the resources and keep building the community. You need to be able to show how community engagement impacts company’s growth and revenues.

The book introduces SPACES (support, product, acquisition, contribution, engagement, success) model for measurable outcomes that communities will drive. The metrics for each aspect are familiar business goals such as customer lifetime value, reduced R&D time and costs, customer churn, reduced support & onboarding costs and times etc.

For the community and tactical level the book introduces two other frameworks that help to grow and build healthy communities with many practical tips, guides and words of wisdom.

If you’re thinking of building something together with other people Spinks has managed to put together an inspirational guide that is a must-read to walk you through the practical steps towards a vibrant community.

Startup CEO

March 26, 2021

Startup CEO is a book for everyone who finds themselves in a CEO position. It’s a job that you learn by doing, but you can benefit from the experience of others.

Leading an organisation is a tough job, but if you need to figure out your company’s direction, traction and keep enough cash in the bank without revenues everything escalates to another level of difficulty.

Matt Blumberg tells his more than two decades journey in Return Path and shares his learnings with us. It covers everything from authentic leadership to storytelling, growing and managing your organisation to governance and finally exiting the company.

The second edition has the benefits of the experiences of surviving the dot com crash, financial crisis, and covers even the latest COVID situation. Building a company from zero to +100m revenues and over 500 people is a journey with many phases. Building the company for the long haul is something that brings benefits and perspective to the discussion that you don’t get if you exit in 5-8 years after founding the company.

Marketing 5.0

March 18, 2021

Marketing has taken some 70 years to reach human-centric marketing from product-driven and customer-orientated focus. The next phase according to Philip Kotler et al. was the transformation from traditional marketing to digital where both the offline and online where co-existing with an omnichannel approach.

Marketing 5.0 talks about three challenges that we are currently facing: a generation gap, prosperity polarisation and the digital divide.

We have currently five different generations from Baby Boomers to Generation Alpha giving marketers different challenges to target and serve customers with different expectations, values and tech-savviness.

The authors define Marketing 5.0 as “the application of human-mimicking technologies to create, communicate, deliver, and enhance value across the customer journey.” Technology should follow strategy and humans should be working in symbiosis with new technologies utilising the best leverage and advantages of both.

Machines are good at recognising patterns of actions (behaviour) whereas humans are adept at underlying motives for actions (attitudes and values of customers).

Marketing 5.0 consists of five components that technology enables: data-driven, predictive, contextual, augmented and agile marketing. The three middle ones are interrelated applications that are built on the first and last organisational disciplines.

Since everything is tech-based the whole approach relies on big data capabilities that drive the whole marketing but also product development and the rest of the organisation in providing new customer experiences that are frictionless and compelling.

The book outlines and describes the reality of startup companies that are from the outset agile and often also data-driven by necessity when trying to find their product-market fit.

The golden right of first refusal

March 15, 2021

Erik Byrenius – TALKS WITH PETRI

Erik Byrenius talks about scaling his startup and the intriguing turns with strategic investments that led to an optimal exit situation. He also shares his lessons from +50 angel investments and where to find the best ice-cream in Manhattan.

The golden right of first refusal

Bio

Erik Byrenius is a Swedish foodtech entrepreneur who turned investor. He has spent the last few years giving back to the startup ecosystem by doing investments, working with philanthropy and building StartupTools.org with free resources for startups. He is now running Trellis Road, focusing on high-impact foodtech and agritech startups globally, investing at seed stage.

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Transcript

(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri: How does it feel to sleep in a car?

Erik: Oh, it’s cold but you sleep like a baby. You wake up in the middle of the night screaming and wondering where you are. But it’s a good experience because you learn that some things are more important than others and the bed is really nice.

Petri: I thought it’s too cold in the Nordics to sleep in the car. In the US, they do that but how do you do that in Sweden?

Erik: You can’t really do that in the winter. When I slept in the car that was when I was running my own startup and I totally bootstrapped. Me and my co-founders went on sales trips to meet restaurants and try to sell them online ordering system so we could put them on our marketplace.

We couldn’t afford to stay at a hotel or hostel. We had to find a way to bootstrap. One way was to sleep in the car. We tried to get free food as well, which wasn’t that difficult because we sold to restaurants and all the restaurants wanted to show us that they had the best pizza or kebab or salad or falafel in the city. We were offered more free food than we could take.

Petri: Which was first: you wanted to eat pizza or the business? Or is there some crazy story why you decided to focus on pizzas?

Erik: It’s always there, your own needs first. Food was number one. It all started that me and my co-founders, we were slightly hungover on Sunday while we were studying at university in Sweden, in the city of Linköping. We wanted to order pizza, but we didn’t have any cash. We used all of it the evening before apparently. We didn’t remember, but obviously, that was the case. We wanted somehow to be able to pay by card and we didn’t really want to go to the restaurant to pick it up. We wanted to have it home-delivered. We realised that this wasn’t possible. This was back in 2005. It was pre-Facebook and pre-smartphones. We decided to try to build that service ourselves, which lead to become what we in Sweden called OnlinePizza. It’s now under the name Foodora.

Petri: There was a previous episode where Elias Aalto, a co-founder of Wolt, was referring to you. He was saying that “we thought we were up against basically Pizza-Online, which was back then a very web-focused and early 2000’s kind of product.” Then he goes on talking about how they are a mobile-first company. To listen to more of that episode, check it out yourself.

Was there anyone else doing that or you were pretty much the first one in the market? You came to Finland and other markets as well.

Erik: We were the first ones in Sweden. There was one company that had just started in Denmark called Just Eat, which is now a UK-based company. I don’t think there was anyone in Europe as I can remember, at least. We were starting out. We could look up to Just Eat as role models, but they were so early.

We basically had to invent everything ourselves. What we did see there were some attempts to try to do something online for restaurants but nothing that was built into a marketplace and nothing that worked that you could order from. We saw that others had the idea, which encouraged us that maybe it’s not that stupid after all.

You have to remember that this was 2005. Online ordering in general was very immature. I think the only kinds of products that you could order then were like books and some things related to travel like hotel rooms and flights you could book online, but that was about it. Ordering anything else online was weird.

Petri: Can you imagine that there were no iPhones, even paying something online wasn’t that easy and getting orders and getting restaurants in there, a lot of hurdles. The stack was not really where it’s today. It might be even for some people quite difficult to think about all the obstacles you’ve been going through at the time.

Erik: Yeah, it’s a good point. It was early days. It wasn’t just about the consumer behaviour that wasn’t there already. It was also about how you build the business. There was no startup ecosystem. There wasn’t a hoard of angel investors who you could approach. We didn’t have entrepreneurial role models to look up to who had been in the same space before.

We didn’t have an extensive framework on how to develop an e-commerce site. That was basically how we started out. We spent the first five to six weeks learning how to build an e-commerce site and getting it online and writing everything from scratch. Of course, everything ended up as a terrible spaghetti code that no one else than me and my co-founders could understand.

Possibly not even us at the end. Everything was a hassle. I’m so happy for entrepreneurs nowadays. There are so many things that you could just use as a foundation when building a startup and you have lots of guides and lots of events. You can meet entrepreneurs. You can learn from them, just a totally different ecosystem today. I’m so grateful for everyone else who can leverage that.

Petri: How did you get traction? Because you needed to sign up the end-users, the hungry students, whoever they were, the first ones to get to the system, but also the restaurants. I don’t think you had deliveries as a third component or did you?

Erik: No, initially we didn’t. To put it simply, we spent more than a month just learning how to code and developing a very rudimentary online ordering platform. Then we spent one month going around to restaurants locally and trying to convince them that it’s a good idea to be online.

That was very, very hard. But eventually, we managed to convince two or four restaurants locally in the city where we lived. When we had those signed up, then luckily for us, it was about time to go back to school in August after the first summer that we spent building the company. We went back to school and brought some flyers that we were printing at the school printers, and we started handing them out to students.

We assumed that since we were students and wanted the service, then hopefully there are other students who also liked the service. We started spreading the word by flyers and it worked. It wasn’t an overnight success in any way, but after a few days, we saw that we had to first order from someone we didn’t know. It wasn’t one of our friends we forced to order.

Eventually, it picked up speed. It was really a very simple approach to how to get traction. You tell people about the service and then you sit around and wait and hope for them to order.

Petri: When was it exactly? I’m starting to think about Facebook and their early days on campus. It sounded a bit similar type of…

Erik: Yeah, I wish I could compare ourselves to Facebook. Thank you Petri for bringing that up. Of course, there are some similarities in terms of starting on the campus, but I think that that goes for a lot of different businesses worldwide. But going to students is usually the less difficult path than trying to access another user base somewhere. Students are relatively easy to find because they go up to campus every day.

They are usually more open to trying new things and especially if the product was developed by their peer students then it’s easier to convince at least a few of them to try it. That was a good step for us to try and it worked then. It also turned out that later during the year students were a very important customer group of ours.

Petri: You had some trouble obviously as well. You were first fully digital, even though you needed to build quite a lot of things yourself. But then you started to do something in the hardware space as well. Why was that?

Erik: Oh, the hardware. Yeah. Well, so what happened was that we started in the city where we lived. We could do everything digitally. It kind of worked. It started growing. When we went back to school in August after the first summer, we didn’t have much time to spend. We spent evenings and weekends but that wasn’t enough really to grow the business as fast as we wanted to. We decided to spend the next summer, 2006, trying to expand to new cities. We decided to go round to restaurants in other student cities with campuses in Sweden. And try to convince them to join and then copy what we did in Linköping to start from the restaurants and then go to the campus and start handing out flyers.

It totally failed. I think we had 100 or 150 meetings with restaurants that summer. I think we signed one. We couldn’t really figure out why it was so different from Linköping, but eventually, we understood that the restaurants felt it was too complicated with them having to get a computer, getting an Internet connection.

It was still 2006. At least in Sweden, it was rather uncommon with small businesses having their own Internet connection at the time. We had to help them get a computer. We had to help them get an Internet connection. Probably, they didn’t always want to tell us, but they thought it was perhaps too complicated and a little scary, to be honest.

We didn’t always get the true reason why they didn’t want to join, but we eventually understood that the complicated Internet set up was definitely part of it. We realised that we have to find another way to get the orders into the restaurants. We can’t expect them to have a computer. And also for us, we learned from Linköping that even if we help them get a computer then we end up as IT-support for the restaurants and we get called on Friday night when someone working at a restaurant can’t play a game on their Windows machine. It wasn’t the ideal setup for us either. We wanted to be an online food ordering company, not an IT-support company for restaurants. We decided to try a few different ways to get ordering into restaurants.

All this was before smartphones, we couldn’t just get a smartphone or an iPad or something. We had to come up with something else. We tried to give them a mobile phone so you can send text messages, but obviously text messages are very brief and it’s hard to get a big order over text messages.

It just led to failed orders. We tried using a fax machine. It sounds crazy today, but that was the best solution we had for quite a while. We helped them get the fax machine. I don’t remember how long it was used for, but especially in Germany where we later made some business through a partner, I know that they used fax machines quite broadly, many years after the release of the iPhone. Fax machines, they’re not that bad. From our perspective, you can send the full page or several pages. It’s easy to read. There’s an automatic printout. It’s not as a digital message that someone at the restaurant has to put down on paper and give to the kitchen.

You don’t get a full confirmation that someone at the restaurant actually read the fax messages sent, but you do get the confirmation from the fax machine that it has received the message. You somehow knew that probably they have received this message.

Petri: Unless it’s not out of paper!

Erik: Exactly! There were some of those risks and that was one of the reasons why we couldn’t keep going with fax machines because we couldn’t really know if they actually read it or not. And of course, for us, one failed order was a disaster. We wanted it to be a hundred percent success rate in delivering the orders.

Otherwise, we would lose trust from the consumers. What we did was to try to create our own fax machine that corrected all the flaws with fax machines. We didn’t want it to occupy the phone line when it was used. We wanted it to have some sort of bi-directional communication.

When a restaurant had received the message, they had to push a button or something and give a delivery time. So, we could show that to the end-user and give them confidence that the restaurant has really seen your order because they even said when it would be delivered. That was the ideal step we wanted to reach.

And we couldn’t find anything on the market. We were thinking that, okay, so maybe it’s not worth doing this. Maybe we’re just too early. We have to wait until something comes along, but we were still studying. We didn’t really have that much else to spend our time on. We thought it was really fun.

We said, okay, why not? Why not try to, instead of us just closing down the business, why don’t we try to build something? Then we’ll learn something more. The option wasn’t really just to focus on running a digital business. The option was to stop running a business because we couldn’t keep going the way we did.

Petri: This was like two years in?

Erik: So, this was autumn 2006, after our very failed sales summer that was when we realised that we have built something. Then we started googling. Luckily, Google was there. We did get some support. We realised that there were different kinds of hardware components we could put together probably somehow.

We started ordering what we found online. In the end, after months of trying, we realised how hardware works and how programming hardware works. Eventually, we did create something that became an ordering terminal that we could put at restaurants. They just plugged it into the socket and we could send orders wirelessly to the mobile network.

It was basically an ordering terminal with a mobile modem inside using GPRS to transfer data. We put a SIM card inside. We put a small speaker inside so we could let the restaurant know when there was an order. We built in a receipt printer, a very small printer that could print the order for the restaurant as they didn’t have to type it on paper themselves.

And we attached some buttons so they could reply and say that we will have a 30 or 40 minutes delivery time today. And that totally changed the business for us. All of a sudden from being those complicated dudes going to restaurants and asking them to to get engaged into Internet and computers we were the ones coming with one piece of hardware and saying, if you take this piece of hardware, you put it on your counter and you plug it in it won’t occupy your phone line or anything. Then you will just get more orders. And we only charge you per additional order you get. That was a no-brainer for restaurants to try at least.

That was the turning point for us from being close to closing the business, to realising that, wow, this really works. Now, it’s just about scaling. There was a Eureka moment for us.

Petri: Until that point, at least, you were bootstrapping. There were no external investors.

Erik: True. We invested ourselves about $80 every month, the three founders. We had $240 per month. That was our burn rate for the first three years, basically. And then, of course, we started generating some revenues that we could use that as well.

Petri: But do you need it to build the hardware as well? Isn’t that expensive?

Erik: The hardware, we saved for a few months. We saved those $240 for three months before we could order the components we needed to build the first version. Then what we did was we didn’t charge the restaurants. They didn’t have to buy the hardware from us. They could borrow it but they had to leave a deposit.

They’d left a deposit of, don’t remember exactly, let’s say $300. But the hardware only cost us $200 to build. We promised them that you can any day call us and say, I don’t want to be part of this anymore. I want my money back and I’ll give the hardware back to you.

That was the promise to restaurants. But of course, when we received the money from the restaurants, we used that to order more hardware so we could build for the next restaurant. And all of a sudden we were in a situation that if 10 or 15 of the restaurants would call us on the same day as they would want our money back it wouldn’t be possible because we used all this money to buy new hardware. Our bet was completely upon being able to deliver value to the restaurants. Otherwise, we would fail from one day to the next. From that perspective, hardware wasn’t that expensive. It was a few hundred dollars per piece and we could finance it by revenues or in this case deposits from the restaurants.

But I mean, you’re definitely right that if we would have had more external money somehow, then we could have grown much faster because then we could have ordered much more hardware and probably had lower prices on our hardware. But we didn’t really need that because we were also limited by our own time. We were still studying.

We couldn’t spend all the time going around for restaurants selling. We were anyway limited in how fast we could sell and scale up and add new restaurants to the system. We couldn’t spend the time needed to do marketing anyway. It was kind of okay for us to grow slowly.

Of course, if we would have started the business in today’s climate, we would surely have had investments early on from angels. And we would have probably quit our studies to focus full-time much earlier than we did, but for us it worked okay.

Petri: How did you scale? How did you manage to get new restaurants in new cities? Eventually, you started to do also acquisitions and go abroad as well.

Erik: The first scaling in Sweden, we did basically the way I will describe in terms of ourselves going around to two different cities, knocking on doors, sleeping in the car, eating free food at restaurants. Still bootstrapping. That worked pretty well. After a while, our name OnlinePizza in Sweden became more well-known among restaurants and consumers, of course, but especially restaurants.

Then all of a sudden it started becoming possible to sell by phone as well. We didn’t need to visit all restaurants because they already understood how the concept works, because they read about it somewhere or they knew someone who used us. Then we started scaling a little bit faster and that was about the time when we also realised that it can’t just be the three of us founders.

We started recruiting people both in customer care, people helping us with entering all the menus and delivery data into the system, and salespeople’ as well. Then we started scaling. When you start scaling in terms of employees then also the business goes faster and then we could scale even faster.

At some point, we realised that, okay, this is going really well in Sweden now. We should try to focus on going international as well. And that was when we started looking into acquisitions and mergers in other markets. It’s a bit funny, but I think when you explain something in retrospect, it sounds like everything was so clear and strategic. But I think like most entrepreneurs know it’s never like that you’re being very opportunistic and you change your mind from week to week because you learn new things.

And for us, when we started the international expansion, the plan wasn’t really to do any mergers or acquisitions. The plan was just to make a brief market analysis of all the countries in Europe and close to Europe, realise which countries are the best and then we’ll just launch in those countries.

It sounds so simple. And of course, it wasn’t so hard to make a market analysis and see where do we have e-commerce growing quickly, where do we have a card payment going quickly? But when you know which countries are on top of the list…if I remember correctly, I think Greece was really high on the list for us. I think that was like the number one priority.

Okay, we know we want to launch in Greece, but how do you do that? How do you launch in Greece? We can’t just sit in our office in Sweden and run a Greek business. We need to find local people. How do you find a country manager for Greece if you don’t have the network, you only have been students living in Sweden, all of you? It’s really hard. Do you put an ad on the job board somewhere saying, Hey, we need a country manager for this online food ordering business? Probably won’t work. Probably won’t find the right people. What we realised after a while was that we have to think the other way around. We have to start looking for people in any of the top 15 European markets on our list.

Then when we find the right people, then we decide which countries to go to. And that was also what led us to do some acquisitions in other markets because we realised that maybe the right people to run our business were people who had recently started building their own similar business because they understood the business already.

They believed in the market, but maybe they didn’t have the resources to grow quickly. And they most surely didn’t have the hardware terminal that we had developed. If we could invest in them or acquire them somehow they could use our technology, then it was just a win-win. That was how they ended up. But to be honest, it wasn’t planned. We learned along the way.

Petri: Do you remember what was the first acquisition you did? How old was the company? What were your revenues and how many people you had, how early-stage were you?

Erik: We didn’t do that many acquisitions. What happened was the first international expansion we did was to Poland. Where we found a Swedish-Polish entrepreneur who we tried to convince for a while to run this business. The problem was he was living in Sweden at the time and he had no interest in going to Poland.

We thought it was brilliant. You speak Polish. You have lived in Poland. Of course, you go to Poland. You start this business. He didn’t really understand why he would go to Poland. He was living in Sweden. We didn’t really understand each other, but after a few months, maybe up to a year he got back to us and said, Hey I met my girlfriend.

She lives in Poland. Do you still want me to run the Polish business? And we were like, oh, okay. Yeah, for sure. Let’s do it. That’s how we started in Poland. But then we realised that this process was also quite complicated. You have to try to find the right people and start from scratch. After launching in Poland, we said that, okay, let’s see if we can find acquisition targets instead. The first one we did, to be honest, I’m not sure which country it was, but it was either Finland or Austria because those were the two next markets where we launched via not full-scale acquisitions, but first step as investments and we later acquired those companies.

Petri: Can you give some tips or hints or share some experience for those who are thinking, or maybe now starting to think about it: maybe I should actually start to do acquisitions instead of building everything from scratch?

Erik: I think what we learned was that we were very happy that we didn’t fully acquire the businesses because then that would mean so much more overhead for us at the headquarters. We would need to probably find new people to run the businesses if we would fully acquire them. We want the local entrepreneurs to have very strong incentives.

We want them to still have the majority in the companies. We had shareholders’ agreements. We still had some vetoes and some control, but we wanted the entrepreneurs to have a huge financial upside. We want them to feel that it’s still their company. Just going in acquiring something is in my view very complicated and you need a strong organisation to be able to actually make use of that acquisition.

There’s a big risk that the business loses its value if you don’t take care of it properly after that acquisition. It usually looks better on paper than in practice after the acquisition. That’s something I would be careful about. Really thinking, how will we run this business afterwards? There’s a difference between if you run a business like ours, where you need a strong local presence. In those cases, it’s obvious that you need a strong local team. There are other kinds of acquisitions where you don’t really want the team. You’re more looking for some assets. Maybe I have a global business where you sell software online and then it doesn’t really matter.

Maybe you don’t need the team. Maybe you just want to buy the customer list or the IP. Then it’s different. Then it’s more easy to incorporate that into your business, I would assume. It’s also easy to just start doing it prematurely. You need to understand your own business.

You need to understand the market well before you start acquiring others. Otherwise, you won’t know how to incorporate them in the best way. I think we were lucky in the way that we had spent several years bootstrapping ourselves, learning a lot about how to run this business at a detailed level.

We didn’t acquire anything that we didn’t understand. We understood completely, exactly, where they were, what they needed. You can look into their metrics and see that they should be able to improve that metric by 10%. And we could also learn that they’re really good at that metric and we could probably prove 5% on that metric.

If we would’ve had totally different businesses, but just sharing some customer groups, then it would have been much more difficult. But since we acquired more or less identical businesses to ours it was easy for us to understand.

Petri: What was the process of convincing other entrepreneurs to join forces? Because I would assume that quite many of them have ideas that they’re building their business and they don’t need anyone else. And maybe they were not even thinking of anything along the lines of joining forces?

Erik: I think the key for us was this hardware box that we had and potentially that we could also invest some capital in the businesses. Because the acquisitions we made in Finland and Austria, they were still in the early days. It was before the bigger startup hype. It was still pretty hard to attract investors to that kind of business.

For us coming with the hardware box and showing them how it works, showing that it really helped us scale in Sweden and Poland and also being able to inject some capital in the business, I think that was very tempting. I would guess that those entrepreneurs, you should ask them, but I guess that those entrepreneurs considered us to be a helping hand along their journey of building their business.

Petri: Sounded like you were more like a hardware company than an actual direct competitor.

Erik: On a global level, we were strong competitors. I would guess that if any of the entrepreneurs that we approached for acquisitions, if they would have a global target, then it probably wasn’t the best strategy to have us on board. But if they were more focused on building a strong local business in their country and possibly neighbouring countries than us running a business in Sweden or Poland, didn’t matter. Then we just benefit to be part of something bigger where we could learn from each other and use money more efficiently.

Petri: Were there some markets you wanted to enter but you didn’t find good acquisition targets or cooperation partners? Or you were just flat out maybe outed from the market by other competitors?

Erik: When we did our market analysis we also based that partly on how strong the local competition was. Luckily for us, the competition was very weak in almost all the markets. There were very few players that had popped up in a few markets, but it didn’t really limit us that much. There were so many more completely open markets to attack.

I mentioned Greece that that was one of the countries very high on our list, but where we just couldn’t find the right team or entrepreneurs and we couldn’t find anyone else who did it in Greece already. It was the market that we would have liked to do but we couldn’t at the time. After we had made acquisitions in Finland and Austria we started looking for new, bigger markets after that. We became market leaders in all of our foreign markets, but we also felt that if we’re going to take another market, it should be a much bigger market. We started looking into especially China and South Korea as possible next steps that would make a big difference for the company.

But of course, it’s hard to find the right team in those countries. We were a little more mature ourselves as a team and an organisation at the time. We’re probably about a hundred people in our four countries. We had some better network and some more capital. We had some more resources trying to find the right people.

This was about the same time as we started thinking about being acquired. It wasn’t so much about us planning that it was more about two other players on the market being interested in acquiring us at the same time. While we’re thinking about either we declined those acquisition offers and we go all-in on one new big market or we start discussing with these potential acquirers to see if this is good timing for us to exit. So, it wasn’t really planned, but we realised that having two of the biggest players in the world in our space who wanted to acquire us at the same time, put us into a very good negotiation position.

Petri: Can you name those who were interested of you?

Erik: Yeah, sure. One was the previous Danish company, I mentioned Just Eat, which at that time was a UK company.

They were the biggest ones in Europe at the time. To make a long story short, they had also invested in us before and they were on our board. We were already somehow partners with them. They knew everything about our business almost. They felt that it’s probably about time to acquire by now, before we grow too big for them.

And at the same time, we were also partners and we had made a small investment in German Delivery Hero when they started up in 2010. All the major players in Europe are really interconnected. It’s quite complicated. Us investing in Just Eat’s worst competitors while Just Eat was on our board. That was complicated.

Petri: What was the reason behind that? Was it some kind of hedging or keep your enemies closer type of thing?

Erik: Yeah, I guess you could say that. From Just Eat’s perspective investing in us, I don’t think they would ever confirm it, but I think it was a way out for them initially when it first happened. Because they had launched in Sweden in our early days. We were fighting head-to-head with them in Southern Sweden. Especially, they were running some of their operations from Denmark.

We were running it from Stockholm and Linköping at the time. We were really fighting hard with them. They had all the capital they needed. They were well-funded at the time. They had experience. They also had a hardware solution quite similar to ours. But they didn’t have the strong Swedish team. They tried to do it mostly from Denmark.

We were fighting that big giant with energy, passion and trying to innovate all the time. In the end, I would say it was too hard for them to succeed in Sweden because they didn’t find the right team. They had to somehow explain to the world and to the shareholders what happened in Sweden.

I think they couldn’t really say that we just failed. We lost it to these three students who didn’t have any money and experience or time. They had to find a way out. Their way out was to accept to invest in us because we really needed the capital at that time to go international. We accepted their investment and they got a strategic stake in our business.

Then when Deliveroo decided to start up slightly later in Berlin we knew the team from before. They learned a bit from us about how to run the business. We strongly believe that this team will be able to build something big. They had a slightly different strategy from ours.

They really had a landgrab strategy and growing as quickly as possible, raising a lot of money, which wasn’t very suitable for us. We were much more focused on building a strong presence, becoming market leaders, driving revenue and reaching profitability. We had quite different ways of running businesses, but we realised that they’ll probably succeed with their strategy. Then we thought it was better to keep them close. We did a symbolic, tiny investment to them. Partly, so they could show to other investors that these OnlinePizza guys believe in us. They have even invested in us, even though we would eventually somehow globally become competitors.

I think it really helped them. We also licensed our hardware to them. They could get going quickly when they launched. And of course, this was a complicated thing with having Just Eat on board because Just Eat also had partly a landgrab strategy. They would become more direct competitors with Delivery Hero.

Petri: How do you navigate all that? You obviously have some information you don’t want to share with everyone and everybody’s competing with each other and then you are all in the same board meetings, maybe.

Erik: Yeah. How do you navigate that? Maybe it sounds more complicated when you describe it later because now it sounds like everything was so chaotic, but at the time it was spread out over a couple of years. We had a lot of time trying to understand what are the incentives of everyone? How are we working with everyone? What do we have to share? What are we legally obliged to share to a board member? In the end, I would say that, of course, it was complicated, but I think it was probably slightly less complicated for us than for Just Eat and Delivery Hero because we were so different in our approach to scaling. Since we focus so much on our core markets and being very, very strong footholds on those markets and Just Eat and Delivery Hero were more direct competitors. Of course, for us having competitors as shareholders and board members pushed us to really understand what does our shareholders’ agreement say? How can we adapt our shareholders’ agreement so we don’t end up in a trap somewhere?

 But in the end, it’s business. It’s about relationships in the end. Of course, we could have a shareholders’ agreement, but in the end, we had to make sure that no one felt that we were being hostile to them. And that’s about building relationships. That’s something you must never forget even if you end up being in legal discussions: in the end, the agreements are usually just a reflection of what you have anyway agreed upon and the handshake is sometimes more important than what it actually says on paper.

Petri: When you wake up one Sunday morning and you want to exit your business, what’s the button to push? I guess there’s no PizzaOnline box where you say that I want to exit now, please?

Erik: No, but the truth is we didn’t really want to exit. It wasn’t that we didn’t want to, but we were definitely not looking for an exit at the time. We had probably realised by then that at some point in time we’ll make an exit. We are probably not the ones who will run this to a huge IPO and be global leaders. We will probably make an exit someday.

We already had a few acquisition offers that we declined naturally. We had mentally accepted that at some point in time, we would probably be acquired. We also felt that we probably need to do this for a few years before we will be in that position. What happened was that Delivery Hero had just raised even more money and decided to grow very quickly using M&A.

They didn’t want to start from scratch because it was too slow. They wanted to do M&A in lots of markets at the same time. Their storytelling to their investors and to the market was that they were very early in a few markets. They were early in China. They were early in South Korea.

They had come some way in Germany and a few other European markets, but they also needed to show that they could be really profitable at some markets so they could tell the story that look, we’re having these really profitable businesses in country X, Y and Z. Then we have these other huge markets following the same trajectory and in a few years they will eventually be at the same profitable level. And then we’ll be super valuable. They wanted to sell that story, but then they needed the really profitable countries, which they didn’t. Of course, they looked around and see who are having some really profitable countries with nice margins.

And to be honest, we were the only ones that even remotely could be acquired. They started looking at our countries. Especially, Sweden and Finland that were the most profitable countries and realised that if they could tell their story and show that Sweden and Finland have these nice margins, then fundraising would be so much easier for them.

If they were able to generate some revenues they didn’t need to do as much fundraising. I think that was the rationale why they more or less suddenly realised that we should acquire OnlinePizza.

Petri: Did you realise at the time that you have leverage that you were the only one? You had that position when starting to go the valuation and exit prices.

Erik: We realised that it was probably important to them. Yes. Even more, what was important for us in terms of leverage was that we had Just Eat as a shareholder. We had a shareholders’ agreement that said that all shareholders have a right of first refusal. It means that if the other shareholders wanted to sell their shares to someone, then the existing shareholders have the first opportunity to buy those shares at the same terms as the third party offered to buy the shares for. It means that if we want to sell the company to Delivery Hero then Just Eat could say, okay, but we’ll do it instead on the same terms that Delivery Hero offered you.

This meant that we could convince Delivery Hero that if you’re going to make an offer on us then there is no point doing it for a valuation that is rather low because then Just Eat could just say, great, we’ll take it. And then we would be legally obliged to sell it to Just Eat. We wouldn’t have an option then. There’s no point for Delivery Hero doing it unless they could put the valuation at the number that they thought that Just Eat wouldn’t accept.

Because that’s the only way for Delivery Hero to be able to acquire us at all. And they only had one shot. If they missed, if they put the too low number, then Just Eat could just acquire it and they would lose the deal. And that would be the worst possible scenario for Delivery Hero. It would be Just Eat acquiring us.

Petri: That sounds so beautiful afterwards!

Erik: Yeah, it was beautiful. That’s one of the few things I’d say it doesn’t sound much better afterwards than it was at that time. We were obviously in a very nice spot at that time. We were lucky. Of course, we built a business that was sustainable and profitable and we were not in a rush. That put us in a good position as well, but the specific timing of Delivery Hero being afraid of Just Eat acquiring us and Delivery Hero needing us to tell their story. That was luck. We could without telling Just Eat that we could negotiate with Delivery Hero and push them to put a number that we together thought might be too expensive for Just Eat.

It turned out that Just Eat didn’t think it was expensive enough. Eventually, we received an offer from Delivery Hero, and then we had to go to Just Eat and say, Hey, okay, now we received this acquisition offer from Delivery Hero. Do you want to take it?

Then Just Eat started thinking for a few days. And then they said, yes, we definitely want to take it. And then we thought we put too low a number. Not that it matters so much to us who would acquire us that wasn’t a big thing. It was more like, we realised that, okay, we probably could have pushed this number higher, but then it was too late for negotiation.

We had the number on paper. We told Just Eat that we have received this offer, which meant that according to our shareholders’ agreement we had to sell to Just Eat at the same terms if they accepted it. That was their right. And they said we take it. That gave them 60 days to complete due diligence and to negotiate final purchase agreements with us.

The offer from the Delivery Hero was more a term sheet saying that these are the headline terms: this is the valuation, we should complete in this time and some other major terms such as how is it paid, and so on. But it didn’t include all the specific details on warranties and all that you put in the share purchase agreement.

Just Eat had to spend some time doing their final due diligence before the board would decide if they really wanted to acquire us or not, and negotiate the agreements with us. Just Eat were in a slightly difficult position at the time, because they were just planning their own IPO, which meant that everything they did, especially bigger deals had to be formally a hundred percent correct and compliant in every way.

They couldn’t take the risk of missing something in a due-diligence that close to the IPO turned out to be a disaster because that could ruin their own IPO. They had to do a full, complete due diligence with us, even though we were still quite a small company. It was quite a small deal. I think it was a $55 million deal.

It wasn’t huge, but it was big enough for them having to do a proper DD that took a lot of time. We were quite an unorganized company at the time. We had businesses in four countries. We had about a hundred employees. We had never had a big formal investment from any VC before.

We hadn’t gone through a proper DD process. We didn’t have our papers in order. It took a lot of time for us and for them trying to finalise the DD. Eventually, they did complete the DD, but there was still some question marks that they didn’t have time to dive into.

There was some question about the VAT levels in Austria if I remember correctly. It was like one of those things that they didn’t have time to figure out. In the end, they said after the 59 days, okay, we need three more days. We need to figure this out. We can’t sign the papers until we figure this out, but we are confident that we will. But we need to have it on paper before we sign.

And we said, okay, but you know, you have 60 days to sign the papers. We are ready. Just call us in the evening on day 60 and we sign the papers. But eventually, they never called. They said that they needed one or two more days. Of course, Delivery Hero knew this. We said to Delivery Hero that, okay, now 60 days have passed, it’s 1:00 AM in the night. We haven’t had any phone calls from Just Eat. Now we’re up for grabs. Then Delivery Hero flew in their management team from Berlin to Stockholm. We met at 9:00 AM in the morning. They started doing their DD in parallel with negotiating the final purchase agreement.

We had parallel tracks at the lawyer’s office. It took some time but compared to Just Eat’s 60 plus days, after 21 hours, 6:00 AM in the next morning, they were happy enough with what they found in the DD and with the share purchase agreement. And then they signed the papers.

They by being super quick and entrepreneurial, and of course, to some extent, being willing to take some more risk because they couldn’t finalise all the legal DD, they decided they trusted us. They’d worked with us for a while, not as long as Just Eat, but still long enough for them to understand that this is a good business.

They could compare our metrics to their metrics. They didn’t care so much about the legal details, more about the commercial details. Just Eat was much more focused on the legal aspects of things, not so much on the commercial. They were just much quicker understanding that even if there would be some legal trouble somewhere, it doesn’t matter so much to us.

Petri: Did you manage to do something with the price?

Erik: No, we couldn’t. We were not allowed to. That’s how the right of first refusal works. We received the first offer from Delivery Hero. And then we had to show that to Just Eat. We couldn’t negotiate the price with Just Eat because we also had to show them what we had already accepted.

Then after those 60 days, then if we would change anything in the terms, then we would have to go back to Just Eat again and say, okay, so now we have received this new offer. Now we have 60 more days. We had to do everything on the same terms not to lose the deal. Unfortunately, we couldn’t leverage that, but we could instead leverage the situation with Delivery Hero to push them into having a very friendly share purchase agreement because those details were not in the offer. They needed the offer that we showed to Just Eat. There were still some details to negotiate and we could get those very seller friendly. They didn’t have to pay everything upfront because they didn’t have the money.

They paid some upfront and then they paid some things a year later. Then we could have our whole company as collateral. If they wouldn’t pay, we just get the company back and we didn’t have a long lock-in. I had six months lock-in, which is quite short in that kind of business where the founders are still expected to run and grow the business for a long time.

We could negotiate some of those things, but not the price. We ended up at 55 million, which compared to today’s numbers, it’s ridiculously low. But given where we were and where the state of the startup ecosystem was at that time, it was quite a lot. Especially for us, the founders who still owned the majority of the company.

Petri: You were in the university when you started. Was this your first job? And then you exited it. It’s a quite nice number from there.

Erik: Yeah, it was. We started in university. And I like to stress that starting a company while you are studying is probably the best time in your life when you can start a company because you don’t take a lot of personal risk. In Sweden, at least, you can live decently on what you can get in terms of grants and loan for being a student.

We didn’t need more income. We could take $80 per month and invest in the company instead. That’s a really good time. If it fails, okay, that’s it. Then you go back to focusing on your studies or start something new. You don’t take a lot of risk. We did start doing and then pause the first attempt. I had been involved in other projects before, but nothing related to starting a business.

I had met my co-founders at the university while we were active in student organisations. We hadn’t built a commercial business before, but we had worked on projects before, so we knew each other.

Petri: What happened after that? Again a Sunday, but now you have a bit more money in the bank and probably nothing to do?

Erik: I had money on the bank account, but still that money was never the primary driver for running a business. It sounds like a cliché possibly. I’m very well aware that money makes things so much easier, but it doesn’t change so much in your passion and your day-to-day activities.

I still wanted to see things grow. I still wanted to learn. I’m a curious person. I couldn’t just sit around and try to live off the interest rate. I would be depressed by doing that. From that perspective, it doesn’t change so much. I mentioned that we had a six months lock-in from the buyer, but I stayed for almost one and a half years in the business trying to recruit new people to replace me and my co-founders and making sure that those people learned the business before I left. The business was still my baby. I didn’t want to leave. I had a gradual phase-out from the business.

But eventually, I started thinking about what to do next. Should I start a new business? In that case, what business? I made a list of different potential businesses that I wanted to start, but I also realised that I shouldn’t just jump the gun and start something immediately. I should spend some time learning about the different markets, the different business models that I was curious on and possibly learn from other entrepreneurs who had different experiences than I had. I started reaching out to entrepreneurs, asking them to tell me everything they knew about their market and their business models and learn from their backgrounds. Of course, they started asking why should I spend my time doing that? That strategy didn’t work. But then I realised that if I invest money, what do you do then? Then I became an angel investor, offering money basically to learn.

From that perspective, it’s probably more for the money but still, that worked. I became an angel investor to learn while figuring out what is the next big step for me? What is my next business?

Petri: How many companies have you invested in?

Erik: By now about fifty. I don’t know the exact number. it’s about fifty.

Petri: Fifty lessons to learn.

Erik: Yeah. You never learn everything you want to learn. What I did realise was that It’s so much fun doing investments because of all the learning you do. I started doing investing in 2013, a year after our exit. I did realise that I enjoy doing angel investments so much that six years later I was still looking for the next thing to do myself.

I had to confess to myself that, at least, right now in this phase in life, I’m probably not going to start a new business. I’m probably going to spend more time on many different businesses. It was just the model that attracted me slightly more than starting my own business at the time.

At that time, I didn’t have fifty investments. But I did realise that I have to do something more focused. Then I started looking at a few different side projects where I could spend some more time myself. I started thinking about not only investing generally in software that was my only focus at the time but trying to be more niche somehow. Because then it could learn more about the one or a few spaces that interested me even more.

Petri: What are your experiences and the lessons learned from being an angel investor? I understood that you were also learning that process by doing and having different stages and steps, and different approaches also to investing?

Erik: Yeah. That’s a good question: what have I learned? I did this for so many years. I learned so much. It’s maybe hard to tell what was the learning from actually doing the investments and what was the learning from life itself. One thing that’s become more and more obvious to me is that I think all investors think that later-stage investors, they lack conviction. Yourself, you see that, okay, this is the future. This is going to happen in a few years, I have to invest now. And then when it’s time for them to raise the next round, you think that the later-stage investors, they don’t have the conviction.

But you also always think that the earlier stage investors, they are just shooting from the hip. I think this is true for every stage in investing. You can ask a Series-B investor and they will think that Series-A investor is shooting from the hip, and Series-C investors, they lack conviction. It’s so easy to convince yourself that at the stage you’re at, if you’re investing at seed or A-rounds, it’s so easy to convince yourself that this is the next big thing and I want to be part of this hypertension journey, even though it’s high risk. When you looked at it a year later, when it’s time to raise the next round, then others don’t think at all that it’s that obviously, this is the next big thing or that these companies are the ones who are going to solve it.

 I learned a little bit about not falling too much in love with a product or an idea or one potential or one team but trying to be a little more realistic about what will the next round of investors think. How will they determine if this is a proper series-A investment for them or not?

Petri: How do you evaluate now new startups if you’re thinking of investing in them? This is also maybe advice for those who want to approach you. What is important?

Erik: I have learned more and more that even if it’s a cliche, it’s true that the team is super, super important. I spend more and more time trying to figure out how the co-founders work together. What the relevant experience is? Have they run a startup before? That can be quite important. How are they at recruiting people?

How were they at pitching to investors? Because I realised that most of the companies I invested in, they will definitely need to raise quite a few more rounds. They need to be good at pitching to later stage investors as well. I think initially I was more focused on the product and the solution and the product/market fit. But I have come to realise that teams are really, really important.

That’s definitely one advice to early-stage founders. Think about the completeness of the team. Maybe you need a third co-founder, who has more experience from something that you’re lacking. If you’re a deep tech company you need strong scientific expertise somehow or technical expertise in the business, but you will always need that startup/commercial experience as well. And by that, I don’t mean someone who just worked with selling stuff before. Because sometimes I feel that technical co-founders think of commercial as one thing. And assuming everyone is good at selling, they’re good at everything related to commercialisation and raising money and recruiting, but it’s really different things.

Understanding how to run a business, it’s not the same thing as being a commercial co-founder. You have to understand how to recruit people, how to maintain them, how to pitch to investors. There’re lots of things related to operations as well. I mean, someone in the team has to like doing the operations.

There’re so many different aspects, but it all depends a lot on what kind of business you’re running. But really think about the completeness of the team and think about the skills that you are lacking or are they so crucial to the business that there should be a co-founder with this skill or is it enough to recruit someone who is more of a senior role in the company with this skill, or could it be an advisor even? It’s not always clear to me how much of that skill you need on a daily basis and how much it could be as an advisor. But I think you as a co-founder should probably understand it better. That’s one advice: focus on the team.

Petri: With +50 companies there must be so many stories, a lot of drama, a lot of successes and failures.

Erik: There are quite a lot of failures, for sure. Some of the worst ones I’m not sure the entrepreneurs want me to speak openly about them.

Petri: Maybe if you can do it anonymously. The point is here to learn and not repeat the mistakes. If you can pick the wisdom from there.

Erik: I can definitely do it on an aggregate level because I’ve seen enough of them. A very common mistake is to be way too focused on the product itself and not being enough focused on the value that you’re actually creating for the customer, understanding the customer needs.

I understand this is something that’s been repeated quite a few times, but I have to stress it again and I’ve seen it so many times in my own companies. That goes partly back to myself that I’ve been too focused also on investing in teams that have a good product.

Maybe I myself haven’t understood the market needed enough. Definitely not saying that it’s the fault of the entrepreneurs only. It’s also the investors. But that’s a very common thing. I’ve been pretty lucky in not seeing too many co-founder dramas. But I know that there are. I have a few of those in my portfolio and there are quite some investor friends of mine who have more. But I guess my focus is on the team. Especially, in the last few years have hopefully led me to companies where the co-founder team is more stable.

Petri: You’ve been doing good as well. There’ve been some initiatives. I understood you’ve been trying to help free someone from prison and you’ve been also pledging a bit of your money to other causes.

Erik: That was actually how I got to know my co-founders for OnlinePizza in Italy. They were both active in the campaign for a Swedish citizen, who was a journalist, who was born in Eritrea but lived in Sweden and was a Swedish citizen. Then he returned to Eritrea to help start a newspaper there.

Then just a few days or a week after 9/11 2001, the president of Eritrea decided to become a dictator. He closed all media, imprisoned all the journalists and opposition politicians. Almost all of them have been in jail since then. That’s almost 20 years ago now.

This journalist, Dawit Isaak, he’s still in prison. There are quite some signs that he’s one of the few people who are still alive in that Eritrean prisons. At the time, when we started learning about this case in 2004 he was and maybe still is the only European citizen that Amnesty adopted as a prisoner of conscience.

There might be a few more now. From that perspective, the case was quite unique and should have received a lot of attention. What we realised was that we didn’t know about this case. This was about three years after he was imprisoned, which we thought was weird. If there is a Swedish citizen and a journalist in prison without a trial for three years why don’t we read about that every day? Why don’t we hear politicians talk about it? Why isn’t that the big thing for the Swedish government or the European Union? Eventually, we learned that people didn’t know about it. We spent some time trying to inform people about this. We started working with his brother who lived in Gothenburg trying to spread the word about it, get media attention and get politicians to act.

After about a year of doing that, luckily, the major newspapers started picking it up. There were other freedom of press organisations in Sweden that picked it up and started to run the campaigns. That was how we got to know my co-founders. Initially, we had worked together on that, also bootstrapping as students. That was one of the learnings about how politics works by being not involved in politics directly but by trying to affect the politicians to run things and understanding why hasn’t the media been writing about this? Well, because he is black, it’s a country far away from Sweden.

That was the honest truth that we heard from the major newspapers in Sweden why they didn’t focus on this case. If it would have been a Swedish name, white skin and it would have been in Russia then we would be pretty sure that he would be on top of the agenda every day. It was kind of depressing to learn about how reality works as naive students as we were at the time. At least, it led to the EU and the Swedish government engaging in it.

From one perspective, it’s still a failure because he is still in prison. But from our perspective, the most important thing was to get bigger organisations with better networks and more money and political power to start running the campaign instead of us. We couldn’t do that much we felt at the time. Of course, it led us to start a new business. That was also something good that came up from it.

Petri: And that leads us to the Founders’ Pledge. Now, we have closed the loop on how you started your business and went to angel investing. Now, you have to do something with the money and you have pledged some.

Erik: Founders’ Pledge is an organisation that approached me a few years after they were started. Founders’ Pledge is an organisation that helps founders and investors to do good even before they have liquidity. Which sounds weird, but they do it in the shape of a pledge where you as a founder promise and you’re legally bound to, by signing a pledge agreement, you promise to when you have an exit, works for investors as well, when you have an exit from your portfolio, then you promise to invest a certain percentage that you decide of your exit proceeds to charity. You decide yourself to what charities, you decide yourself how much. I think there’s a minimum threshold, a few percent. You can do anything from a few percent up to a hundred percent, if you want to. It’s up to you. And by signing this pledge you become a part of the Founders’ Pledge community, consisting of all other founders and investors who also care about philanthropy and doing good. The basic level, it’s a pledge, but it’s really more about building the community and meeting other people and you also get to meet very early-stage charities who have good traction, but still early days.

Maybe you as a philanthropist want to support them in the early days so they could show and get metrics that what they’re doing is this really effective. And the way Founders’ Pledge works is that when it’s time to donate, they have their own research team. They’re also working with an external research team trying to figure out which are the best charities that you can donate to given your own criteria. They are very much experts in understanding the charity landscape and how to convert one donated dollar into real value for the world. That follows the effective altruism idea or trying to do as much good as possible for a certain input.

I’ve been supporting them since I heard of them and trying to help them get going in the Nordics, especially in Sweden. I can really recommend them. Maybe this sounds like a sales pitch, but I think it’s worth it since they are really that good and inspiring.

Petri: I think it is a sales pitch. There is also the counter-argument, just to take another point of view. You’re saying that you cannot allocate the money better and do more good with doing by yourself, maybe investing in some startup companies or you just take the portfolio view.

Erik: It’s a good question because it’s really one big debate in effective altruism and Founders’ Pledge working a lot of this as we speak on how to balance between doing long-term investments, growing the capital and donating later compared to donating to the best charities today.

That mathematical model, how to model the value of doing investments today, is quite hard. There are strong indications that, at least, some of the money should be invested long-term, not so much because we expect that the value of the money that will grow so much faster than the value that is created by donating today.

But rather that we learn so much every year from how to use the money, the donated money, integrating value. The effective altruism movement is still very young and I’m learning a lot every year. And we expect that in 10 years, maybe we’re twice as good at converting donated dollars into value.

That’s a strong reason why it might be good to invest instead of donating today. But the research on this topic is definitely far from clear yet, and it’s still going on. It’s kind of hard to know at this point. I’m doing both. I’m not investing only to donate everything later, but I’m also investing to learn and to have a lot of fun while doing it.

I try to balance between doing the investments and donating as well. But it’s hard. It’s a hard question and it will definitely be up for debate for many years ahead. We might still not come to a strict conclusion on what is best. What is clear though, is that if everyone would only invest their money and there would be no donations creating value today that would not be good.

There’s a strong reason to believe that investing some of the money could probably lead to even higher value creation in 10 or 20 years.

Petri: You’ve been also doing something for the Nordic startup community by means of documents, Startuptools.org. What was the reason behind it and can you explain briefly what is it about?

Erik: Right. That was one of the learnings when I started doing my own angel investments in 2013. I realised that when I was about to invest in a company, I couldn’t figure out myself what are decent terms to invest on. It didn’t seem like anyone else knew either. I started asking around a lot, what are normal terms in a seed round in Sweden, and I got a lot of different answers.

I started more or less crowdsourcing different term sheets from seed rounds and realised that very few terms existed in all the term sheets and very few ones that were very odd compared to the other term sheet. I summarised this, picked everything that seemed to be more or less common and said that, okay, now I have my own term sheet.

This is a normal term sheet. It’s not founder-friendly. it’s not investor-friendly, but it’s balanced. It’s basically both investor and founder-friendly in that sense. I started using that, but realised very quickly that, okay, now I crowdsourced this, why don’t I share this with others so others can use it as well?

I put it online and it gained some traction. It led me very quickly to understand that it’s not enough to only have a term sheet. You also want the investment agreement and the shareholders’ agreement that correspond to the headline terms in the term sheets. I started working with a lawyer in Sweden to develop these agreements, put them online, started receiving even more traction and more questions about other kinds of documents.

Entrepreneurs wanted employment agreements and agreements for stock options, NDAs, convertibles. I realised that, okay, I should probably spend some time working with lawyers to create these standardised, balanced templates and put them online. I spent some time doing that and it’s all for free.

The lawyers are working for free in exchange for exposure to documents. They basically get leads from companies, who want help with documents. It started in Sweden, but now it’s also in the rest of the Nordics. The latest launch was in Finland in December together with seriesseed.fi. Now, I have some plans to grow this into a sustainable business. Today, it’s fully supported by my personal money that goes into the project to pay for everything. Like most charities, many of them would be better off if they also had some sort of revenue model. It would be sustainable and not dependent too much on donations.

 That’s the plan for Startup Tools to try to keep it going to make sure that it can keep delivering balanced, standardised documents for at least the Nordic startup ecosystem, but hopefully more in Europe as well.

Petri: I think one of the exceptional things when I first some years back learned about Startup Tools was that you were also checking the taxation, which is not usually the case. Lawyers are so good with the legal stuff, but they don’t want to bother with taxation. And that’s very important in Scandinavia and Nordics because of the high taxation and sometimes the laws are not exactly on the side of the founder when you’re doing exits or you’re doing some kind of transactions and giving incentives for employees as well. You may have some consequences in the taxation perspective, and those may not be reflected in the contracts.

Erik: This is something that’s bothered me for a while. Lawyers tend to be experts in one field. Either you’re a tax expert, and then you’re only know tax, but you’re usually not that good at understanding a startup journey and understanding how to adapt contracts to them. You only know the tax rules or you’re an expert in something else but you don’t know tax.

That makes it difficult for founders who might not be able to afford to have several different lawyers coming in and working on helping them. But as an entrepreneur when you’ve been through some of that, then at least you learn where it is important to think about the tax consequences.

I could then support entrepreneurs via Startup Tools by having tax experts take a look at a few specific areas where I know that it can be tricky for founders. Especially, when it comes to taxation for receiving value from the company in terms of options or founders with vesting and so on that are traditionally more risky areas than, for example, a sales agreement or an NDA.

Petri: Where is Trellis Road?

Erik: Trellis Road is…that is a good question!. Where is it? It’s a place in the future where we have, sorry, I can’t explain that one. Sorry!

Trellis Road is the company that I started with my now co-founder Anna Ottosson. She was running a company that I invested in myself before. They were doing a deep tech, B2B solution for the distribution of data. So, very different from the food tech that we are now focusing on.

Petri: Pizza again!

Erik: Pizza is food but pizza is not that much food tech. Online delivery is food tech. We focus on the impact aspects. We started talking more than a year ago about doing something together. Yet, again I thought that maybe I’m about to start my own company again, a real startup. But I realised that it probably wasn’t the right timing for many different reasons.

We started talking about doing something together, and we had both been through starting a company, exiting a company, started to think about what to do next. We’re in a similar personal situation as well. I just had my first baby and Anna was about to have her first baby. We both had started thinking more about our legacy as well to the next generation.

We concluded that we have to work on something that really reasons with us that aligns with our passions. It sounds like a cliche but when you are in the luxury situation that we both were not being dependent on a daytime job you would have the luxury to start thinking about what is my passion.

We both concluded that we want to feel that we help to improve the world somehow as a combination of impact but also startups. We know both worlds and we see there is a huge overlap that traditionally has been a bit neglected. The overlap between high impact and high profitability. I think five to ten years ago investors at least thought that you had to choose between impact and profitability.

It has been obvious that it’s definitely possible to build huge businesses that combined both. Where one unit of economic growth in the company also generates one more unit of impact. I mean, looking at the food industry that we decided to focus on, you have like Swedish for example, that replacing milk with oat drinks, growing tremendously in aiming to 10 billion IPO now in May, I think. Beyond Meat with the plant-based burger replacements who didn’t IPO in the US, there are some of those cases that I know went all the way to an IPO and there are much more coming. We definitely see that this is a great idea for entrepreneurs and artistic investors to focus on.

We also looked into a few different areas before deciding on food tech. We look at the energy sector, for example. But realised very quickly that to make a big dent in the energy sector, you need a lot of money. It’s quite dependent on big corporates and it’s quite dependent on policies. We didn’t really want to be dependent on those things.

We thought that we want to find some area where you can make more of an impact as a small startup and small investor and realise that food tech is that space. And there are lots of things happening in food tech, both on the research level but also on the commercialisation level.

That shows that even small startups can have a path to become huge, without being too dependent on policies or big corporates and letting them grow. You can compete as a startup. I think it’s partially because of the consumer focus of all food. In the end, there is a consumer that’s going to eat the food.

Everything along the food value chain all the way from agriculture to packaging and e-commerce is to take the consumer into account. If consumers start changing behaviour, if they start being attracted by new brands, for example, then that trickles down all the way down to agriculture in the end.

That’s a way for startups to affect the whole industry without being too dependent on external factors.

Petri: Is this a journey you’re planning to do as you go or is there some big idea already behind it?

Erik: If you ask me in five years, I’ll tell you there was an excellent strategy on how to become what we have become in five years. But, like most other things I have to admit that it started out as we decided that last year we should spend at learning as much as possible.

I had spent some time in food tech, but not high-impact in any way. That was online food delivery. I didn’t really know how the high impact aspects of the food industry work today. We didn’t have the networks in that niche. We didn’t have the connections with the entrepreneurs that we wanted to invest in either.

We had to spend lots of time learning about the space and finding entrepreneurs, finding investors, finding the experts. We decided to spend last year investing our own money in high-impact food tech startups at the seed stage, alongside big investors who have been in this space for longer. That was the way for us to learn.

We did about seven investments last year, $50-200k tickets. Just as the way to learn. Now, I’d say that we have learned a lot. We have realised that this is the perfect space to focus on from our respective, both us small investors, but also from an impact perspective. The more we learn about the food industry, the more we learn that it’s really one of the few key areas in reducing the negative effects of climate change and human health can be radically improved by the food system as well. It’s a super interesting area from both of those aspects. We have also seen that it’s definitely doable to change things from the startup perspective, which was also one of our assumptions.

We are going to spend all our time on food tech. We are thinking about how to leverage that more than just investing our money in super small tickets. But that’s up for discussion what it will look like. We have spoken to a few other individuals and organisations that are also doing their own direct investments.

We’re thinking that maybe we should start working together somehow pooling the money, perhaps. But it’s still too early to tell. I’ll probably have a great story in a few years on exactly why we chose a certain path, but, right now, it’s still a bit up on there. What we do know is that this is happening.

We definitely see that food tech is changing the world for the better. It could be faster. We think we can help accelerate it. We should definitely be active and do a lot of investments in the space that will be great both from an impact perspective and financial perspective if we don’t mess up. But it’s hard to tell exactly what the best model is. We definitely want to jump on the train before it leaves.

Petri: What is your favourite word?

Erik: It’s serendipity. I have love that word for many years. Ever since I went into the best ice cream bar in the world, I think, in New York in Manhattan. There’s an ice cream bar called Serendipity, which I didn’t understand the word by then, but I thought it sounded funny to say serendipity, just tasted it.

It’s so fun to say. And then when I realised that it means happy coincidence I just fell in love with it. I wanted to name my own company serendipity when I started investing, but then I realised there was another investment company in Stockholm named Serendipity. I couldn’t do it. I was frustrated for days I couldn’t use the word serendipity, but at least I get to say it here. That’s fun.

Petri: What is your least favourite word?

Erik: I don’t think I have one. I tend to dislike negativity, so I guess maybe the word no is something I usually don’t like to hear. I don’t like the idea of limitations or negativity or obstructions to people who want to be creative but are limited by other people or by systems, like stopping things, I guess.

No is a word that symbolises that. I also think we tend to as individuals value the negative consequences of actions higher than positive consequences. Even if an action has total positive consequences, humans are likely to oppose it if there are also obvious negative consequences or risk. Especially, if the negative consequences come first. I’ve been so frustrated more and more, but especially like the last year or so when I spent more time in food tech and realise how, even though I do claim and think that startups can really make a difference by being innovative and creative, but I still get so frustrated every time I see that there are big corporates or politicians trying to stop creativity, trying to stop the future from happening. There was a tweet not long ago from the French Minister of Agriculture when he read that Singapore was the first country in the world to open up for cultivated meat, lab grown meat to be sold to consumers. Then his first gut reaction was to go to Twitter and say: “This will never happen in France. Not under my watch. The meat will always be natural for animals and never be grown in a lab.”

I think it’s just such a tragic attitude that the new things cannot happen because…well, you should ask him why. But, the French are known for protecting their farmers. By protecting an old industry that we know is in many ways crazy, especially, for the climate. It’s just tragic. Sorry. That was a long rant on the word no.

Petri: What turns you on creatively, spiritually, or emotionally?

Erik: I really get excited, when I’m around people who are intellectually honest and have that curiosity and energy to question their own beliefs. I think intellectual dishonesty is increasing or at least it’s become more apparent lately with the filter bubbles on social media and access to the information on the “facts” that you prefer yourself.

Maybe that makes me appreciate it even more when people obviously are willing to question their beliefs and not make up their mind too quickly, but showing their willingness to listen to contradictory information. There’s a model I heard about, not long ago called strong opinions, weakly held, which basically means that you try to make up your mind early, on a certain topic, which helps you structure your thinking about it.

And if you wake up in the middle of the night gun to your head you know what your decision or your thought is, but the opinion itself is very weakly held, which means that it can always be changed when new information appears. And if you commit yourself that this is my approach, it’s easier to accept that.

Yes, of course, I do have opinions, but they are also changeable. I have been using that more and more the last few weeks since I heard about that. I think it really helps to structure your thinking and being more open to changing your mind.

Petri: What turns you off?

Erik: But that has to be the opposite. Sorry, boring answer. When people are not curious and don’t want to learn or improve things, just lazy and happy with the status quo. Partly, that’s a good thing from a happiness perspective that you can be happy with what you have.

That’s great. And I practice that a lot and you should definitely try to do that, but only doing that and not being curious, not trying to learn that really turns me off.

Petri: What is your favourite curse word?

Erik: It has to be Swedish fan, which basically means the devil. But, I guess, more translated it means fuck or something. I’m not sure if I used it that much, but it feels like easiest to say when you ask for a curse word.

Petri: What sound or noise do you love?

Erik: It has to be my one-year-old daughter laughing. I guess this is a cliche as well, but that’s just irresistible.

Petri: What sound or noise do you hate?

Erik: I really love my daughter, but when she wakes up at 5:00 AM in the morning and I hear her say “daddy play.” I know that now it’s going to be impossible to get her to fall asleep again. I mean, hearing that it’s not what I’m looking for.

Petri: What profession other than your own, would you like to attempt?

Erik: It has to be something where I can use both my body and my brain and create something, see something being built like a baker or building furniture. But it has to be a baker. I enjoy bread more than furniture.

Petri: What profession would you not like to do?

Erik: Definitely, a politician. There are probably lots of them, but top of my head being a politician. I mean, just looking at the politics taking place in a hundred person startup that’s more than enough for me. I really hate when things are not focusing on rational, improving things or if people are not focused on meritocracy where the best ideas win or the best facts wins, but you start running politics either in an organisation.

I think that’s just politics on a high level when you become a real politician. I spent some time trying to figure out how politics works. I can’t even imagine what it would be like to spend my days working with that in practice.

Petri: If you could be a co-founder of any startup in any era, which one would you choose?

Erik: One of the ideas I had when I came out from my own business and started thinking about a new business, which I still haven’t seen happen, and I’m happy to give that idea away. It’s tricky to execute, but I really want to start a startup or see someone start a startup. I’m happy to fund it!

Ping me, if you’re starting this. It’s a health tech startup that somehow is able to collect lots and lots of global anonymous, of course, health records, including personal background, symptoms, diagnosis, treatments, results from those treatments, long-term effects. And ideally also collect things like DNA, regularly measured blood tests, poo samples, like everything that we today think is important to the health of an individual.

If you can get access to all that data, then by applying machine learning, I’m pretty sure that we could create virtual doctors that are much better than anything we can imagine today. And by doing that, we would also be much better too proactively realise that something is going on or soon going on in a human being and be able to prevent that before it even becomes a disease. I think that would be a major leap forward in terms of human health. I’d like to start that startup.

Petri: Any final words for the audience?

 Erik: If you are thinking about starting a startup, do it! It’s all just easy to sit around like I am doing or have been doing for a few years, trying to wait for the perfect moment. But if you have the opportunity to do it and especially if you’re still quite young, maybe you’re still studying, maybe you have somehow secured your personal financial situation. Then even if you don’t have the perfect idea, it doesn’t really matter. You can do it just for learning. And then when you have the perfect idea, maybe it’s easier for you to make the decision. Yes, just do it!

Petri: Thank you, Eric. This discussion has made me hungry.

Erik: Thank you, Petri! Me, too. Let’s have a pizza!

Bootstrapping your way to success

February 15, 2021

Heikki Väänänen – TALKS WITH PETRI

Heikki Väänänen, the co-founder of HappyOrNot, talks about his entrepreneurial journey from bootstrapping to raising over 40m EUR funding and scaling the company to +200 employees, and stepping down from the CEO role after 20 years. He also tells why it’s a good idea to wear a company T-shirt.

Bootstrapping your way to success

Bio

Heikki Väänänen, 40, has worked most of his life as an entrepreneur. The idea of HappyOrNot was born, when at the age of 15, he received bad customer service at a store he visited. He wondered whether there would be a better solution to give feedback and came up with the idea of the new service. However, he did not execute his idea right away and let it mature for a few more years. In those years, he graduated  as a Master of Science in Technology and founded, at the age of 20, his own gaming company Universomo. He has held board member roles in several technology and services companies, with a proven track record of increasing sales and profitability. With his combined experience and expertise, Heikki has directed the successful strategic development and sale of six Finnish companies, including the sale of Universomo to THQ – the second largest gaming company in the world. 

In 2009 HappyOrNot was born. The Smiley devices measuring customer satisfaction can be found at various locations, like grocery stores, pharmacies and airports, in more than 120 countries around the world. The HappyOrNot service has currently collected 2 billion feedbacks – a record in the customer feedback market space. While the idea of the Smiley devices is simple and the way of giving feedback is easy, the feedback data enables actionable insights and empowers companies to develop their business by improving their customer experience.

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Transcript

(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri: Hello Heikki, how are you doing today?

Heikki: Good, good. Thank you. How about you?

Petri: Not bad. It’s quite nice here. It’s a winter day and the sun is shining. I think things are pretty good. Two billion satisfied customers or was it clicks?

Heikki: Yes, clicks. That’s the situation where we are today after ten years of building HappyOrNot.

Petri: What is HappyOrNot? Are you happy or not?

Heikki: We are providing service for our customers so that they know how happy people are at different physical locations. You may have seen our terminal or device somewhere. For example, maybe at the airports where there is a device asking that how happy you were for the security or how happy you’re aware for the retail experience. Then you can push one of those four smiley buttons and tell how you feel.

Petri: Sounds pretty simple. Does it really work?

Heikki: When we started the business that was one thing what we needed to learn because the idea felt so simple. Also, we were not 100% sure that this will work. For that reason, we agreed with roughly five customers to test the idea and see and learn if the data has some value for the customers.

Petri: Can you walk me through it? Usually, things are not simple in the beginning. Why was it simple in the beginning? Why did you think that you have the audacity to think that it will work because it’s such a simple thing or was there something hidden what I don’t understand?

Heikki: The idea felt so simple: let’s just put a device with four smiley buttons and a question sign. From the tech perspective, there is nothing like a miracle there. We were thinking that because the implementation is so easy from the tech perspective maybe someone has been trying this before and failed.

That’s the reason why we didn’t need like 50 developers and engineers to put this first prototype together to see the first results from the customers.

Petri: But it was not an easy ride. I understood that a lot of people were laughing at you. And they didn’t believe that it works or it actually adds any value.

Heikki: When we were negotiating and discussing with the first customers we were also discussing with one person who is a customer experience professional. And we were representing this idea for her as well. The feedback from her was that that idea won’t ever work.

That’s the worst idea I have heard in a long time. She felt that that device will be just in front of everyone and everyone will hate those devices. Why would someone use that kind of terminal? And of course, because that feedback was coming from the customer experience professional we thought that she knows a lot about this market and space. For a few days, we were thinking that, okay, maybe that’s the case that this doesn’t work but at the same time like giving up is not something what we do easily. We made the decision that let’s continue and let’s collect more feedback. And let’s start testing the concept.

Petri: How many feedback loops and how many months or weeks or days it took that you were convinced that maybe it’s not time to give up yet?

Heikki: Maybe the first test was the most interesting one. It was one retail chain in Finland that made the decision to be the first one on this. We took one device to Valintatalo. It was a small grocery store site. We put the device there in the morning and together with the customer we were thinking that maybe we get like ten or five feedbacks per day.

Normally grocery stores are getting maybe three feedbacks per month or maybe ten feedbacks per month. They were thinking that if we can get the same amount of feedback per day that would be pretty amazing. After the first day, we had roughly 150 feedbacks collected. The customer was really surprised because they could for the first time ever see how happy people are per each hour. And of course, we were surprised that lots of people are giving their feedback. That was the first really positive sign that actually this can work.

Petri: What are the questions you’re asking in those terminals? Do you remember what was the first one, the very first one you were describing?

Heikki: The first one was how happy you were for the service today? Of course, in Finnish here, locally. It depends on the vertical. If you are within retail, usually it’s about the customer experience, it’s about did you find the products, it’s about the cleanliness of the location.

When thinking about the airports, then it’s about the security experience, about the package claim experience, about the happiness for different areas on the airports. And on healthcare, it’s different kinds of questions, like how happy you were for the doctor visit and so on. It depends on the customer group what’s the optimal setup of questions.

Petri: Why should I push it as a customer? Is it to vent the bad experience and to express myself? Can you also describe what happens after I push the button?

Heikki: That’s one thing. Based on the discussions that we have had with the people, not with the people who are working at the sites, but people who are giving the feedback, some people get nice feelings. They are able to tell how they felt about the experience.

Both, if the experience was great, it’s nice that you can tell that. But also if you are not happy with the experience that’s also sometimes really nice that you are able to tell that to someone. Then from the company perspective, it’s nice that people there know how people are feeling. For example, I was discussing once with the person who has been working at the grocery store for 20 years. And of course, people have been every now and then telling you are doing a great job or similar. But she didn’t have any statistics on how well she is performing.

For the first time ever she saw that their location is the number one when comparing different locations and retailer sites to each other. It can give really positive feelings for the people. The reason why people give feedback is that then those locations can improve their things and give even better experiences for you in the future.

Petri: You were the CEO of the company for many years from the founding onwards and now you have stepped down already. So, it’s been quite a journey I would imagine, but how did it all begin?

Heikki: The idea of this concept is from more than 20 years back when I got this idea about how about if giving feedback would be much easier. Instead of filling in some online surveys or paper surveys or answering the phone, when someone is asking how happy you have been for the different services?

That was the thinking what I had. And also, when helping other companies, I noticed that companies are usually asking…or back then companies were usually asking customer feedback maybe once per year or maybe once per two years.

And I felt that can’t be the case on the term. Customers are the ones who are bringing the money to the companies. It felt weird that you would be asking every second year how you feel if at the same time you are the one who is paying my salary.

Petri: Can you apply these principles and what you have learned in a startup environment? If I’m building a new startup and starting today, now, what you know based on that 20 years experience, what would you tell someone that what are the things to implement and how to do that? Even though, they may not be in the retail space?

Heikki: There’re a few things on that. When starting a startup nowadays the great thing is that you have really good tools to get a lot of data in so that you can optimise your offering much faster than you were able to do maybe 10-15 years ago.

Building a startup today it’s pretty different compared to how it was before. There are Power BI, Tableau kind of tools. There are a lot of free tools within marketing, within sales and also for product development and how customer satisfaction relates to this is that when you are building a startup you may want to know that your flexibility within marketing, your messaging works well. Of course, you will be following maybe some controversial metrics from leads to marketing qualified leads and sales qualified leads, and so on. But you may also want to know what people are thinking about the messaging you are using.

Or within product development, it can be the same that you can follow the metrics from the first sign up: what’s the percentage of the people who are using your service again. Maybe the drop off is let’s say 50%. So, for some reason, your customers will use your service once and then 50% of your customers disappear. Then you may want to ask what are the reasons why you didn’t come back and then that’s something that relates to customer experience. You want to learn the reasons behind the drop-off.

 Petri: How quick cycles can you have in this feedback loop and improving and trying again?

Heikki: I would say in days. That’s pretty typical nowadays. Not maybe within the hours because of the volume. You may wanna have at least maybe 100-500 feedback in total. Usually, it’s about the days that’s how the most successful companies are working nowadays. It’s about testing things and seeing in a few days if the new idea works well or if it doesn’t work well.

Petri: Let’s take an example. You’ve been in the gaming world before. If you’re building a mobile game and you would like to test some parts of the new improvements in the latest version can you do that by applying the principles and ideas of what you are doing?

Heikki: The principle is the same. In game development it’s the same as developing, let’s say, software for the B2B environment. For example, you may want to test that are people able to increase the volume and you are maybe doing that by sitting next to the person and testing different ideas. Let’s put the volume icon here, and let’s see if people are able to recognise that.

And if people are not able to recognise that then changing the colour or putting the volume icon somewhere else. Or if you can’t be physically there then you can do that online as well and ask for feedback there.

Petri: Can that be done in a COVID world type of way? People are around the world and you have a new software release. Can you somehow put the buttons or how do you know how they are feeling when they downloaded the new version or played the game or they are onboarding, is there a way to know what’s working?

Heikki: It can be done, for example, with a video connection. In some tests, you want to follow what the person is doing. You want to follow where the person is watching. You may also want to tell the person that please continuously tell what you feel and what you are doing and what you are trying to do.

If someone is playing a mobile game, the person may tell that, hey, now I wanna add my friend here as well, but now I’m trying to find the button or the way how to do it. And if the person recognises that it will take, let’s say five minutes to do that then the learning is that okay, we actually need to do this in a way that it’s a bit easier for the users, because otherwise there will be maybe drop off and you will lose the players and the person will download some other mobile game, which there are a lot of available today.

Petri: HappyOrNot has been getting quite a lot of media coverage. And I remember in 2018, you got The New Yorker to write an article about you. And that was a big deal. And obviously, it is a big deal but I mean that it also had a lot of business impact.

Can you explain and tell how you can get such a nice article in The New Yorker?

Heikki: That was our goal always that it would be amazing to be recognised by the top magazines in the world, and especially in the US. How this The New Yorker opportunity came was that we were at a trade in the US, and there was this person from The New Yorker going around. He came to see us. He came to our booth and was asking about what we are doing. How this is working, and so on.

One person who has been with us for a long time, Tod Tyson, was in the booth and he was telling the store how everything started and how this works, and so on. How we are changing the way how retail companies can improve their operations. Luckily he got so excited about us that we agreed to a follow-up call with him. During that call, he was asking a bit more questions, and eventually, we agreed that they will do an article about us and they also let us know that they will be a few days with us.

And, also they will fly, for example, to San Francisco to meet our customers and so on. Normally, when these people are putting these articles together, they may be spent maybe two hours, three hours with the person and the company but this was pretty different. They were spending many days with us and even met my wife and were asking a lot of questions about her. What she has been doing when she was young and so on. It was more questions than you are getting in a job interview.

Petri: Wow! What was the impact? Nowadays in the tech world, we tend to think that it’s more about Twitter and social media and regular media doesn’t have that big effect anymore. But I would assume in your line of business, it had a great impact?

Heikki: During that time we had some presence in the US. We had some customers from the US.

Petri: Can you name a few customers to get an idea?

Heikki: For example, Rite Aid was our customer. The Space Center in Florida was our customer, a few hospitals were our customers. I think we had our first terminal at Walmart as well.

When a European company is going to the US it’s about building credibility. And if you have only European customers unfortunately for US companies it’s more critical for them that you have local references. And so that those people can maybe have a chat with the people who are already using your service.

We had some customers but we were missing parts of the credibility there still. Where this article was helping us a lot was that …because even for the US companies it’s almost impossible to get an article on The New Yorker. That’s the magazine what well-educated people are following and reading. After we got that article and when we were telling them on the call or on the meeting with the customer that here you can read the six pages story about us on The New Yorker then the comments were like, wow, how you did that? We have been trying to get an article on that magazine too but we have never been able to do that. How did you make that happen? It was a big thing from the credibility perspective and doing the deals became much easier after that.

Petri: You have your US headquarters in Florida, which is becoming a hot place for startups now. People are moving from San Francisco and different places to Florida, but you were early on there. Why Florida?

Heikki: Of course, I could tell that we made big research and we saw this happening in the future that companies are going there but that wasn’t the case. A few things which were critical for us, one was the time difference. When you have employees in Europe, Asia and in the US it’s easier if there wouldn’t be too big a time difference between the teams.

We are from Finland. We have pretty cold winter time so our first persons who went there…we just started from Florida. We didn’t think too much about that. We made small research, but not the long one.

We were thinking let’s start here and let’s see how things go. Our customers were, basically, everywhere in the US. We were not in a position where we would have like 100 potential customers in the US and they all are in New York. Then it would have been easy to pick up New York. Because our customers were everywhere and anyway we needed to fly to different cities.

We started there and that’s the place where we are today. We have people in some other locations as well in the US but the office is in Florida.

Petri: You’ve been having some ups and downs in recruitment like any founder in any company. Can you elaborate a bit and tell some of the stories you’ve been having during the time? Maybe when you were moving to the US, for example, how did you find the people?

Heikki: That’s maybe one thing also for the European companies. When you go there people in the US they are amazing at telling their story and presenting themselves. When we were doing the first hires there it felt that In the US, there’re only amazing candidates.

 All of them were able to tell the things what you wanted to hear. That’s a bit different compared to Nordics. You’re going to have amazing talent in Nordic but on the job interview, they are just telling me that I have been doing these pretty small things. And the reality is that they have done some amazing stuff.

Because we were scaling fast we were also hiring people pretty fast. During that journey, we made some less expensive and some a bit more expensive mistakes. It would have been good to get more local support while doing those hires.

We were even hiring one person who had a really bad criminal background and we found that out a bit too late and we were in trouble for a while. We were able to solve that but that’s something when you’re doing things fast and when testing things fast, you’re also like sometimes making mistakes.

Petri: What are the most expensive mistakes? What type of mistakes?

Heikki: One area is the hires. Because you’re maybe paying for some company who is helping when you are doing the hire, but it’s also the lost time what is expensive. If you’re hiring the person for the sales role or if you hire the person who is leading the sales that’s something where we did one mistake early on. We hired a person who was supposed to lead the sales and we learned that this doesn’t work. Then it means that you basically have lost maybe even a year. When calculating together the time when you are interviewing the candidates, then that person has maybe three months notice period after he or she can show in. And the person starts, there is maybe three to six months onboarding. And after that, you noticed that, okay, this is not working.

So, you have spent one year without getting the company to the next level. In the tech space, one year is a long time. We are not anymore in the cycles of two years or four years or ten years. In the tech space, great products can only last, maybe let’s say, three to five years in total. If you do one mistake, which costs you one year that can have a huge impact on your success.

Petri: How can you avoid those mistakes? What’s the lesson to learn from here?

Heikki: That’s a really good question. Especially, if you are starting the business for the first time without networks then I would have maybe encouraged you to get some help and be data-driven there. Doing some tests and making sure that the profile equals to a really successful, let’s say, sales leaders who you are looking for. That’s one way to do it. That’s the way how we are operating nowadays that we are using as much data as possible when doing the hires to make sure that we would do less mistakes there. But of course…

Petri: What you mean by data?

Heikki: There’s a lot of great tools available nowadays. You can run different kinds of tests for the candidates. For example, we have been using the Caliper test globally and that has been working really well. The results are pretty much trustable, and if the person gets really good scores on that test it usually means that the person is also successful.

 Maybe the other way to do it if you have some networks and if you know some people who have been successful before, and if you are confident that those people have still energy and a willingness to run, maybe then hiring those persons who you know and are from your network and have been successful. That has been one great way to do good hires.

Petri: How are you using HappyOrNot within the company? Are you testing and having the pulse of the staff as well?

Heikki: Yes, for the whole company’s history. That’s something what we are doing and what many companies globally are doing. Every day when people leave the office, they can give feedback on how they felt. That has been really helpful. Especially, for the management, it’s more about if there’re more employees than normally who are not happy. With the follow-up questions, you can also find out what are the reasons. Compared to yearly surveys the management and the employees get the information about the dissatisfaction the next day. That’s helpful for the teams so that you can fix things fast instead of waiting a year.

Petri: How do you figure out the root cause? If people are just not happy how can you try to figure out what’s the cause of that?

Heikki: The version of what companies are using nowadays a lot is the tablet version. And then you have follow-ups. If the person wasn’t happy then there’s a follow-up question: was it maybe because of the leadership or because of the workload, or maybe because of the office environment?

And if the person says that this was because of the leadership, then the person that can also type a bit more details there that like what were the reasons. Maybe I had unrealistic goals for this month or maybe the way how the supervisor is managing the team.

Maybe there is something what can be improved there. It’s still anonymous, so that’s something. Something like what we want to make sure that people feel safe to give feedback because otherwise there will be less and less feedback for the companies.

Petri: As a CEO, I think you’ve been the entire time till you stepped down the CEO of the company. Can you describe the process of how you’ve been changing your role from the beginning and what have been the most difficult and maybe the easiest and the unexpected ways you have grown in the process and things you wanna share with other ones who are facing the same thing?

Heikki: Mm. I think like for this topic we got to use maybe one or two or three days. There’re huge differences if you have five employees, if you have 20 employees, if you have 40, if you have 60, 100 or 200. All those stages are a bit different.

If you have a small team of, let’s say, six employees, then you are looking at one supervisor and the team. All of those people can be in the same room and they always are on the same page and you can change the direction of the company in one day, or you can change the direction of the company even twice per day if you just agree with the team. You are pretty agile. When you have 20 employees, you are not maybe the supervisor for everyone. You will start to have a bit of structure there, but still keeping all the employees on the same basis is pretty easy.

When going into the stage of +100 employees, then things will change a lot. Then you have to start thinking about different processes. What’s the way how employees are managed within your company. Let’s say that you have a marketing team, you have a sales team, you have a research and development team. Let’s say that you hire a person from Oracle to lead the marketing. You’ll hire a person from Salesforce to lead the sales and then you hire a person from IBM to lead the product. If you just leave it there and you’ll work with only your team members, what you will find out that actually, we have three different ways how people are led in the company. There is one who is leading the people how people were led at Salesforce and one person who is leading their people how people were led at Oracle, and so on.

One advice I would give for the teams who go beyond 60-70 employees, then you have to start thinking about things like how people are managed, how people are led. What’s the way how we are doing that within this company?

That’s a big difference and also the step for the founder. If you’re a founder of the company, when you have 20 employees, you know everything about everything. And if you have let’s say 70 employees you don’t know anymore.

You have to start trusting on your team members. When you have 150 employees, you don’t even know everyone’s names. And that’s one step where I felt that maybe I’m losing my memory because I can’t remember everyone’s names. But that’s one phase.

When you are experiencing that for the first time, it may feel a bit weird when you are meeting someone at the office and you are like what was the name of this person? I can’t remember. You are working in my company, but I can’t remember your name. That may feel a bit weird.

If it’s let’s say three years from the situation when you had ten employees and you knew everyone’s names and even the kids’ names of the persons. When the company is smaller, it’s a more personal experience. And then when the company gets bigger, it’s more about building the structure for the founder who is also leading the company.

Petri: Was there any phase where you were thinking that, okay, this is getting a bit out of hand you’re not comfortable with the speed or something happening and some rough patches in the growth?

Heikki: Many times. We did the A-round and the first round when we had about 60 employees. We started a collaboration with the investor and we put the hiring plan together. Within that hiring plan, we had roughly 100 roles.

Petri: Who big was the series-A round?

Heikki: It was about 15 million.

Petri: Did you have any investor money before or did you bootstrap with your own money or was there some angel round or seed round?

Heikki: No rounds before that. It was bootstrapped until that.

Petri: Okay. How many years were you bootstrapping?

Heikki: Six years.

Petri: You were a few founders and owned the whole cap table?

Heikki: Yeah, and also sharing the shares for the team members. That’s something what I’ve been doing, and we have been doing always quite a lot. Not keeping the ownership only within the really small team, let’s say two or three persons. We have always preferred the way that we share the shares of the company for the team members. I think it’s better to own a small amount of a really big success than owning 100% of no success.

Petri: This was a big deal to take an external investor because then it’s not in your hands entirely anymore. Was that something you must do or you wanted it to do, or can you explain a bit about the process?

Heikki: We spent quite a lot of time with different investors. There were maybe 100 investors contacting us during that year. And all of them telling that, Hey, please, take our money and you can do amazing things. We spent with one investor called Northzone quite a lot of time.

We had the plan going forward without the investment but also with the investment. The difference of what we saw there was that actually we can do things and we can speed up things so much that let’s see if we are able to get reasonable terms or good terms. If the package feels good, if the team at Northzone feels good, if all the components feel good.

One thing what we did was that we are asking from the investor that can you come and give a presentation about yourself to our employees before the investment? So if our employees will say that this sounds really nice and exciting and good then that’s one positive sign. And, like you mentioned that it’s a pretty big thing when the company is not any more within your hands. But it’s not like investors are coming to you and telling that this is how their business would be led in the future.

Of course, the team who is building the company should have the knowledge. And, the role of the investor is to bring more money to make sure that the company can move fast and expand the operation fast and become even more successful.

Petri: You were not knocking on the doors of the investors they were coming to you and you were like let’s see if this works. Did I get that correctly?

Heikki: Yeah. That’s how the environment and space works. When a company is getting to the point of, let’s say, 5 million euros or dollars in revenue. There are a lot of investors who will be then contacting you. And especially if you’ve been growing 50% to 100% a year on that scale, all good VCs or investors, they have a group of people who are doing research and they are trying to find you. Usually, they find.

What the investors are doing they are investing money what they have to invest somewhere. They can’t be without investing that money.

There is competition in that space as well. There are not one or two or three investors who are investing in companies. There’s also competition between the investors and they want to make sure that they can give money for the teams which are the best ones and capable of scaling the businesses because they want to get a good return for the money they put in.

Petri: This is not your first company. You have been successfully building and selling companies before as well. Has that been critical in the success of your current company?

Heikki: It made the first years a bit easier. We haven’t been on this scale. Now, we are going beyond 100 million in valuation. We haven’t been this far before. But the first years were definitely much easier. We had a small software development company, roughly 10 employees. Then we were in the mobile game business.

And that business was growing really fast. We sold the business when we had roughly 40 employees in total. If you have done something or maybe two times then the next time the things will be a bit easier. That’s the same in everything. Also when building businesses. The first years I would say were pretty straight forward when our team had experience from the previous companies.

Petri: When you were building the first product and prototyping, I understood that you were not paying everything out of your own pocket. You were saying that I don’t have money now, but maybe if this is successful, we can compensate you. How did you manage to pull that off?

Heikki: Yeah, that was something what we were testing. So, thanks to the people within our network that they had the trust. How the story went was that we knew that to put the terminal together we needed some skills and help there.

Also when building the first version of the reporting service where people can actually see the results we also needed some great help there. We met a few people and we told them about this idea that, Hey, like this is something what we are planning and are you willing to help in case we need some.

Basically, everyone told us that, of course, if you need any help, just let us know. I was discussing it with Ville, the co-founder. Hey, how about if we would be able to do this kind of deal that we don’t…we had only 2500 euros on our bank account. We can’t buy stuff.

If you buy product development from somewhere, you at least spend 50k or 100k or even more. The one option we would do the round immediately. Or we test and see if people can help and the way we agreed was that if the company is successful then we will pay a lot for those people.

Petri: What is a lot? Can you give something concrete that if I want to do the same thing what should I suggest?

Heikki: Let’s put some figures. Maybe that makes it more concrete. We had people who were helping us, for example, with some graphics or with the device, and they were maybe using, let’s say, 100 hours for something.

We agreed that if this is successful then they will get 30 000 euros. If you work for 100 hours, you will get 30 000 euros. We were thinking that that’s pretty good compensation, especially back then many of us had just finished the studies and many of us didn’t have a lot of money in our bank account.

We were thinking that maybe that’s fair. We went and met some friends and people and told that this is something what we can offer. And of course, there’s a really big risk that this is not successful because usually companies fail. But if you are willing to take this risk, if you really are willing to help, this is something what we can offer.

All those persons said yes. They are happy to help and we also made some papers about that so that we have something documented as well. That’s something what we have been always doing that let’s put stuff on the paper so that we don’t have to discuss after a few years what we actually agreed. That’s how it was working and after the company became successful then we paid those out.

Petri: You have been also taking money after the A-round. Can you explain something about the process there as well? Does it get easier – are there any changes when you start to put more alphabets into the series?

Heikki: It’s a bit different. When doing the smaller rounds and then the requirements from the investors are not so tight. When doing the bigger rounds then there will be much more requirements, for example, related to the data quality. If you are putting the following rounds together you most likely have then the experience from the previous rounds.

You know all the terms. You may have read a few books and some articles and you have gone through the process. From that perspective, it’s easier. You also maybe have the network already in place. Sometimes the investors who are in the B-rounds are maybe a bit different.

Maybe the biggest difference is when doing the bigger rounds then the requirements for the company get a bit more strict. You have to be able to provide a lot of data. You have to be able to provide a lot of data pretty fast.

When things get big enough if thinking about investments of, let’s say, +100 million or acquisitions +100 million I just heard a story where there was one acquisition happening in +100 million category and the company who was doing the acquisition sent the data request for the company that please provide this churn information on us.

And the company was putting that data together and sent the day within the week back and the feedback from the company who was doing the acquisition was that this was too slow and we will cancel the acquisition. At this stage, you can’t answer these kinds of basic questions in seven days, you have to be able to provide the answer within a day or two. And for that reason, we cancel the acquisition.

Petri: You have to have everything ready and anticipated all the time?

Heikki: Yes. When you get to the category of, let’s say, +20 million rounds and especially if you are working with the US investors. They require more in terms of data quality. When scaling up the business you need the data for the investors but also you need the data to scale up your business. There’re many reasons why to focus on data quality.

Petri: How much have you been raising so far?

Heikki: Roughly 40, now.

Petri: What is your plan for the future? You still need more rounds or you want to go public, or what’s the big plan?

Heikki: The plan is to continue building the business and create an even much bigger success story. How we see it is that when you build amazing companies then you also have options. You can have an IPO or you can maybe sell the business. You can maybe continue as just like having the company maybe. If you have investors, of course, they have to do the exit, but there will be then some other parties, who can maybe then buy those portions. Our focus now is to continue building the success story and going from there.

That’s something what I also advise people to do. This COVID is now a really good example of that. If some companies had in mind that let’s sell the business in the summer 2020, that’s our goal. We do everything to get there.

We streamline our cost structure, and so on. We sell the company then, and now we know that COVID happened. There can be some external things happening. If you put your eggs in the one basket you may have not so nice surprises. If you have an amazing business, then you also have many options.

Petri: What’s your take on the board and the board work and starting from just a few people in the beginning and now having a lot of employees and also investors? The governance structures and the management needs to also be up to par. What’s the best way to do that? Now, looking back is there something you would do differently? And what’s the advice for those who are building their company now?

Heikki: It depends on the situation. There is no one single answer to that. If you have the team who knows what they are doing, they know their business, they know their market well then I think you can go without the board maybe even to 10 million scale or something.

If you feel that you have a great team but it would be actually helpful to have someone external from the finance perspective, from the product perspective, from the sales/ marketing perspective, from the scaling perspective sharing more some experiences for the team who is doing that first time, then it’s maybe good to have the board in place and to have the skills there what you need.

When you are below, let’s say, one million in revenue the board is maybe a bit more operational and not having meetings like every second month. It’s more about having the WhatsApp group and discussing different topics maybe every week. How we did it, was that I think we had roughly two million in revenues when we got our first official board together. Until that we felt that we kind of know what we are doing. But at a certain point, I felt it would be good to have some supervisor for me as well and it would be good to have the people around you, who you can discuss different topics and get some help.

The first board was set by the group of people who had really good experience about scaling their businesses from the marketing/sales perspective, from the finance/funding perspective. And nowadays, it’s more about having also like investors on the board. We usually have had five or six members on the board to make sure that there are enough ideas, but not like too many ideas.

If you have a board of ten persons it may be tricky to do the decisions if you have like, let’s say five persons on the board you can also get decisions out.

Petri: You were planning to step down from the CEO role and then COVID happened. Can you describe the changes and how did you actually then finally come up with the new CEO?

Heikki: I have been in the CEO positions for roughly 20 years and a bit more than one year goal it started to feel that it would be really interesting to do something else as well. And this again is about testing different things. I was thinking that now I want to test that how does it feel to do something else as well?

At first, I told about this idea for the investors and at first, they were like, okay, that’s an interesting thought.

Petri: What’s wrong with the company?

Heikki: Yeah. Why you are doing that? This is not something what founders normally do. I was telling them if we can find an amazing person who has amazing network, skills, knowledge about scale the business, what will we lose?

 I’m an engineer and trying to think from a pretty practical perspective. I was proposing that let’s test this. Let’s see how it works. After that, we were discussing with the board and basically the feedback was the same. Eventually, we agreed that let’s start the process and let’s see what kind of candidates we can find, and then COVID happened.

We were on the journey for scaling the company towards 300 employees globally and the COVID came. We have this hiring process going on. Then we had to agree that, okay, let’s now manage this phase. Our new business sales dropped roughly 90%.

Then I had to focus on the situation what we had within the company and the employees there. But also I continued together with our chairman the discussions we had with the candidates. Eventually, we actually found the person from our board.

We have had Miika Mäkitalo as one of our board members. He has been scaling up M-Files from 40 employees to +500 employees and has amazing global experience in scaling companies. I was asking him what are your thoughts about the future? What kind of plans he has and eventually discussions got a bit more serious and we were discussing about the option that if he would join. Eventually, we agreed on everything at the end of last year. He started in early December last year. That’s shortly the story.

Petri: How do other people react to success? You say that in the beginning, you had a hard time convincing anyone that it’s working, at least some of the customers. Then there’s obviously a lot of people who look at the four buttons and say that this is so simple. What’s the experience? What to expect?

Heikki: It’s being on the roller coasters. You will maybe analyse the experience more after you have gone through instead of while having the experience. Before building the companies, I was thinking that maybe there is a lot of, I don’t know, parties and emotions related to that during the journey. But at least in our case, the journey has been so fast. We have been just doing a lot of stuff, moving fast, having fun and, and every day trying to learn something new, improve things. Maybe we should have stopped a few times for a week and just to discuss together what has happened and what are the learnings and how to go forward.

But it has been more about a run for ten years and maybe the detailed analysis will come later when we have more time for that.

Petri: In one episode with Jurgen Appelo, he had some interesting experiences in Canada. I think you were traveling to Canada, and something happened?

Heikki: Yeah. This is like one thing when going fast from places to other places from countries to other countries. Sometimes you are so focused on the business, you are so focused on the customers and improving the business that…I was in New York and meeting some investors and customers there.

And I was planning to fly back to Florida when we were living there, but my colleague sent a message: please fly to Canada, to Toronto and let’s meet there and I will send you all the details via email. I took the ticket to Toronto and went there to the airport and I went to the security line.

And the person who was asking what is the hotel where you are going? And I was like, I don’t know what’s the name of the hotel. And then he was asking that who are the people who you are going to meet? And basically, he was asking the questions and I didn’t know answers to any of those questions.

Then the person told me that you have to go to the room there, and they will have more questions. I went there and again the person was asking the same questions and a lot more questions like what do you are doing here, and so on? And I had all the details, all the information on my mobile phone, but the issue was that they told that in security in Canada you can’t use your mobile phone. I was telling them that I have all the answers here on my mobile phone. And if you don’t let me use this, I don’t have any answers to your questions. It took about one hour and eventually, they told that, yeah, you can go.

Petri: How did they were convinced that okay, you may be telling the truth?

Heikki: I had a HappyOrNot T-shirt on, and I was going to speak at an event there. I told them that, hey, you can see these smileys here. You can see my face on the trade show material from the web. I’m going there. I’m actually going to meet the people from Toronto airport. So, I’m going to meet your colleagues as well. But I don’t know those names because I have those on my mobile phone, but you are not letting me use this mobile phone. Eventually, they gave up.

Petri: What was the button you pushed? Or they didn’t have the terminal there yet?

Heikki: Yeah, they didn’t have the terminal yet there.

Petri: What is your favourite word?

Heikki: Love.

Petri: What is your least favourite word?

Heikki: It’s kind of the sentence: “I won’t ever learn this.”

Petri: What turns you on creatively, spiritually or emotionally?

Heikki: It’s freedom and space.

Petri: What turns you off?

Heikki: Limits, small rooms.

Petri: What is your favourite curse word?

Heikki: Mm mm. Let’s go to the next one.

Petri: What sound or noise do you love?

Heikki: Sound of birds.

Petri: What sound or noise do you hate?

 Heikki: How to say this in English: when someone is giving up without any reason.

Petri: What profession other than your own would you like to attempt?

Heikki: Hmm. Maybe something related to music or something related to entertainment.

Petri: What profession would you not like to do?

Heikki: Hmm. Doing something what is against the situation of what we have globally now in terms of temperature increase and the climate change what we are having now. Things related to that.

Petri: If you could be a co-founder of any startup in any way era which one would you choose?

Heikki: Maybe Facebook. And the reason why I say this is that I think it would have been amazing to be part of building the new ecosystems within the B2C space and getting all the learnings from there. Maybe Amazon is the second one, which is amazing from the culture perspective and when building really big things. Also failing with pretty big things.

Petri: Any final words for the audience?

Heikki: Hmm. If you hear that someone is having a somewhat good idea about something that, hey, should I maybe start the business and especially if the person is, let’s say, between 18 and 25 years old, and maybe that person is studying at the university, please encourage those people to try because that’s the time when you are usually used to live with pretty small amount of money and taking risks during that time is much easier compared to the situation when you have family and maybe two kids. And you need that 2000-4,000 euros or dollars per month to provide food and have a warm house. There definitely can be more successful companies globally.

That encouragement can mean that we will then hear about some amazing success stories because you have been guiding some people in that direction. We need support from each other, especially during these times.

Petri: Thank you, Heikki. It’s been such a satisfying experience, a lot of smileys!

Heikki: Thank you. Thank you. Likewise.

Miscommunication is the norm

January 24, 2021

I don’t understand you! It’s safe to assume that what you intend to communicate is not heard the same way by the recipient. This saves a lot of time but it’s hard to do it in practise.

The complexity is manifold. It requires clarity to express something simply and with minimum ambiguity. Even if your thoughts are clear the recipient does not share your life experience.

You write a lot between the lines when you’re expressing something. You bundle your impressions to the symbolic links we call words. They have many meanings.

Add cultural and generational differences and the mix is becoming so complex that it takes a supercomputer to keep up with the variants.

How about when you’re not thinking clearly, communicate in hurry or you have some misconception or ambivalence in your message?

In reality, we have some expectations, hopes, fears, cultural norms or behavioural patterns that smudge message further either in the receiving or sending end, often in both:  a real-life broken telephone.

Setting expectations, hoping to reach the deadlines or trying to decrypt the intentions from a few lines of words or video calls takes a lot of bandwidth. The guessing game is endless.

Yet, it’s useful but pointless at the same time. We never know what’s happening in the sender’s head or what their real intentions are. They can just have other priorities, distractions or life events that take precedent over your cause.

It’s easy to start to take offence and imagine things that have no base in reality when you’re waiting for a response. The higher the stakes the higher the pressure and the temptation is there to just end the uncertainty. It only takes a few words and one action to end it all.

Remote communication puts the noise level higher. Here’re a few things that might help:

1) Give the benefit of the doubt: assume that everything is done in good faith (unless proven in action otherwise).

2) Avoid quick gut reactions: before sending anything, consider is it constructive and does it progress towards your objective? If not, just venting or expressing your emotions may be best expressed at your end only.

3) Assume it’s not you: the world does not circle around you and people are mainly concerned about their own issues.

4) Be clear, concise and consistent: actions matter more than words. Show your trust and intentions with actions that align with your message.

 5) Communicate your concerns: assume that other people don’t know how you feel or what are your concerns. State them firmly but with kindness.

Individual ownership

January 17, 2021

Last decade gave us our individual voices with social media.  Now, it’s time to take the control back from the big platforms and take ownership of our content, audience, business, finances, and the rest of our property.

Intermediaries are valuable but when they can deplatform you at their whim it’s time to reverse the process. Fortunately, the technology advancements enable this now.

Blockchain, DeFi, edge computing and other technology solutions make it possible to take direct ownership and control without relying on any external party.

This is a huge paradigm shift in our societies. It will take years but it’s a necessary move. Incumbents are not giving up their position and leverage voluntarily. The only way to turn the tables is to create something better and make them irrelevant.

In some cases, this is rather easy. Facebook’s Whatsapp created the perfect gift and opportunity for its competitors by announcing its change on the terms and services. We are lucky to have better alternatives immediately available such as Signal.

In other fields, the choices are more limited. It’s harder to stop using USD if your trading partners, salary or other dependencies make you still to use it. Yet, it’s unsustainable when a currency is printing money at the rate what the US is doing at the moment. They are deplatforming the rest of the world and ending their global currency domination by their very actions.

When everyone is only 100 ms away, it’s easier to start to ask questions that were much harder to consider when we tended to think more locally. Now, much of what we do happens online and the physical boundaries are irrelevant.

This mental shift will disrupt a lot of old ways of doing things in the coming years.  Your business is no different. Customer expectations are shifting and leapfrogging. What was acceptable a few years ago is totally out of order now.

When you have tasted the freedom and control of your own affairs in one aspect of your life it becomes harder to keep up the reverse ways in others. Individual empowerment is starting to penetrate areas that were incomprehensible earlier.

Public sector and central governments have started to feel this disruption.  Expect more turmoil and redefining of all the ways of doing things. We are recreating, rebooting and questioning a lot at this point.

Change is good. We just hate the uncertainty. Enjoy the ride and build something better.

Embrace negotiations with a creative mindset without compromises

December 6, 2020

Joshua N. Weiss – TALKS WITH PETRI

Joshua Weiss talks about why you should not compromise or plan when negotiating, how to avoid common misconceptions, how to deal with bullies and power moves but also become a better negotiator and embrace the process. He also reveals why he did not become a lawyer.

Embrace negotiations with a creative mindset without compromises

Bio

Dr. Joshua N. Weiss is the co-founder, with William Ury, of the Global Negotiation Initiative at Harvard University and a Senior Fellow at the Harvard Negotiation Project. He is also the Director and creator of the Master of Science degree in Leadership and Negotiation at Bay Path University. He received his Ph.D. from the Institute for Conflict Analysis and Resolution at George Mason University in 2002.

Dr. Weiss has spoken and published on leadership, negotiation, mediation, and systemic approaches to dealing with conflict. His newest book is entitled The Book of Real-World Negotiations: Successful Strategies From Business, Government, and Daily Life. The book shines a light on real-world negotiation examples and cases, rather than discussing hypothetical scenarios. It reveals what is possible through preparation, persistence, creativity, and taking a strategic approach to your negotiations.

Dr. Weiss is also the co-author of a storybook trilogy for children ages six to 10 to learn negotiation and conflict resolution skills. The books are part of the Emo and Chickie series. The first book is entitled Trouble at the Watering Hole: The Adventures of Emo and Chickie and seeks to teach children creative problem-solving. The second book, Bullied No More:  The Continuing Adventures of Emo and Chickie addresses the difficult issue of bullying. The third and final book, Phony Friends, Besties Again: The Continuing Adventures of Emo and Chickie focuses on a social media conflict and how best to address it.

Dr. Weiss has conducted trainings and consulted with a number of organizations, companies, and governmental entities, including Microsoft, General Motors, United Auto Workers, Houghton Mifflin Harcourt Publishing, Christie’s Art Auction House, CDM Smith, Deloitte, Genzyme, Harvard University, Mass Mutual, the Massachusetts Institute of Technology, Yale Medical School, the United Nations (Mediation Unit, UNAOC, UNITAR, and UNDP), Government of Canada, the US Government (State Department, Federal Emergency Management Agency, National Park Service, and Transportation Security Administration), and various state governments. 

​Lastly, Dr. Weiss delivered a Ted Talk in 2018 entitled “The Wired Negotiator” about the role of technology in negotiation and how to use it most effectively. 

Website  | Twitter | Linkedin

Transcript

(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri: Hey Joshua, how are you doing?

Joshua: I’m doing great. Thanks so much for having me. I really appreciate it.

Petri: Why should you not plan when you’re doing negotiations?

Joshua: It seems a little counterintuitive to think that way because most people want to plan. They want to have a clear sense of how do I go from A to B to C to get to my desired outcome. The problem in negotiation is that it’s rarely linear. Negotiation ebbs and flows. It goes down roads that we often don’t see and can’t really see coming until we’re in the process.

We actually use what we call the 80/20 rule. There’s about 80% of a negotiation that you can prepare for and about 20% that you can’t. You have to just react and respond to. When you have a plan it doesn’t account for that 20%. And that’s often where people get really confused.

They get disoriented because their plan isn’t going in the way they imagine. And so they start to panic. They start to get nervous. Instead, better to approach negotiation from a contingency planning point of view. Which means that you think about what your goal is but then you think about three or four different avenues that can get you to the same goal.

Petri: What is actually a negotiation if you start from the beginning? How often do we negotiate and when it’s important or is it always as important? We have seen in the movies and TV series all these hostage negotiations and high stakes negotiations. Is that the only game in town or what’s the magnitude and when should I care about negotiating?

Joshua: That’s an important question because I think a lot of people tend to not see themselves as negotiating much. But in fact, my view is that you’re negotiating all the time. At work, you negotiate with your boss, your co-workers, people you oversee. You negotiate with clients. You negotiate with subcontractors and then at home with your spouse or your parents or your kids.

And in the world around you, with a company that you might disagree with, buying a house or a car, all of those are opportunities for negotiating. If you don’t realise how much you negotiate, I would encourage you to begin now because it’s not too late. And to learn about negotiation. This is the big challenge. Most people do what I call intuit their way through it.

They take an intuitive approach to negotiation. They don’t prepare. They just think that they’re gonna find their way through the process by the seat of their pants. And it doesn’t work well. Really one of the critical elements of negotiation is that planning phase and doing your research, understanding the parameters of negotiation in all of this.

I believe very strongly that negotiation is something we do every day, all the time. You utilise negotiation for three things. The first is to create a deal. In the business world, it might be to sit down and to try to work out a deal with another company that seems to make sense with you.

The second is to build relationships. This is something I do a lot of where I’m negotiating with people and I’m negotiating the relationships so that in the future when I want to work with them or engage with them, I can. That’s a much longer process. It’s a much more subtle process.

The third usage of negotiation is to deal with conflicts and problems that arise. In fact, negotiation is really our primary tool for handling conflicts in a peaceful kind of manner. If you think about those three realms, that’s an awful lot of opportunity for practice and for usage in your own life.

Petri: And yet it sounds so paradoxical in a way. It’s like the previous episode we talked about selling. It sounds so simple, you just sell, but most of the, even business schools, universities, they don’t have a sales department. They have marketing, they have accounting, all these things, but somehow sales is not there.

For some reason, I haven’t gotten a lot of education from negotiating and I don’t think there was anything, at least in my formal education, about how you negotiate. So putting it like that. Okay. There’re a lot of opportunities to train, but then you say again that we don’t actually really practice that, and we are not even probably conscious that we are actually negotiating.

Where to start and how to do that properly?

Joshua: I would say that I think things have changed. I think now when you look around most, for example, most law schools in the United States offer a negotiation course, at least. Many business schools, many undergraduate schools here in the United States as well are focusing more and more on negotiation.

And I would also say at the middle school and high school level here, maybe 10-18 years old, those kinds of classes are becoming more numerous. That’s good that there’s hope there. I think there’s a recognition that we do this quite a bit and we better learn how to do it effectively.

Where you start in so many ways is with educating yourself because the key to negotiation in so many ways is awareness. For example, when somebody plans to use perhaps some dirty tricks on you, some manipulative tactics. Those tactics only work when you don’t know about them. When you know that another person is taking a good cop, bad cop approach to the negotiation.

In other words, one person is going to look good and the other person’s going to be the bad guy and they’re going to play off each other. When you know that’s what’s happening. You recognise it quite easily and say, okay, I’m now playing the good cop bad cop game. And I know how to do that. The good news is that there’s a lot of information out there on negotiation.

If you Google negotiation books there’s a tremendous amount. It’s a realm that is in some ways open for sort of self-study, if you will, because the books are very accessible. They’re written in many ways for a popular audience. They’re not too academic for folks. That’s really the first step.

When people start to learn about negotiation, what happens is light bulbs start to go off. They begin to realise that if they learn more and more in this realm, it’s going to help them at every facet of their life. I’m currently teaching a class in the master’s degree program that I run.

It’s the first class in the program for students and it’s an introduction to negotiation class. I continually get emails from people saying I can’t believe I didn’t know all of this. I’m 50 years old or I’m 40 years old, and this is so helpful and I can already feel myself feeling more confident.

That’s where you begin and once you start down that road, you realise that when it comes to negotiation you can learn all of this and it will make you much more confident in your approach.

Petri: At least for me, I think the most important thing when you’re starting to think about doing a negotiation if you are consciously doing that is that you go there with the right mindset. It is so important that your mind is in the game and you’re preparing yourself for what’s coming.

For many people, negotiations have a negative connotation.

Joshua: It does and I think that’s due to their experiences. Most people, again, here in the United States, most people’s experience when it comes to negotiation if they’re not doing it in a business context, is buying a car or buying a house. In particular, cars here.

Petri: Lemons!

Joshua: Lemons. But the process itself with the salespeople is often uncomfortable.

Petri: It’s unfair well, isn’t it? They are professionals. They’re selling every day and you’re buying a car, you know, once in a few years or something.

Joshua: It used to be unfair. I would say it’s not as unfair as it used to be. The reason I say that is because negotiation is about access to information. In fact, to me, information is the currency of negotiation. If you think about maybe 30 years ago when there was no Internet, car dealers and the salespeople involved, they had all the information. They knew what they paid.

They knew what things cost. It was very hard as a consumer of a car to know what that information is. Today, however, there are a number of websites out there for you to do your preparation and planning so that you can learn more and more. What you’re actually seeing, certainly here in the United States, is that people have moved away from that model of negotiating car prices.

There are a lot of places here that just have a no negotiation price because so many people don’t like that process. Now, of course, there’s a problem with that, which is that the dealer’s the one that puts the price on there. And that’s usually higher than it ought to be. In general, the problem is that most realms in life when we’re uncomfortable we don’t do well and we don’t want to be engaged with it. That’s where a lot of the anxiety comes from and the uncertainty of it. If we don’t know what the parameters of the negotiation are, then we feel like we’re grasping in the dark. We’re not able to really get a good sense of where I should be headed.

That’s again, back to your research and your planning and your preparation, why that’s so very important.

Petri: What are the biggest fallacies, the biggest mistakes you can do when you start to negotiate?

Joshua: There’s a lot. You referenced one about mindset. A lot of people come into negotiations and the world tells us this. It’s somewhat natural and normal, I suppose. But the world kind of tells us that there’s going to be a winner and a loser. The best negotiators that I work with and have worked with for many years know that’s not true. The majority of our negotiations are with the same people over and over again. Probably not when you’re buying a car but when you think about your negotiations at home obviously they are. But even in a business context, you’re tending to negotiate with the same people time and again.

Having a win-lose mindset doesn’t really help you. If you’re trying to negotiate with a client and maybe you squeeze a little bit more money out of them. But they walk away from the table feeling badly about it or realise after the fact that you took advantage of them, they’re not going to be your client for very long.

You have to have what I call a mutual gains mindset. I don’t think there’s always the opportunity for a win-win where everybody gets everything they want. But I do believe that there is an opportunity for mutual gain for you both to do better than you can when you walked in the door.

That’s the first thing. The second thing…

Petri: Can we pause here just for a sec? How can you set that? If you’re coming to the negotiations with someone, maybe someone you know, and you already know that they may not be in that mindset for whatever the reason. Maybe we were talking with some organisation and there’s a new person coming in, but the relationship between the organisations is an old one.

Is there a way to set the stage in a way that you’ll stack it on your favourite that’s more advantageous for both parties that outcome, or at least at the outset?

 Joshua: Yeah, there absolutely is. The first thing is something that I would call naming the game. When you walk in the room and let’s say you start negotiating and you can tell that the other side is defensive and holding back information and trying to play different games.

One of the things that I tried to simply say, look, we can negotiate this way where we both kind of hold back and push back, et cetera, but I don’t think that’s going to help us over the long-term. Let me propose that we try a different way of negotiating where I think, because we’re going to be doing this for a long time, hopefully, where we can both really try to come up with the best deals possible.

One approach is to just name the game. And it’s interesting because there are a lot of people who don’t realise there’s another way to negotiate. They think what they see in the movies, as you mentioned or on TV is the way to negotiate, when in fact, it’s really not.

That’s one idea is to name things directly and try to highlight for the other that there’s another way to do this that would be very likely more beneficial to both of you over the long-term. That’s one.

The other one that I use and I’ve been using more frequently and comes out in my recent book is using stories to help them to understand how taking a different approach would be beneficial.

What I’m noticing in my negotiations is that when I say, let me share with you a story of how I’ve done this in the past. And lay out a scenario where it looked like we might have a win-lose negotiation, but we reframed it and ended up having more of that mutual gains approach that I told you and that we found value, and it was a much better deal than we would have ever had.

By painting that picture using what we often call illustrative specificity, painting an example very clearly for someone, it can be very persuasive in an almost non-confrontational manner because you’re telling them a story. When you say, let me share a story with you, people’s minds almost immediately go back to say when they were children and an older person, their grandparents sat them on their knee and told them the story. It’s disarming and that’s…

Petri: Once upon a time…

Joshua: Exactly. It’s a nice way of trying to change a dynamic that often exists in a negotiation. That is, by the way, one of the harder things. Because when people come in with a certain mindset, that’s what they’re looking for. If everything looks like a nail, they use a hammer. And the idea is to replace the hammer with something else.

Petri: And you can do that even if you are the weaker power party there if you realise the situation?

Joshua: Yeah, you absolutely can. And in fact, when you are the weaker power, one of the tools and tactics that we often talk about using is framing the agenda and framing the negotiation the way you would like to, or at least trying to, because people don’t realise that the frame that you put on negotiation is critically important.

It’s what you’re going to talk about. So, who gets to frame the negotiation and who gets to lay out the agenda matters greatly. One piece of advice for people who don’t have power in a negotiation is to to try very hard to write up the agenda and frame things in a way that would help you.

That’s one of the tactics that you’ve got at your disposal to do that. And you mentioned, by the way, other mistakes, the other one that I wanted to make sure to mention is this notion of compromise. Often people equate negotiation with compromise. Which is another reason by the way that people don’t like it. Because they look at it and they say, well, so I have to give something up in order to reach some kind of an agreement but I don’t want to give something up because it’s really important to me.

That’s not an effective negotiation. To me, negotiation is about creativity and problem-solving. You can always compromise later at the very end. It should be the last stop on the train, not the first one. What you ought to be doing is thinking I’m going to go into this negotiation and I’m going to try to get the other person to think in a creative way with me and to problem-solve. And to think you and I, as negotiators have a negotiation problem in front of us, how do we solve it? How do we create the best deal possible? How do we manage this conflict? Much of the time I find a compromise is not necessary. It’s only necessary because people seem to rush there and think it is. I would really encourage folks to hit the pause button on compromising and instead think more about being creative and problem-solving and taking that orientation toward your negotiations.

Petri: You’re saying that actually, they skip the process because it’s probably painful and they don’t want to be in that position. And they start to compromise before you should talk about more like, okay, what are we doing here? What is the big picture? Why are we here?

What’s the value for both parties? Set the objectives and see that we are in a bigger frame on the same page and everybody understands what this is really about. When we understand the values and the dynamics there, then later it’s easier to go to the compromising or if you need to do some kind of trading.

Joshua: That’s exactly it. People compromise typically for two reasons. One is that a lot of people, as you mentioned, have anxiety about the negotiation process. And so they don’t want to lose a deal or they don’t want to if the other person is putting pressure on them, they’d rather just compromise and get something.

But the other is, as you mentioned when a difficult issue comes up in a negotiation, people often say, well, let’s just split the difference and move on. The problem with splitting the difference and moving on is you don’t really know what’s important to the other side. You haven’t explored in the way that you just talked about.

What do you value? What really matters to you here? Because what matters to you is how you create better deals. If you don’t dig down for what we would call interest and what’s really motivating people then you’re skipping a big part of the process. When you rush to compromise, that’s exactly what you’re doing.

You’re not really probing for what is it that’s really important to this person. It’s not what they tell me. What they tell me is what we would call their positions. But what’s really important for them. What’s going on on the surface are their interests. And their interests are all of those things that bring them value in a negotiation. If you haven’t dug down and really figured out what’s going on in the negotiation, you’re missing all kinds of opportunities to create those better deals and to not compromise.

Petri: And this goes back to the research. You have to understand what is it even the hidden value or the hidden agendas in there that are actually driving them? What is the most important thing for them? And it may not be any of those things you think that you have to give up in order to achieve a good deal for both parties.

Joshua: That’s exactly right.

Petri: Were those all the fallacies? You just wrote an excellent book and I think there was like five or probably there was something still missing or did we cover most of them already? I just want to make sure that we close the loop.

Joshua: The other one that’s missing is that a lot of times people see their goal in negotiation as reaching an agreement. When in fact that’s actually not the purpose of negotiation and a lot of people are very surprised when I say that. The purpose of negotiation is to…

Petri: Yeah, it’s counter-intuitive. Isn’t it called an agreement…

Joshua: Right. People are like, what do you mean…

Petri: ..what you are supposed to sign.

Joshua: Right. People are like, what do you mean I’m not supposed to reach an agreement? And it’s not that you’re not supposed to. It’s just that that’s not your objective. That’s not your goal. People get things confused in that way. Because if my goal is to reach an agreement…I’ll share a story with you.

One of my first jobs in the world of negotiation consulting was with a small company. I got a call from the CEO and he had a sales team of six people. He said I’d like you to come and do negotiation training with my sales folks and figure out why they’re bringing back such poor deals because they are.

So I said, sure, no problem. I went into the training and then during one of the breaks, I think it was at lunch. I said, your boss told me that you guys are coming back with deals that are not very good for the company. Why would you do that? One of them said, well, it’s our metrics.

And I said, what do you mean it’s your metrics? And he said, well, we’re gauged as salespeople on whether we reach agreement or not. Not on whether it’s a good agreement for the company or not. But whether we come back with an agreement. That’s how we get our bonuses. So, I went back to the CEO…

Petri: You just get what you measure.

Joshua: Yeah. So, I went back to the boss and I said, actually, you’re the problem. I said you’re giving them instructions that are counterintuitive. They are missing the mark. What you ought to be saying to them is that these deals need to be profitable. They were so fixated on reaching an agreement that they didn’t care whether it was actually beneficial to the company because that’s how they were gauged.

The point is that in negotiation we have a goal. We have an objective that we’re trying to meet. That is how you should gauge your negotiations. Did I meet my goal as best as possible? And if you didn’t then…I often say to people because we talk about a concept called your BATNA. And your BATNA is your best alternative to a negotiated agreement.

All that really means is if you can’t reach an agreement with the other side, what are you going to do? What are you going to walk away to if you will? For me, if I go through a negotiation process and I realise at the end that it’s actually more beneficial for me to exercise my BATNA, to walk away from this particular deal than to sign on the dotted line that’s a successful negotiation to me.

A lot of people would say you failed. And I would say absolutely not. Because to me, it’s about meeting my objectives and I can meet my objectives better by walking away to another deal than I can by reaching this agreement. That is again, it’s where you look, it’s where you focus and put your attention.

But it’s a really important difference because when people believe that their goal in negotiation is to reach an agreement, they reach bad ones.

Petri: Yeah, because they want to finish that. They want to have an agreement like in your story. I think it also shows in you, if you have already accepted, I may not have an agreement and I may walk away without a deal and that’s okay.

Joshua: That’s right. It takes the pressure off, actually. You’re exactly right. That when people sit there and they say, you know what? I actually think that especially when you’re planning you also know what the parameters are of what you should accept. This is back in that preparation phase. You do your homework and you say, if they aren’t willing to go past this point, then this deal no longer makes sense for me.

If you don’t do that if you’re thinking to yourself, I need to reach some kind of agreement here, you don’t define those things and you’re really subject to making bad deals because you have not defined the limits for yourself.

Petri: Was it even in your book, this is like a self-harm situation. You don’t have a deal when you walk in. You did a bad deal and now you actually are in a worse position because you did a horrible deal. Maybe you are losing money and you’re tied up and you cannot do anything else. It’s actually way better just to walk away.

Joshua: Yeah. One of the case studies in the book that I share is about a company who was based in the Middle East. They had signed a deal with a shipping company to transport ore, aluminium ore because they make aluminium products. They reached a deal and literally within months, this was back in 2008, we had that global economic meltdown.

For them, the deal they signed was $25 a ton or whatever it was. The market dropped to $10 a ton and immediately they were in this really difficult position. They had to try to think creatively. How do we renegotiate that?

There are factors and there also lots of circumstances that change along the way in negotiation that are important and out of your control. That’s the thing that is really important for people to grasp and it’s back to that 80/20 rule. Which is, there’s a lot that you can determine, but there are a lot of factors in negotiation, whether they’re market forces or other things that might prevail now, but in six months could be very, very different and make it what seems like a reasonable deal then something quite bad now. There are a lot of those factors that come to play. That’s exactly right.

Petri: One of the interesting things I’ve picked up from your book was Post Settlement Settlement. Can you describe what that is?

Joshua: Sure. Post Settlement Settlement. It’s a very interesting idea. It was started by a colleague of mine named Howard Raiffa at Harvard Business School. It ties back into something we talked about, which is compromise. He was convinced that most negotiators compromise. They essentially did not explore for what really mattered to people for all the value in a negotiation that they were compromising too early and too quickly.

He proposed an idea called Post Settlement Settlement sort of the least sexy name he could think of, I think. But the idea is important. What he basically did is he said to parties in a negotiation: come to me. And if I can make your agreement better for both of you, you’ll give me a percentage, not just one or the other, but for both of you.

He was so sure that he could because he knew that most people rushed to compromise that he essentially did about 300 cases over the course of a few year period. In 90% of those cases, he was able to find value for people. It’s a simple question that he encourages people to ask, which is when you believe you’ve reached an agreement, hit the pause button and say to the other negotiator, Hey, would you be willing to look at our agreement and see if we can’t make it better for both of us?

Are there things that we didn’t include before we signed on the dotted line? Are there things that we didn’t include that we could include that would have value for you and for me? And as you say, in the book, there’s a case study of exactly that with a company that does recycling and working with a distributor and they asked that question based on some of my tutorage because I was happy to do training with them at the time. And I probed a little bit and asked them had they had this conversation with the client and it turned out that they hadn’t and they went back and they had the conversation and they were able to make the deal better.

One of the nice things about this is that you already have a deal. You already have a deal that’s on the table and you can always go back there and say, okay, we couldn’t find anything. That’s fine. But back to your point about taking pressure off. There is no pressure when you ask this question because you already have that deal.

Then people are more able to get into a creative brainstorming kind of mode once you know that your fallback is that I already have this deal. So, maybe I could think a little bit creatively and differently in this instance and see what we can find.

Petri: Just a technical question, but I’m curious. Would you recommend to actually sign the original deal because then you have a deal? It’s a signed deal. Because, at least for me, the question comes as well, that okay, if we do this, can I actually blow off the whole deal? If we now start to talk about some stuff and then it’s like, okay, we realised that maybe that the original deal for… stuff happens, you know? What’s your advice, how to do this if you want to do this because it’s not a standard way of doing things?

Joshua: Typically, I don’t. I typically will say, look, I know we have a deal on the table and I’m actually comfortable with it, but before we sign it, can we just take a minute and think about whether there’s anything that we could add from your point of view? I’m going to think about it from my point of view before we sign off on it.

It’s never been my experience that people say, well based on this latter part of the conversation, I don’t want to do the deal anymore. it usually only is an enhancer. It’s only a way of making it better. I don’t encourage people to sign because then there’s a finality to it and I don’t know whether people would take the Post Settlement Settlement process as seriously. Whereas if you’re still holding a little bit of something out there before you sign.

Petri: Can you do that….I’ve seen at least the difference between the big boss or the owner of the company, or someone who has the power to do whatever moves or even exceptional moves in negotiations. And then someone who is sort of a middle-level employee and they just don’t have the power.

It’s not that there’s anything else, but they have their certain limits where they can move. Can you do that in all the levels of the organisation when you are negotiating or is there something in a way that this works better than in other situations?

Joshua: Well, I think you need to know the parameters of what you can do. In my mind, there’s an in most negotiations, there’s an internal element to the process. For example, if you’re negotiating with a client it behoves you to meet with your boss or a team of folks and say, let’s talk about the parameters of the negotiation and where you don’t want me to go beyond.

When you do that, you can negotiate with much more confidence. If you were to go through the process internally you’ll feel a lot more comfortable at the table to do that exploration and realise that, Hey, this is a red line that I can’t cross. So if the other side were to ask you, could you add this?

And you know, you can’t. You know the answer. For me, it’s certainly possible at all levels of the organisation. But in order to do that, I believe it’s important that you ought to spend some time internally talking to those people that the deal is going to impact and saying, tell me your interest here and where are these places that you don’t feel like I should cross? Then within that, you can more freely explore.

Petri: One of the takeaways for me from the book was that leave money on the table. If you have the power position, if there’s something in there, don’t squeeze everything out of every deal. It’s better to take the high road for the sake of the relationship but otherwise as well. Are there some situations where you should not do that or is that always nice and kind advice to the follow-up?

Joshua: Well, I think that when you might not want to do that, and you have to be careful here, but when you might not want to do that is when it’s a one-time negotiation. And you’re really sure that you’re not going to end up negotiating with this person again in the future. As you all know, as you’re listening to this, you know that we never know what the future holds. There’s a lot of uncertainty in life and things like that. If you negotiate with your reputation always in mind you’re going to be safe and that’s the best way to do it. I often say to somebody, it is really not worth sacrificing your reputation for a few more dollars or a few more euros.

If you are in that one-off kind of scenario where you’re purchasing a home and you’re never going to see these people again, or you are buying a car and you want to get the best price or whatever it might be in your business dealings. You’re in an industry where you do have a lot of one-time negotiations and you don’t have a lot of long-term relationships then it’s okay to go for trying to do the best that you possibly can.

In the vast majority of industries, that’s not how it works. I do believe that you need to be really careful because there are a lot of negotiations out there that look like one-time affairs and lo and behold, you turn around and that person is standing there six months later and it’s someone you’ve got to deal with. If that’s the case, you’ve really created a problem for yourself.

Petri: Yeah. I tend to think that people forget the details, the facts, but they never forget how you’ll treat them. The emotional state when you do something and that will stay for decades. It can be that you were the rookie in some company and now you’re the CEO 20-30 years later. And the guy you were treating badly, it’s just on the opposite side. And now you’re getting your payback.

Joshua: Yeah, exactly. There’s a case in the book that is very much about that. About a startup company that needed an infusion of capital and the person who was willing to give it to them did so but really took advantage of them. When he five years later wanted to take his company public, he had to divest of those shares and, and the person involved knew that he could now take advantage of him because he needed that.

As a result, it became that game of one-upping. It’s something you have to be really careful of. A lot of people when they are confronted or when they’re given the opportunity to take advantage of somebody, they might do it without realising that it could come back to haunt them.

I remember my grandmother often saying to me the only thing that you have in this world is your name and your reputation. Everything else is pointless. She’s in the back of my head a lot when I’m negotiating and thinking about some of these things, because it’s a good litmus test to say to yourself should I do this?

Is it the right thing to do, et cetera. And I will tell you that from my point of view, in all the negotiations that I’ve been involved in, I’ve done far better by leaving money on the table, treating the other side in a manner where I know they have a goal as well. That’s the thing about negotiation is it’s an interdependent process.

I need you and you need me. That’s why we’re sitting here trying to figure this out. If we didn’t, we’d just walk away. When you treat the other the way you want to be treated, you’re not going to lose.

Petri: There’s in the book…This is actually about a transportation case. And for those who haven’t read the excellent book you should but just to briefly recap details. I want to ask you about this. There was an ethical dilemma, and it’s not even a dilemma. I want to ask you.

What’s your opinion? You just stated the case there. This case you already mentioned that the price dropped. They had a long contract in the shipping and then they leaked some information in order to gain an advantage and that was kind of an unethical thing to do.

What do you think about that move?

Joshua: I do think it definitely was. I was going to say borderlines unethical, but I think it was unethical.

Petri: Yeah, I think it t’s was a hundred per cent unethical, at least in my books.

Joshua: Yeah. They did a forensic accounting analysis of the situation and they found that there was a consultant that might’ve done some things illegally. They put that out to the press in the country where the shipping company was based. It put pressure on them because the country where the shipping company was based had a very strong, moral and ethical culture.

They certainly being seen in that way was not a good thing. I do believe that you have to be very careful with something like that. That was a very dangerous thing to do. My understanding is that the relationship went forward and they’ve continued to work together over the years.

I think perhaps on both sides, there were some aspects of some of that. But I think in that scenario, it was a very questionable action that did change the dynamics pretty dramatically, but it was absolutely questionable and could easily have come back to haunt them.

They could have easily pulled the plug on the whole deal and said if you’re going to act and engage in that with those kinds of tactics and we’re not doing business with you. I wouldn’t be surprised if other companies would have taken that approach.

Petri: At least in my case, I would ask if I would ever do business with them when they’re going to do it to me? If they’d been doing it once that can happen another time. I’m not sure that I want to be dealing with this type of people then.

Joshua: That’s the prevailing attitude that happens when you have something like this transpire, some questionable behaviour.

Petri: I’ve been having my share of negotiations. A lot of different negotiations, but usually in business, in the startup field as well. I remember one particular case where I was negotiating a deal, a VC deal. That was a series A deal, some millions involved already. I was negotiating with the main partner in the VC company.

When we were supposed to draw the contract and go to the contract negotiations… and that was really weird. I’d never seen that before and afterwards. This happened in Finland. The general partner of the VC company said that, okay, now, the negotiating party, the one who is actually presenting the fund, the actual fund… they were obviously the general partners, managing the fund but the actual fund where the money is coming from, which is just the legal entity is presented by an attorneys-at-law company. What happened was that I already agreed on all the important terms and everything. But then comes the lawyer and this general partner is nowhere anymore. And basically whatever we agreed upon didn’t apply anymore.

And the GP was just like playing the game that, okay, well now you’re negotiating with the lawyer and everything is on the table again. What should you do in that situation?

Joshua: Well, you should begin by asking yourself whether you want to continue with that negotiation.

Petri: Indeed. But if you cannot walk away, you’re already drained out of funds and it’s been going on too long and it’s like the other option is basically folding the company. How do you turn it around?

Joshua: First of all, recognise what’s going on is the first thing. Because they, what I think they were probably doing is…

Petri: It was a good, bad cop type of thing. It was a conscious act to do it that way because they had the power. They were just using their power. And thinking about from the lawyer’s perspective, painting the picture here, they do it by billable hours. They are representing the fund. They are squeezing everything out of it. I will never see that lawyer again. I have to only deal with the general partner later on. Obviously, it was not the smartest move from his side either, but that was sort of the setting.

Joshua: He probably got that advise that if you go in and get some of the parameters down, we’ll come in and we’ll be able to improve things for you. We’ll drop the hammer on them and, and take that approach. So you’re right. You have to recognise exactly what you said. You recognise what it is, which is a good cop, bad cop thing.

When you create a sense of commitment in a negotiation like that you and they have agreed. People tend to not want to walk away from that. They tend to feel like, okay, we’ve committed to this, so we need to see it through. There’s a psychological dimension that they’re also picking up on, which is creating the sense of commitment in you to not walk away from the process.

And then taking a harder line with you and hoping that that will stick. For me, I guess what I would have done one of two things. I would have said, look, I need to go back to the person that I spoke to and discuss this. Like, I’m not talking about this with you as the lawyer.

Petri: The GP refused to do that.

Joshua: Well, so again, that would be a red flag.

Petri: I’m saying this is not the optimal way of doing this thing, but it’s just like, okay, do we fold the company? We are already due. That was the tactic as well. They just want it to wear us down.

Joshua: There’s a lot of that. Back to the popular conceptions of negotiation, I remember one time I was meeting with a union representative of auto workers union. He said we definitely ascribed to the idea that the first person who has to get up to go to the bathroom loses the negotiation. I thought, well, okay.

I don’t really know why, but okay. I guess if you really needed that negotiation, what I would have said is to the lawyer, look, if you’re going to open up this whole deal that I thought we had already agreed to, there are some parameters that we would like to focus in on that we’re not really happy about it.

What I think I would have done is sent the signal that look, I want to go back and talk to this other guy. If you’re not comfortable with me doing that then you need to understand that if you guys want to open up the conversation again from where I thought we were that there are going to be some changes on our end too, and it’s not going to be us just going along with whatever you say.

I think I would also send that signal to them that if you want to play this game. Okay. But the game’s going to cut both ways. It’s not gonna end well for anybody, but I think that because of the tactic that they’re using I think it’s really important to send a signal that you know what people are doing. Because a lot of times people think they’re being very savvy and very clever about using a good cop bad cop thing. And you need to say to them, actually, I’m very clear-eyed about what’s happening here and you need to understand that if you guys, like I said, if you want to open things back up, then we want to renegotiate these clauses because they weren’t as good as we wanted on our end.

Petri: Yeah. So, just thinking about it now, I would probably being in the same situation again or in that situation, I would say that, okay, I understand that we are starting from scratch again. What we discussed before doesn’t apply. You are actually the person now who has the decision making power and the other guy was just a practise run.

Joshua: Yeah, exactly. That’s right. That was good fun. Now we’ll get down to business.

Petri: Yeah. It’s good that we can now close this quickly because we have the decision-makers on the table.

Joshua: Right. And by the way, that’s an important point. And it’s an important tactic that people utilise, which is, and it’s something to clarify early on in your negotiations is to say to the other side, if it’s unclear, do you have the decision-making authority here? Because a lot of times we assume because we’re sitting with them that they did, and there’s nothing more frustrating than going through the whole process thinking that they had the ability to decide, and then they say, okay, well, we’ve made really great progress. I just have to get my boss to sign off on this. And you’re like, wait a minute. What! I thought you could decide. It’s an important point in terms of process when you begin a negotiation that you want to ask that question to see what happens.

Petri: Another thing I come across quite often is that when somebody gives a contract or that’s the first proposal what they are offering it’s so outlandish that it’s not even anywhere near what you are sort of acceptable. What’s the next move?

Joshua: First of all, any proposal, any initial offer is designed to anchor the conversation where the other side wants it. If an offer is so outlandish that it’s completely unrealistic to me instead of … People fall prey to this trap, which is they start negotiating from there.

What you ought to do is say to them. I did my own analysis and my numbers are quite different than yours. Can you help me understand how you got there? Why do you think that this is a reasonable offer? What’s it based on? People don’t ask that question nearly enough.

They just start negotiating as opposed to trying to probe for what assumptions did you make? What were you trying to accomplish? What usually happens when people make those outlandish offers is there’s no basis for them. It’s just a trick to get you to start negotiating there, because then what happens is often they will come down a good bit.

They’ll turn that around and, and remind you of that and say, well, I did start at $5 million and we’re down to a million, so look how far I’ve conceded, right? It’s another tactic or a trick. And so to me, the best way to handle that is to make sure that you don’t get anchored by that but to then turn around and say, help me understand how you got there.

What is this based on? People can give all kinds of outlandish offers for things. But there has to be some justification. There has to be some reason for those offers. I think that’s where you want to go is paint a picture for me about why this is reasonable.

Why should I say yes to this? Usually, they can’t. That’s the thing.

Petri: One of the difficult things is that if the deal is a bit bigger. It is an important deal. You’re negotiating with important people as well and then comes to the lawyer, the in-house lawyer or the legal department who is drafting the contract. Not just once, but a few times as well. This happened that we made some modifications.

I just went through the terms to nitty-gritty details, but the important ones and the lawyer from their side comes back. And it appears that our business partner from the other side is not involved in the process. And those modifications, those comments, those things we wanted to change, they are completely omitted and they do new ones. You see the power game there.

Just giving a bit of a reasonable doubt as well. The benefit of the doubt in a way that maybe the business people were not involved and they just let the legal people to run the negotiations there, the details, but what should you do?

Joshua: Well, you have to be careful because every action that you take in negotiation sends a signal and sets a precedent. If you were to just let that happen, the other side knows that they can manipulate things a bit. If you were to call it out and say, you know what happened to these clauses that were here that we wanted to discuss or whatever it might be. So recognise that in negotiation. If your actions send a signal to the other side, positive or negative. It’s funny because I do a lot of work with an engineering consulting group and they’re often confronted with… They work on very big government projects at the national level and at the state level here. And a lot of times they’ll have the clients who would be the federal state government, come back to them and say, Hey, we need to add this, this and this into the scope. And we don’t want to pay you for it. It’s $50,000 worth of work or it’s $10,000 worth of work.

That’s not included in the contract. Can you just do it? And a lot of times they would say to me, look, we’re working on a $5 million project. We should just if it’s $10,000, we should just do it. And I say, I get it. Yes, it should be a business decision. But when you make that decision, you need to understand that you’ve just sent the signal to the other side, that things that are not in the contract are okay.

And that they may very well come back again and ask you for more things. Because you just said yes to something else. One way to handle that and one of the things that I’ve said to these folks is look, if you’re going to do that, you need to be really clear with them that you’re willing to do this once.

And you’re not setting a precedent about this kind of action. In negotiation, it’s really important, in my mind, to be excessively clear in your communications. I know that sounds like an oxymoron but it’s really important. Because communication should have really been called miscommunication because it’s rare that you really understand what it is that I’ve told you.

If I’m not explicitly spelling out to you that, Hey, we’re willing to absorb this $10,000 cost for the sake of the relationship, but we’re not doing it again. So don’t ask. Something like that. It has to be really clear. if you’re going to go down that road.

Petri: Yeah. Is it even enough? Should you even just ask that to say that they’re not going okay. If I absorb this thing I want something from you as well.

Joshua: Yeah. Generally, what I often say to the consulting firm is your first response to them should be, well, let’s drop in an addendum to the agreement. And, what’s the scope, et cetera. You should absolutely start there. You should definitely ask if something is outside the scope of what you’re talking about.

It’s always important to say, well, is there some kind of back and forth here, you know, we’re willing to do it, but it’s not part of this contract. What can you guys do for us? Let’s just imagine that you happen to know them and they say, listen, can you just do this for me?

We’re good friends and things like that. I’ll figure out how to do this, something for you later or whatever. When somebody asks for a concession for the sake of the relationship. That’s actually a manipulation and they’re not really a friend or an associate in that way if they ask that because it’s a manipulation.

If they’re asking for a concession, they ought to be thinking there’s something that they should be doing in return. Be careful there. Our tendency, when we do like people, is to want to do things for them and help them, but we don’t want to be manipulated. And it’s that fine line.

Petri: it’s also important to understand that sometimes the people you’re dealing with may not be the ones who you’re having the consequences later, or maybe that person leaves. Or the relationship is not there anymore, but you still have to deal with what’s written in the contract.

Joshua: Yeah, I see that a lot with this company, by the way, where the state or federal government will say, Hey, if you do this for us, there’s another phase of the work. And they say, okay, well, all right, well, we’ll do this. And then the person who made that promise is gone, they leave the organisation or whatever, and nobody has any recollection of that promise.

So, right. In that instance, I often will say to them, look, can you get anything in writing that actually demonstrates that there was some sort of back and forth concession here. Because otherwise, you’re leaving yourself…

Petri: So you can call the bluff?

Joshua: Or call in the agreement, right?

If they say to you, Hey, you’re going to be absolutely in line for the next phase of this if you guys were to do this. And, you have something in writing that says that. That carries more weight than well, Bill told me this when we agreed to it. Well, sorry, but Bill doesn’t work here anymore and we have no record of that.

Petri: I can not help to think about while we were talking about this. This is like going back to kindergarten or school. It’s like how do you deal with a bully?

In a sense that we were just a moment ago talking about how you should not absorb those costs. Take something and it’s just not acknowledged that you realise what’s happening here. So, how do you respond to a bully?

Joshua: Bullies typically push hard against you until there’s pushback. For me, when I deal with a negotiator who I think is over the top, you have to let them know that this behaviour is not okay or you’re not going to be forced into anything and you’d rather walk away. Most kinds of bullying negotiators are people who think that they have the ability to just try to force things on you. And when you let them know, one of the best ways to try to deal with sort of that bullying approach in negotiation is to know what your BATNA is.

I mentioned that before. If you understand that you can walk away to something else than what power or leverage does the bully really have? The answer is not much.

Petri: If you understand the value of what the other side is really wanting to get out of the deal. No is a really powerful word as well. Just say no.

Joshua: Yeah, exactly. There are a lot of negotiators who try to use threats. You have to be very careful when you use threats because if you’re not prepared to follow through on your threat as a forceful negotiator, you’ve lost all credibility.

I think we see this in the political realm. I’m thinking of a particular politician that resides on this part of the ocean, who uses that tactic a lot. And, when those threats are not followed up by action, they lose a lot of luster and people look at it and say, well, okay, this is their approach to negotiation.

And by the way, if you’re known as a negotiator who just is going to be issuing threat after threat, not only are you not going to have a lot of deals, but people are going to recognise that this is the way you try to get things done and they’re going to resist you. They’re going to find ways of doing deals elsewhere.

We fail to realise a lot of time that there are different avenues. You’re not the only game in town much of the time. And as a result, if you’re going to just issue threats and things like that a lot of people are going to go elsewhere. They’re going to find another company that’s going to do things differently.

Petri: Absolutely. And the reputation will stick with you or you just don’t see it at first. People start to avoid doing deals with you and your deal flow will go bad and that’s what happens, but it may take some years for that to go around.

Joshua: Yep. That’s right.

Petri: What is your favourite word?

Joshua: My favourite word. I think my favourite word is interesting because it signals to the other person that I might be using it, that there’s something in there that they’ve said or done that is noteworthy. And yet interesting is a vague and general enough idea that it doesn’t necessarily always convey exact meaning.

Petri: Whether you are not meaning it the British way? Because it’s exactly the opposite of interesting.

Joshua: Well, maybe I am, maybe I’m not. When someone tells me something and I’m not quite sure what to make of it, I’ll often say that’s interesting, which means I’m thinking about what you just said, and probably need to think more about what you just said.

Petri: What is your least favourite word?

Joshua: I might be tempted to say interesting as well.

Petri: Now, I hear the lawyer talking.

Joshua: My least favourite word I think is any word that is really definitive. Voltaire said, there’s nothing worse than uncertainty except certainty. When someone is so certain that they’re right or that they’re on the right side of history or whatever it might be, that’s dangerous because you fail to continue to take information in and you fail to learn from your mistakes.

You fail to recognise the atmosphere around you. Any words that have to deal with a very certain perspective position approach to things that makes me very nervous because it means that people are probably not open to thinking differently, thinking creatively, et cetera.

Petri: What turns you on creatively, spiritually, or emotionally?

Joshua: I love what I do. I love working in the world of negotiation. I could have conversations like this every day, all day, because I find them fascinating. I would say that, and also the sort of unknown elements of what I do. I love the adventure of the unknown. I’ve done a few different things in my life where there was a lot of uncertainty.

There was a lot of question. There was a lot of, sort of trusting in taking steps and seeing what happens, seeing what emerges in front of you. In part that’s because when I was a kid, I failed a good bit. I was a bit of a slow starter. I’m not afraid of failure. Not being afraid of failure is really helpful.

Petri: What turns you off?

Joshua: I think the biggest turnoff for me are people that have a condescending attitude toward you, toward life. That they believe they’re better than everybody else. And they act that way. I think that we all need to be humble as we go through life and have an air of humility about us because there’s a lot of things out there in the world that make life challenging.

We have to be forgiving of people a lot of times as well. We’re not nearly as forgiving as we are. When I come across somebody who is really condescending and has a bit of a superiority complex. That’s a very big turnoff for me.

Petri: What is your favourite curse word?

Joshua: I do say shit a lot. I find it to be a very helpful word, a lot to blow off some steam.

Petri: What sound or noise do you love?

Joshua: I guess I would answer that as sort of sounds of nature, crashing waves and birds chirping. I do a lot of walking and hiking and those things really soothe me. They really take me down a notch, and I’m a big fan of the ocean. I love the waves, the crashing waves and watch quite a few shows about dolphins and whales and how they communicate.

It’s all of those sounds in nature. We live in an area that’s right along a bird migration route where Canada geese fly North and South. When I’m walking and I hear them honking away like those things are very soothing to me.

Petri: What sound or noise do you hate?

Joshua: I don’t like whining and complaining. I have three kids, so I’ve heard plenty of it. I’ve gotten to a place in my life where I believe that most problems that we are confronted with can be solved if people put their shoulder to it and put their mind to it. Whining and complaining that you’re bored or that you’re not happy is the opposite of that is not really focusing on the problem, but just wallowing in your own sorrow, if you will. I’m not a big fan of that.

Petri: What profession, other than your own, would you like to attempt?

Joshua: I’m also a sports fan. I grew up as a kid wanting to be a professional baseball player, which I know in Europe, you all wouldn’t understand. But I love sports. It’s a good release and a good distraction for me. Baseball was the sport that I grew up here and it was sort of the national pastime in America. And so I always wanted to be a baseball player.

Petri: What profession would you not like to do?

Joshua: Well, I’m actually not a lawyer. I got my PhD instead because I felt like that process fit my style much more. I think the profession that I would least like to be in is one that is adversarial in nature. And in fact, part of the reason I didn’t go down the road of being a lawyer was because I felt like there was a lot of adversarial aspects to the world of law and it just didn’t suit my personality. I’d prefer to be far more engaged in creativity, problem-solving, brainstorming, thinking that way about the possibilities than about people pitted against each other. That’s why I kind of see negotiation differently. I don’t see it in that adversarial way as much as I can, because I don’t really believe it benefits us.

Petri: If you could be a co-founder of any startup in any era, which one would you choose?

Joshua: This is an interesting question. I thought about it and I thought probably Apple. Mostly because I thought, and I still think that there was so much interesting creativity that went on in Steve Jobs’ garage about what the world could look like and about how technology could aid in that process of moving humanity forward. But I think it was because of the creativity aspect of it in the process that they brought to the table that I thought was so fascinating.

Petri: Any final words for the audience?

Joshua: Only that I would encourage you to embrace negotiation. It’s something that I think a lot of people have run away from. And not run toward. It’s a little bit like the old Chinese finger trap where you put your finger in each end and when you pull away, it gets tighter. But when you come together, it loosens.

When people come toward negotiation, when they embrace it, when they understand its value and its power and how it can really help you in your life, then you get almost entranced by it. It becomes a fascinating process of how you live your life, how you deal with problems and conflicts and situations.

I would encourage people to try to see negotiation more along the lines of what we’ve discussed today than what they might know and maybe just to try to learn negotiation anew. Go out and pick up one of the books that’s out there on negotiation. It could be mine, it could be others.

Petri: Can you name a few good ones to get people started?

Joshua: Sure. Mine is The Book of Real-World Negotiations. If people really want to change their perception on negotiation, I would have them start by reading the book called Getting To Yes: Negotiating Agreement Without Giving In that was written by Fisher and Ury in 1981.

And it’s still in the bestseller list and really transformed the world of negotiation. There’s another book called Never Split the Difference by Christopher Voss, which is also good. There’s a book called Negotiating the Impossible by Deepak Malhotra. There is a book called The Art of Negotiation by Michael Wheeler who talks about how the essence of negotiation is really being able to think on your feet and being adaptable. And as a result, he encourages people to learn the skills of improv as a core skillset.

There’s also a really good one called Negotiating Rationally by my friend Mark Young, but another one called Beyond Reason by Roger Fisher and Daniel Shapiro about the role of emotions in negotiation.

And this is a place where a lot of people struggle which is in managing the emotional side of negotiations. And so they offer up some ideas about how to do that more effectively,

Petri: Thanks, Josh! It was so fun to talk with you. I could do this, like you say, to the whole day long. I thank you so much for having you in my show and good luck with all your negotiations!

Joshua: Thank you. I really appreciate you having me on and taking the time to do it and all your great questions as well.

Why we do what we do

December 4, 2020

The answer to the book’s title questions goes pretty much back to our brain. It’s still a mystery that we are resolving piece by piece. Neuroscience has been steadily gaining insights into our biological system that consumes 20 % of our energy.

If you’re asked why you acted as you did the answer is not obvious. Many of our daily actions are unconscious or habits that we have formed over the years.

How we eat, sleep, exercise (or not) has a huge impact on our well-being. Our long human history of survival has deep imprints on our modern ways of living.

We are still biased towards fight or flight responses and almost everything in us is still tilted towards survival. We discount good news, pay more attention to the negative, and have strong biases and prejudices.

Dr. Helena Boschi has put together an extensive overview of different aspects of neuroscience research and knowledge that is easy to grasp and not too academic. It explains the basic mechanisms simply and has practical applications for personal life as well as for business and leadership purposes.

We are emotional creatures first, and logical only second. The first response is fast, intuitive and emotional. It encapsulates our biases, assumptions and mistakes. This is why it’s a good idea to sleep over big decisions and let the slower decision-making system kick in that is more logical and rational. It counterbalances the first response gut-feeling.

Our memories are flickering. Every time we remember something we are reconstructing the very memory based on our current state. Emotional significance emphasises certain aspects and therefore others see the same incident differently.

It is a good idea to keep a record of your decision-making process so that you can go back to your thought processes and not rely on your (unreliable) recollection that changes on every memory retrieval.

If there’s one magic trick for improving your overall well-being it’s sleep. Have enough of it, and you may even live longer. Another amazing remedy is exercise. The simple things have long-lasting effects but like healthy eating, we just need to stick to them.

Our brain is constantly overflowed with information, 90 % of which is visual. Most of the information is filtered out before it reaches our attention. Sense of smell is the only one that is hardwired to bypass the filtering.

We don’t see what we don’t expect to see, and our brain fills the missing pieces of information based on our prior knowledge. A fresh pair of eyes to any problem from someone who has a different background, experience and knowledge domain can approach the topic at hand from an entirely different perspective.

The book gives ideas for communication, marketing and branding. We respond to nouns quicker than verbs, we see words as shapes and visual associations. It’s easier to accept something new if we are given a good reason, and we are explained why.

Our hardwired programming towards negative emphasises and give additional influence on anything negative sounding. Just seeing the word ‘no’ or a similar word triggers the same hormones and neurotransmitters as what happens in stressful situations. This sets us to expect something painful to arrive and the body prepares to receive it.

Similarly, using ‘but’ in a sentence cancels everything before it. And to add to the confusion, if you’re using “don’t” to tell someone not to focus on something that has the exact opposite effect. We cannot help but focus on that.

So, why we do all these things?

Inked by Jeb Blount

November 29, 2020

When the author starts the book by stating that the topic is boring you might be onto something. Sales negotiations are everyday occurrences, as they should.

Now that you are rightly motivated and still keep reading it’s easier to get some results. This applies to sales very much. It’s the process, stupid!

There are no shortcuts or quick wins. If you’re after those you’re going to be disappointed.

Lack of sales results comes from the fact that salespeople tend to “suck at negotiating” according to Blount. They have limited training, poor emotional discipline, minimal self-investment to their trade, the pipeline is empty and buyers are simply better (prepared and have more alternatives).

There might be some quick wins for the company but not necessarily for the salespersons. Your profitability and even sales may go up by stopping deep discounting and shadow negotiating.

Giving too deep discounts with too large incremental steps empties the deal margins quickly, and discounting is an easy tool that is too often used as a blunt sales instrument as a substitute for sales negotiations.

Blount offers seven rules to follow:

The most important one is that you win first and only then negotiate.

The second opposes the maxim of seeking win/win and guides to go for play to win.

The third recalls the importance to protect relationships unless you’re mostly doing transactional deals. One could state that the previous and this rule are at odds or at least heavily trading with each other.

The fourth states that emotional discipline wins. Often, you are your worst enemy, and silence tends to do your bidding.

The fifth tells to master the sales negotiation by mastering the sales process. It’s a rigorous step-by-step process, and no technique will compensate for skipping steps.

The sixth reminds not to give away leverage for free, ever. If somebody wants something from you, that’s leverage and you should use it.

The final rule is to eliminate and neutralise alternatives, and this goes hand-in-hand with your sales process.

Beyond the essentials, the book is full of practical tips that help in different situations. For example, it’s your job as a seller to avoid long-term negative effects such as resentment or contempt later on. It can happen both ways and destroy the relationship nevertheless.

The human side of the negotiations is paramount. People negotiate for satisfaction and contentment. The facts, objectives and results are important but emotions come first.

Motivation is always personal, even in B2B relationships. The higher the motivation the less the alternatives look appealing.

When you have the sales, buying and decision-making process aligned there’s not much to negotiate if you happen to be in that fortunate situation.

One piece of advice that popped up in my daily activities while reading the book was that do not email proposals, ever. You need a conversation with the buyer, and simply sending something will diminish your leverage and weaken your sales process position.

It’s also good to keep in mind that studies have shown that your IQ drops when you’re in a vulnerable position. A right mindset and having your BATNA (best alternative to a negotiated agreement) figured out help in this internal battle. Keeping your sales pipeline full does wonders to your inner calmness.

The book is versatile in content. If you’re an experienced salesperson you still learn something new and for those starting their sales career, there’s a lot to absorb.

What’s the question -approach

November 24, 2020

If the answer is 42 what’s the question? Even in a slightly smaller scale a similar approach to strategic thinking is helpful and can be easily used.

When you’re doing something, pause, and ask yourself what is the question where the answer is what you’re doing right now. If you’re not satisfied with the question you should probably change something in what you’re doing right now.

This method is very simple but that’s why it is so powerful. I find asking the right questions the most effective way to take the temperature on what’s happening and where we are heading with the current course of actions.

Doing is easy. Movement is easy. The right type of progress is hard. When something has been set into motion it’s easier to keep on doing it and stay the course than stop or do drastic course corrections and question the approach.

A strong impetus is needed for change or to assure that you’re doing the right thing (and keep doing it). Asking a simple question that aligns with your outcome frames the setting and shows the implicit assumptions. It is also easy to test whether you are asking the right question.

Often, the question invokes implications that the scope or the magnitude is wrong (usually too small). It can be used to ensure that you can live with the consequences if the action is riskier or more challenging in nature.

Everyday business life is full of actions that start with some ideas or impulses to do something. The focus is on the methods and not the ends. This skews and limits the outcomes but this may not become apparent till the action is carried out, if even then.

For example, somebody suggests doing a marketing campaign using a certain marketing channel with a brilliant idea that kickstarted the whole process. The focus is on the creative and the execution.

The process did not start from the beginning where the project outcome was laid out, the target audience was defined and then the appropriate media channels for the respective audience reach were decided based on their suitability.

All these steps were already implicitly in the action where the creatives and campaign plans were carried out. Nobody stopped asking whether it makes any sense to do the whole thing from the results perspective using a particular media channel.

By asking the right question the overall setting becomes visible (and hopefully apparent). It’s rare to aim too high and be too ambitious than to focus on mediocre actions that yield weak results at best.

The worst part is not the wasted resources and poor results but the opportunity cost where something great and grandiose could have happened instead.

Is this the best use of my time now?

Value-based selling with sales cowboys and the dark side of customer relationships

November 22, 2020

Paul Viio – TALKS WITH PETRI

Paul Viio talks about the difficulty of finding good salespeople, why the majority of companies are underperforming in sales and why you should not hire the top salespeople. He also tells about a cheesy meeting in Paris.

Value-based selling with sales cowboys and the dark side of customer relationships

Bio

Dr. Paul Viio is a leading expert in B2B value-based selling & sales management. He has worked internationally in sales for over 25 years, in addition to which he has a Ph.D. in selling and sales management. He is an entrepreneur, published author/researcher, and the only person in the world holding two professorships in selling & sales management at two top business schools concurrently.
Paul is a sought-after B2B sales keynote speaker, executive trainer, and advisor to companies. He has taught, trained, advised, and helped hundreds of executives and companies globally to improve their sales performance.

Website | Linkedin

Transcript

(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri: Hey Paul! How are you doing?

Paul: Hi Petri! I’m very well, thanks. What about yourself?

Petri: It’s been quite interesting times and sales is rather hard in the 2020s. I don’t know why. Maybe, you know why? And another related question, which is quite important. Why are most of the people doing sales the wrong way?

Paul: Well, that’s a very good question. That’s a very good observation. Also, the first one that you mentioned that sales has absolutely changed a lot in the 2020s. Thanks to the situation that we are at now. When it comes to why sales is difficult, there are many different points or maybe takes on that. That’s actually the reason why I started studying and doing my PhD in selling and sales management. Because I think that most people are actually doing sales in the wrong way. They don’t really grasp how it should be done and what it actually entails to do sales or to sell and also to manage sales and to lead sales. These are very common things that I observe and also get feedback from my clients and customers that they don’t really know what they’re doing.

Petri: But it is just so simple: there are needs, and there’s someone who actually can fulfil that need. What’s the problem?

Paul: Well, exactly. Those are the points. I’m not going to mention the name but it was a former professional racing driver and he told me, Paul, what’s so difficult about selling? You just go out and sell. That’s it. And I was like, well, I wish it was that easy because most of the people out there, they don’t find it that easy.

There’s a difference between selling and also managing sales and leading sales. if you’re successful in sales, which most people aren’t, so, if you’re successful in sales then usually you get promoted or very oftentimes you get promoted.

And then you look at things from your angle and your perspective. You think everybody else is going to do things as well as you do. When they don’t you get frustrated because you don’t understand what they’re doing wrong. Very few people actually are able to do sales and to be successful at that.

Even less people are successful at managing and leading sales. And those few who are, they think that, okay, this is how you should do it. And they stick to old school models and old ways of doing sales, which have maybe worked if you’re in a different industry or if you were in the fifties or sixties when the situation was totally different compared to 2020.

Maybe that’s a longer story but just to highlight things have changed a lot. It’s not just the 2020s. Things have changed since the Second World War dramatically. Sales has changed. How people act, how they buy has changed a lot. And that also entails changes in how you sell.

If the customer acts differently tomorrow than they do today, and compared to yesterday, you have to adapt to that and you have to adapt not only how you do things, but how you understand your customers. What you should be looking at and how he should communicate to and with customers. What dialogue you should be having with them.

These are things which are really genuinely interesting to observe, to study, to research and also to train customers and also to operationalise. And put those theories and models into action. That’s how I look at things and what I do.

Petri: There’s also this very simple fact, which you mentioned to me a while ago, which is that 75% of companies and people, they don’t have a sales process at all. You’re not even doing the basic steps to do proper sales. Why is that?

Paul: I was referring to a study which was made in the US some years ago. They studied about 1300 companies and through the findings in that study pointed out that 75% of companies are not as successful as they could be. Because the study showed that half of the companies actually have a selling process in place, only half of them. And out of those 50% who had a selling process in place, only half of those, which equals 25% of the total number, they actually follow up on the sales process also. They actually monitor it. They have a sales process and they monitor and they follow up on that. And that maybe sounds interesting as such already but when you think of the take away from that is that 90% of the companies that fall into that 25% bracket, who have a sales process in place and also monitor that and follow up on that they have much better profits or higher profits than those who do not do that. If you have a selling process in place, you’re going to be better off than most of your competitors.

That being said, that’s a good thing if you have one but then following up and monitoring that you actually work according to that process that will increase your market dominance even further or your position on the market, at least. This is what I was referring to. There are many reasons why they don’t do that. But I would maybe generally say that they don’t bother doing the homework and creating a sales process. And also then following up with that.

Petri: How can they actually perform at all? Because usually, you have some sales targets et cetera. You have to project your sales and then you have to reach those targets a bit later on. If you don’t have any process, how can they just cope with their life?

Paul: Yeah, that’s a good question. I’m always mind blown when I see a company which doesn’t have any processes in place. Maybe it’s not as dark as it sounds. Because there’s also another study, which points out that what kind of customer relationship are you going to have or what type of customer relationship do you have and that compared to what kind of a selling process or sales process you have in place.

They were studying about a couple of thousand companies, both in North America and the European Union, mostly in the Western European countries. They came to the conclusion that if you’re going to be a listed vendor, which is the basic, basic, basic relation that you will have with the customer.

Ranging all the way to solutions consultant and trusted partner. That would be like going from low to high. Then they compared that with what kind of a selling process you have in place. You have maybe no sales process in place, maybe have a semi-fixed sales process in place.

Then you have a fixed sale process in place or a structured one. And then you had a dynamic one. A Long story short, it shows that those who do not have a sales process in place, they don’t really become the trusted partner. Of course, in a few cases that will happen but from a statistically significant point of view, not enough companies are going to be in that bracket.

It means that you can sell to customers and you can be successful at that to some extent but you will only reach a certain level as a sales organisation. Then on the opposite side, companies and then sales organisations, which have a dynamic sales process in place, they usually end up on a higher scale of the customer relationship. They don’t really stay at the bottom level of just being a listed vendor. They jump that hurdle very quickly and they get more in a deeper relationships with their customers. They usually are In the box trusted partner and solutions consultant. That’s where you usually find them because they are much further as an organisation as opposed to those organisations who don’t have a sales process in place.

What it actually means is quite funny. Those companies who don’t have a sales process in place. That’s one category. Then there’s the next category who have a kind of sales process in place. What that usually means is that they have a fixed sales process in place but they don’t follow it.

When I asked these sales organisations with people working at these organisations do you follow your sales process? Or the first one, do you have a sales process? Yes, we have. Do you follow it? No, we don’t. What are you putting into your CRM or SFA? That stands for customer relationship management system or sales automation system.

What are you writing in those systems because you have some electronic system for that? What do you do? And they say we keep two parallel systems. One of which is how we work in real life and one which we use for our bosses so that they are satisfied with the results that they see in their CRM system or the SFA system.

That’s mind-blowing. But people go as far as they start cheating their own bosses and the numbers are real. But the data that they put in there might be actually something that they package in a way that makes the boss feel good.

That’s very scary because imagine the amount of resources you will be throwing out the window if you have people working in two parallel ways. One which is for your company and one of which is the one which really generates value for the customer and for your organisation. That’s really scary. That’s a route that I always discourage customers from going at.

Petri: This begs for another question. Why is that? Are the systems so cumbersome that nobody wants to use them and so that’s the reason to go through all the trouble of having two systems? What’s the takeaway from there?

Paul: Absolutely. There are a few reasons. Let’s start with the basics. First, it used to be a couple of decades ago, 10-20 years ago salespeople didn’t want to give out their information. They didn’t want to share their secrets and their real information about their customers because it was kind of a one-man show in most cases. The customers were owned by the salesperson if you will.

The salesperson felt and had the thought that if he or she then puts that information into a system then he or she becomes redundant. He or she is going to be replaced by somebody else because all the data’s already there There was almost a fear of putting in your data into the CRM systems.

I get that. I completely get that. But that was kind of in the old days because nowadays people are a little bit more refined in that they understand or realised it’s not the data that actually does it. It’s not what you have written there. Sure, you can be replaced. But the question of the successful person replacing you is he or she able to maintain at least the same kind of relationship as you did with the customer or even create a better one?

It’s about the relationship really. It’s between people. As long as people do business with people it’s going to be very important how you actually deal with people, how they feel about you. That’s one side. Another point is that as you said, are the systems so cumbersome and difficult to use?

Absolutely. Yes, they are. Most of the systems I have been trying out, so many CRM systems and sales support systems and the SFAS have the same problem. They are built in one way. First of all, they’re usually pretty ugly. They’re not very nice to look at unless you like the look and feel of an Excel sheet or any of these.

Well, it’s the same, in my opinion, if you look at Facebook, for example, their graphical user interface or Google’s graphical user interface, they are just mind-blowing how little emphasis they put on that. Same goes with Amazon, for example. These are just ways of doing things which work for them. It’s very productive or producer-oriented in that way, I would say.

But if you look at what a salesperson really needs to have in a CRM system. It can be very different from case to case. That’s one thing, and it can be very different from what the producers or vendors of the software systems or solutions actually think that the salesperson should have. Because the situations are completely different.

Let’s take a basic sample. If you’re working in a business-to-consumer at a B2C industry, or if you work in B2B that’s business-to-business, or a B2G business-to-government, the public sector, is going to look very different what kind of knowledge, data and information you need to have for you as to become successful at selling and managing that sales and customer relationship and building on that and then managing that account and so forth and so forth.

Then it comes also to the point that sorry for dragging out on this answer but I think these are important points. If you look at any product, any product at all. I don’t care if it’s a hard product, a tangible or intangible product, software or computer or whatever it is if it’s made so that the user will find it difficult to use, he or she will not use it at least not optimally or he or she will even try to find another solution.

That’s also an important point when you think about what kind of systems you should have in place. Most companies are still in the old era where they produce systems, solutions, software, components, whatever it is from their perspective. Most companies still do this. As opposed to looking at how and in what shape and form and experience the customer rep should like to have it.

These are reasons which drive salespeople going maybe sometimes even berserk about their sales processes and why they don’t feel like using them or they divert and they use some other alternative ways instead, which works better for them. There is also another dimension to that if you allow me to add on that.

People are very different. Some people want to work in a very organised fashion in the way that they want all the data set in one specific way or system. Whereas other people are more than artists type of people who are able to comprehend things in a different, more abstract way maybe.

And they need maybe a different system. Within the same sales organisation, you might have very different people, different types of people who work in different ways. Trying to enforce a system on them is going to prove difficult. But that’s a fact we have seen that we continue to see in organisations.

Petri: Now we are coming to the point where we actually say that most of the people don’t know how to do sales. There’re only a few really good salespeople. All the systems suck. Should we start to build another world where we say that, okay, I have a new company. I have a startup. Maybe I already have a product and I need to start to do sales.

I need to find customers. We are at that point. If I can start from scratch, how should I do that? And if I’m the CEO, I need some salespeople. I need someone else. What’s the optimal way of doing that?

Paul: You’re looking for a silver bullet, of course, as everybody is. There’s no one right way of doing things. But how I would start it is that, and I encourage people and companies to do that now I actually train them to look at your customers first. Let’s imagine you have no customers in the first place. You have an idea.

As opposed to making that idea complete at first and then going out to the market, I would say that keep it at the idea level first. Go out to the market. Talk to potential customers or partners, alliance partners that you might find and try to get a sense of what they need, what’s in your domain, what’s in your capability and competence that you were actually thinking of doing.

Then look at what the market is actually needing. What do they need? I’m not only talking about the needs that they are aware of but also unaware needs that they don’t know about really yet. Or they might even have some thoughts or they might even have a dream and a wish how things could be. Look at that angle instead. Don’t go and compete head-to-head with other competitors who have something similar but try to look at different avenues.

Once you grasp that. Okay, this is what the customers might want to have. They feel what is important for them. What would drive them further. What would drive their business. Or if they’re not doing business, what would drive their life or situation, what would improve it. And that’s something that you can help create value in.

You’re helping your customer reach that point or that target what they’re aiming at. Then I would go back and look at it. Okay. How do they go about it? How do they buy things like this? Or in this category that I’m trying to promote or sell or propose to them, and then I’ll get an understanding.

This is how they go about purchasing that kind of solutions and choosing them. And what kind of purchasing processes they have in place and what type of categorisational purchases do they use. Then I’ll from there derive how my sales organisation should be working and how my sales supporting functions should be supporting the salespeople out there or sales teams. That’s how I would actually plan them, build them. Now, I understand what the market could need. These could be the customers. This could be the prioritisation of that. This is how they work when they purchase those.

How they screen, select or shortlist and then select, categorise, actually purchase these kinds of solutions. And then I would build from that. I would actually go backwards from that point on and then see, okay, what does it mean for my sales organisation? What type of people do I need? What type of competencies do I need? What type of capabilities? What type of support people? What type of processes should we have in place to make that work in a coherent way? And by a coherent way, I mean that it shouldn’t differ very much for the customer if they contact me or if they contact my salesperson. If I’m the sales executive, for example, if they contact me, or if they contact my salesperson that worked my sales supporting person, my technical expert, whomever or customer complaints service.

They should have a coherent experience for all that. They recognise, okay, we’re dealing with this company, with this supplier. And that should not differ very much between the salespeople in the sales organisation either. We can talk about that a little bit later.

Petri: It starts to sound like a customer experience you’re talking about. It actually doesn’t matter are you even talking with a support person, are you talking with a marketing person, are you talking with anyone in the company and you basically get the same experience.

Paul: Absolutely. Absolutely. You should. This is one interesting thing. Let me rewind it a little bit. With companies that contact me. They oftentimes contact me. I train sales organisations and executives and so forth, study those and then train them and help them become more successful at what they do.

Oftentimes, there’s the CEO or CFO or CSO, chief sales officer, or someone up in the organisation calls me and says, Paul, we need your help. And then I ask, okay, so why do you need my help? That’s usually my first question. When to say, well, our salespeople are not performing well, so we need someone to train them how to sell.

I say, okay, that’s nice. That sounds good. That seems like my ballpark. But, do you know how to manage and how to lead the sales organisation? And they go, what do you mean? I asked how do you actually look at your business? How have you built it? How are you guiding your sales force and how are you supporting them?

That’s where it usually starts to crumble the whole story, because they realise, okay, it’s not just about our salespeople are performing well. Usually, a sales training organisation will be thrown in and they will say if you want double your sales, don’t make 50 calls a week but do 100 calls a week.

And that will ramp up the sales. Sure. Yeah, of course. It probably does at least to some extent but the problem is, especially in the European context, if you look at Europe, which is very much B2B driven, in terms of sales and purchasing, if you look at North America, the US for example, their B2C market is so much bigger. That’s where the most money comes into companies.

In a B2C scenario, it’s easy to just call more customers or potential customers. You find them and then try to persuade them to buy your stuff whatever you’re selling. But in a B2B scenario, maybe you’d only have a few tens of customers globally.

How can you double your sales just by calling more contacts? It’s not going to work. It doesn’t take off like that. That’s one side of the story and the other is that salespeople in organisations are very different. Of course, we have those phenomenal salespeople.

I used to have that too in my organisation when I was driving sales and leading sales. They are very excellent at what they do. They know exactly how to do sales and they are the perfect salespeople but that’s just maybe 10% of the people in your sales organisation. Maybe 20 % if you’re lucky. You have studies pointing that maybe 9-10 % are the top salespeople. Then you have 20% of the salesforce that is still very good but not excellent. And then 70 % of the sales organisation people are mediocre to laggers.

Petri: Who hired those people?

Paul: Exactly, fire that person, right? If you look at it this way, 70% of your sales organisation, in general, when looking through organisations across the industry, are mediocre to laggers.

Their performance is not in line with what the companies are looking for. Those people are usually the ones that companies get rid of. And then they try to find new ones and they try to build a sales organisation which would only have excellent salespeople. Everybody wants that.

But the problem is if you look at how those people work, I talked to executives, I looked at these organisations and I asked their executives: what makes your top salespeople, top salespeople? And they say, Paul, I don’t know. I say, what do you mean you don’t know? Whichever number I give them, they bring it in and they overachieve even that target that I give them. I just let them do their magic. I don’t want to bother how they work. I don’t want to mess with them because if they feel intimidated or they get frustrated because of my stupid questions or something, they might leave the organisation. And I say, sure, that’s one way of looking at it but how on earth are you ever going to replicate your sales success and hiring successful salespeople if you don’t even know what type of people they are and how they’re built and how they think, how they work, how they act, how they deal with customers, how they build that success?

And that’s usually what we stumble on in those sales organisations. The executives tell me, okay, let’s do the training. But usually, I do the training for the executives first, and then I do it for the sales organisation and then for the support organisation. But looking at it from a salesperson’s angle, I always study them and I research them beforehand so I know who these top salespeople are. Very quickly, I will also see that this is that person, these are the mediocre ones, these are the laggers. The point with the sales training is not to bump up the whole organisation and to make them excellent salespeople. That’s not the point.

It’s not going to happen. You might nudge the organisation a little bit forward but the top salespeople, what they get out of it is that they finally realise… And this is what happens in trainings that I do for companies. The first hour or so the salespeople, the top salespeople are leaning backwards in the chair and they’re a little bit like, Oh, what am I doing here? I already know how to do sales. I’m already perfect at this. I don’t need this mumbo-jumbo here. Okay. And those are usually the ones at the end of the training of one or two-day session that come to me and say, Paul, this was the best sales training I’ve ever been to.

Then I ask, okay, that’s great. Good to hear. So what did you get out of it? And most of they say, Now, I finally understand what I do and what other salespeople are not able to do. They’re able to put names and concepts and models, put the names for those things that they actually do intuitively already.

That’s very powerful when you see that. It’s like mind blown when you see people understanding what makes them different from those who are not successful. That’s one takeaway for them. They are better able to support their colleagues, the next best category in becoming as good one day, as good as they are.

Then for the people further down the line who are not as successful, the mediocre ones, you could bump them up somewhat. For the people who weren’t up to a sales job, they themselves, as well as executives, might realise and oftentimes I even suggest this to them if I continue working with them: what if we move these people to not do the first-line sales but to support the sales organisation instead?

Because they’re the perfect ones in sales support. They’ve done it. They tried it, they found it hard but they know what’s needed. Why don’t we use these people to support the rest of the sales organisation? This work in very nice ways and the outcome can be just beautiful if you do it right.

But as I said, there’re many organisations and many ways of doing it. I think as many ways as they are organisations, too. It’s not like one right answer. This is exactly how we should do it. But along those lines is what I would do for if I had a software company or whichever startup. And, I would start building the sales for those.

Petri: I have so many questions. One of them is that, can you actually teach anything to those guys who are really already brilliant and how do you find these people?

Paul: There is a combination of things. First of all, many people tell me that either you are a salesperson or you’re not a salesperson. That’s the old jargon that we hear that you’re either born as a salesperson and you’re a natural salespersonn or you are not.

I think there’s some truth to that. You can be born to become a racehorse, or you can be a donkey. A donkey will never become the most successful in a horse race, I guess, or if you’re a working horse.

Petri: That’s not fair for the donkey, it’s not a donkey race!

Paul: Exactly. Why not use a donkey for something else instead?

 I don’t think that you have to be born as a salesperson. Because at the end of the day, what is a born salesperson? If you are born as a salesperson, probably it means that when we studied these people and then we’d look at what makes people successful, it’s usually that they are persistent in the way that they’d not give in.

They are resilient. Resilience is one word that has become very popular in the last few years and used in many different ways, even used wrongly. Successful salespeople are probably resilient, more resilient than other people.

In approximately seven out of ten calls you’re getting no on the phone if you call someone. That’s usual. It might be even up to 90% of the calls are going to be a no. No, thank you. We’re not interested. You need to be resilient about it and stand up again and learn from your past experience.

What should I do differently? Not just repeat the same old mantra that you’ve done with the next potential customer and try to get whatever you’re trying to get. Is the first step to get a meeting with them, or is the first step to have them buy something from you on the phone or over email, electronically, whatever it is, you got to know what the next step is going to be.

Being very goal orientated, persistent, resilient, have empathy and be quite quick to learn things, and also curious. You need to be genuinely curious and interested in people. As long as we deal with people that’s very important that combination in that mix of the perfect salesperson is to be interested in people and curious.

If you look at it this way, if you’re not interested in people, it’s very difficult to make a good impression on people in a genuine way. Because people will see if you’re just faking it. That’s one thing. And then of course people ask me, okay, can you train people, mediocre salespeople to become very good salespeople or become better, very good and excellent at some point? Yes, you can. My definitive answer is yes, you can. It’s going to take a little bit longer time probably. They have to repeat maybe things quite a few times. They have to change and they have to adapt to how the customer works and they have to change maybe how they work, not who they are but how they work.

Those are things that are needed because there’s a catch to it. Where can I call, for example, to find these salespeople, these excellent salespeople? Imagine you have a startup. Okay. You establish a startup. And you try to find a sales organisation. You need 25 people in sales for global sales for your startup. What’s the risk of employing 25 top salespeople from different organisations? The difficulty is going to be you’re going to have most likely 25 people who work in their own ways, in different ways compared to each other.

How on earth are you ever going to manage and lead that organisation? How are you even going to know how they work? It’s going to be very difficult to understand what they do that makes them successful in order for you to replicate that way of working.

Because that’s what you’re looking for. When you scale your organisation for 25 people, up to 50 people, a hundred people up to 500 salespeople globally at some point, if you’re becoming real successful then you can’t rely on finding those excellent salespeople. Because first of all, they’re going to work in different ways.

The second point is it’s going to be almost impossible for you to manage and lead them and guide them and monitor them. The third part is it’s going to be very expensive. It’s going to be so expensive because those people in that bracket of 9-10% of salespeople globally in organisations who are the top salespeople they can name their price. That’s why sales executives even tell them that, okay, I don’t want to mess with them.

I don’t want to question how they work, or I don’t want to be micro-managing them and so forth because they’re afraid that they will leave. Those top salespeople, they don’t need to look for a job. They get calls every week, most likely from competitors, from head hunters and so forth, who asked them, would you be willing to work for us?

We’ll raise your paycheck and do this and that and give you these and these benefits and bonuses. And they do what they do because they like it. And they stay in those organisations because they like the organisation. If anything happens, usually we see this when we change the incentive system or model or reward models.

If they don’t like it, they leave and they just need to pick up the phone next time somebody is calling them and they say, okay, well you called me a couple of weeks ago. Now, I would like to hear your offer. The next day they are gone. And your sales might plummet in your organisation if you lose these couple of salespeople.

That’s a long story why it’s going to be difficult and I even discourage people from trying to look for the excellent salespeople and hire them because it’s going to be difficult and expensive.

Petri: Now I’m really confused. It’s like mission impossible. If you want to have only the excellent people, they are all cowboys. You have a bunch of cowboys. You cannot manage them. If you want to have a sales team, which is co-operative and you know what’s happening and you have processes, then you have just the regular mediocre people. Then there’re no cowboys anymore. Can we just do marketing and forget the sales?

Paul: Exactly. Let’s all just move to social media and post things on Twitter and do Facebook advertising and so forth and so forth. And just let’s forget about the salespeople!

Petri: Now I understand why it’s a complex and nobody does the processes. They don’t work. Nothing to be done. It’s all just a huge mess.

Paul: Exactly. Yeah, no, it’s not that devastating really. The truth is that you need to look at it as any part of the organisation. Let’s take product management. If your product is faulty, it has some errors in it. The quality is subpar. What do you need to do about it?

You need to reverse engineer what you’re doing. You need to look at, okay. How do we do things? How does it turn into this garbage that comes out of the pipeline and then to fix those things? The same thing we should do in sales. Look at sales in the same fashion. What are we trying to achieve here?

Let me step back here a little bit. If we want to build a company, which is based on helping our customers succeed, which I think is the long-term plan that we should be looking at as opposed to the short-term profits that we can generate from quick and dirty tricking people and forcing people to buy stuff from us.

If we’re looking at the long-term plan, then we should also look at how our sales organisation works. And if that is in line with how we actually want to help our customers create value for their organisation to become successful in their market space. Assuming that, then we should look at our sales organisation and start looking and finding out, okay, how do we work in a more optimal way that our sales organisation as a sales organisation not as individuals works in line with how we want to be performing in the market space for our customers. Then we’ll look at, okay. They might even be top salespeople who are not up to the test who are maybe just pushing products, who are used to high-pressure selling and who do not want to look at the benefit and the value creation for our customers.

So it might even be, this sounds harsh, and this sounds maybe counterintuitive to someone. It might even be that we have to let these people go or to let a top salesperson go. Don’t let them all go otherwise your company will probably go bankrupt. But to change things if they are willing and able to change, which they usually are because excellent salespeople are smart people. Okay. They are really smart. They can really quickly grasp what does this change mean for me and for my organisation, for my personal bank account. What does it mean for me, for my revenue generation capability, ability and also for my paycheck. The idea is that the whole organisation works as a whole and you will need these excellent salespeople.

Assuming you’re able to actually convert and change a little bit the way how they work and to learn from them what makes them successful. If those methods are ethical and methods that you want to have your salespeople use. And then learn how to use them in a more broad fashion in your sales organisation.

Let’s look at it this way. I mentioned that the top 10% of the sales force is actually being consistent with top salespeople. Those ones can be perfect for mentoring even the next category. The next 20% are very good at sales but not excellent. And then that category people in that category can then mentor the mediocre salespeople to become better at how they do sales. That’s how we can build these mentoring systems. We should avoid the trap that many of us think that, of course, this is how we should do things. Why not have the excellent salespeople mentor the mediocre ones, and they will think that they will quickly become excellent.

The cat theory is that those two categories are too far from each other. The excellent salesperson will become frustrated when mentoring a mediocre salesperson, because he or she will not understand how on earth this mediocre salesperson is not able to do these things and learn as quickly as he hopes that he or she would learn.

That’s one side of the thing. The mediocre salesperson will find it very, very intimidating and negative to work with an excellent salesperson because the excellencesalespersonn’s teaching and mentoring will feel so far off for him or her. He or she can not even relate to how this person’s working.

This is what studies show. This is how we should build up these mentoring systems also in organisations. This is again an answer to your question, where we find them and is it impossible to change organisation? No, it’s not impossible at all. We just need to go in a certain methodology about it.

That’s why when I train sales organisations it’s not just about, okay, this is a new slide set, and this is how you should enforce it on the customer. This is how you present it. This is how you should overcome the obstacles or the projections that customers might have and force them to buy from you and then close the sale and then get the signature and get sent the invoice and go to the next customer quickly. This is not the way you should do it. Especially not if you want to build a business, which is based on customer long-term success.

Petri: Let me ask you a very simple question, which might be the hardest question. How do you define sales?

Paul: That’s a question that I usually ask my organisations when I start training them, I ask them actually, what’s the difference between marketing and sales? Now the common way of looking at things is that marketing… I mean most textbooks and in marketing and most managerial books and most organisations also got this understanding of marketing generates the lead or that’s the lead generating machine and then sales takes over from there and then starts working in a consistent way to transform that potential elusive customer lead that they have got from the marketing side and then out the pipeline comes to the customer who has bought from you. Then it goes into account management.

Petri: To be a bit of nasty and take a simple approach: so it’s basically just a subset of marketing and just implementing what’s already in there?

Paul: Not really, no. I said that that’s not my view of things. That’s how organisations usually look at this. As you know and we know and all the older people out there know that things have changed a lot. I mean, marketing, there are companies who are telling: we don’t have a sales organisation. We just have marketing. We have marketing. We have social media. Do you put those in different brackets? No, I would not. I would probably put marketing or social media as part of marketing. Then again sales and salespeople also do social media marketing and create an online presence for the company, for the products, for the services, for themselves, for the whole team.

It’s not as simple today anymore. But for textbook clarity, we like to keep it that way maybe sales is not under the umbrella of marketing. I would say it’s definitely not but I say they collaborate. Marketing usually has a cost budget. They rarely have a revenue budget or revenue targets. They might have that, of course, in terms of conversion and so forth nowadays but traditionally they have had a cost budget. Whereas sales, they have a cost budget also but they’re the most important thing is the revenue stream coming inbound from the markets.

But in my view, sales has to do with finding whatever that means through social media marketing, be part of that, or you’re personally in trade fairs like in the old days or through different events or personal contact networks. So finding potential customers, working on those and finding out, okay, what, what makes sense?

Who can we help? How do we prioritize the potential customers that we might have there? And then have a dialogue with them to understand their business models and the situation, and then to help them achieve that. And of course, for our selling organisation to also make money on that along the way.

You can also say, okay, is there a difference between sales and selling? You might argue, no, but sometimes you might argue, yes, there is. And from my perspective, there is. Sales is more the function, the sales function and the whole area. The domain is sales. If you’re a sales executive, you’re responsible for that domain within the organisation. Then selling is more the verb, the doing of things. Hence you might have a sales process, which is looking at it from a sales leadership or sales executive perspective. And the selling process would then be the steps a salesperson and sales teams conduct when doing sales. This is about terminology. I don’t want to become too academic about it but these are things that you should at least have the vocabulary in your own organisation so that you understand what is marketing, what’s their responsibility, what’s the responsibility of sales and selling. And where does social media fit in?

Is it done in collaboration between marketing and sales, or is it the third area? This differs still, and I think this will differ because organisations solve these in different ways.

Petri: And there’s also the aspect that, who is the one who really understands the customer needs? Is it the marketing? Is it the sales or is it actually the R&D, the people who are building the products? Because all of these people should actually understand what the customer needs. That’s basically the whole organisation’s purpose of existence.

Paul: I totally agree on that. In the old days, it was a little bit in the textbook, for example, if you look at it 10-20 years ago, textbooks oftentimes proclaimed that a salesperson is the one who brings in the feedback to the organisation. This feedback from the market and customers is fed into the R&D system.

Then they are able to refine the product and so forth and so forth. To some extent but in today’s day and age, an organisation which wants to be successful, as you said, Petri, everybody in the organisation has to understand what the customer is looking for. They have to have at least a basic understanding of what is the customer looking at.

Let’s say you are HR. HR is basically not in touch with the products, nor is it in contact with customers really. Not first-line at least. But in order for HR to perform in an optimal way, they have to know what type of resources are needed in the company.

Either you hire them or you use other types of solutions like hiring freelance or then outsourcing things and so forth and so forth. You need to know what type of capabilities, what type of competencies are needed in order to solve and in order to meet and in order to exceed those customer expectations so the customer feels that it’s worthwhile working with you in the first place as an organisation. They come back to, they want to come back to you as an organisation and a supplier. Definitely, even HR, I’m not saying that even HR as if it would be so far off from the customers but it’s kind of the best, maybe the best example that I had at this instant here.

Everybody needs to understand what the customer really wants and needs and what makes them tick and what’s the customer experience, what it’s built on. Even the janitor in the company… Imagine you have a customer walking to your premises or next to your premises and your janitor walks out the door and he or she does not greet but instead maybe grumps at the customer who was outside of your premises. That will have an effect on the total experience that the customer will have only by this one small encounter. If it’s really negative, it might have an implication that this person thinks I don’t want to work with this company anymore. It can be as simple as that.

Petri: And usually it is. It’s those tiny things. It’s something you have omitted to do. If your process is not working or the delivery process is not working and you’re not saying that, Hey, actually it’s coming tomorrow. Hope you are okay. If you don’t do anything, you are already irritating the customer.

Or if the delivery person is saying, Hey, I don’t want to come up one floor to your place. Can you come downstairs and pick it up from my truck? Yeah, so it’s tiny things or it’s customer support. Customer’s always right. Hey, there’s something wrong with your invoice. And they say, no, there’s nothing. And that’s the end of the discussion. These are actually three examples from my life in the last month. So I think it matters because I have stopped doing business with some of these organisations just because it feels like they don’t need my business.

Paul: Exactly. The classic example that we have now from the last 10-15 years is that it’s become so widely used solution to outsource your customer complaints or technical support or any call centre functions to another country. Let’s say and I don’t want to finger point at any organisations or countries or similar but I think I’m sure you get the grasp here that if you give a support line in English.

You have international customers calling in. Let’s say you have people from Scandinavia, for example, calling a customer centre, which should speak English, understandable English, and then it’s outsourced to a country somewhere far off where they speak very different English and you might not even understand what they say on the phone. This is really annoying to not understand what the person is saying.

This happened to me and my wife. My wife was calling one of these organisations. It was a flight ticket. She had a problem with a flight ticket that needed to be rerouted. This was obviously last year. This year we haven’t travelled much by air as most people have not.

She called the support line and she had to tell the person, please just stop. Just stop. I need to get my husband on the line. She walked to me and gave me her mobile phone and said, can you talk to this person? I don’t understand what she’s saying. It can be really that small incident that put her off from that airline because she said, I don’t want to call that support line anymore.

I don’t want to fly on this airline. Sure the airline can think that, okay, it’s just one customer out of a million customers per year. But gradually it’s going to eat up, slowly but gradually, it’s going to eat up your business. This is what happens.

The classic example, look at Uber. Why did Uber succeed so quickly? Many people say because of their business model because they were cheaper and so forth and so forth. I don’t think that was the whole truth, because looking at it from this angle. We all remember how many taxi drivers…

Petri: You want to mute them but you don’t find the mute button!

Paul: Oh, yeah. That’s yeah. Yeah. That’s one thing. And I look at it this way. If you get subpar service, you think that, okay. Bummer. I would rather ride with somebody else but then you find that, okay. Maybe the other taxi company has maybe just like this one or the taxi driver in the other car is probably the same.

We got used to a certain level of service. Then there comes this one company that provides a service, which is different. We think, thank God. Finally, I don’t have to ride in a normal taxi anymore. We find this interesting to have the silence maybe in the car as you said to have the mute button on the person. The person asked you do you want it to be for yourself or you want to communicate and so forth? It’s much more of a customer experience that I get when riding. It’s not just Uber in other companies similar to those. It’s almost like a touch button in the car, the invisible one, or you can actually have a dialogue with the person. You can get to know about the city if you’re there for the first time or you can just push the mute button. And you can sit there and look at your slides, or you can look out the window and just be in total silence.

The whole payment thing is just super easy. I remember the first time I used this kind of solution was in the US and I went to the airport. I was super busy. I was about to miss my flight and I started fiddling around with my wallet. And I was like, Oh my God.

Now, I have to wait for him or her in this case him to take out the credit card payment thingy and he’s not even making a move and I’ll wait for him on the credit card already. Then I realised when we would get to the airport. He just opens the trunk and it says, we’re here, sir.

And I’m like, right, exactly. I don’t even need to pay here. Everything happens in the background. It’s that kind of experience that we’re looking for. Traditional taxi companies missed out on that. That’s a small customer experience thing that can deteriorate your business. I think that’s one of the reasons why these alternative solutions have grown as quickly as they are.

Petri: Yeah. For example, that muting example comes from those five stars. You have to be sensitive to the customers because there’s a rating system. Previously, there was no rating system for taxi drivers. Usually, there was probably some way of complaining if something went really badly wrong. But usually, there was no way.

Now, the drivers know that if they’re not checking what’s the vibe of the customer, what they want, do they want to talk? Do they want to do work or how they feel it will be impacting their ratings. And sometimes they will be kicked out from the system, totally.

Paul: Absolutely. This is funny. It goes both ways. I learned this the hard way. When I was travelling, and I think it was in Minneapolis, I was travelling there and I stayed at an Airbnb apartment. The person, the landlord told me, looked at me when I came to the door and greeted me, of course, and was very friendly.

Then we went upstairs and he showed me the premises and everything. I had the total floor there for myself in a two-story building. It was pretty great. Good experience. He told me, I was a little bit worried about accepting you as my guest. I said, what do you mean by that?

Because you’ve been a little bit critical when it comes to some apartments that you’d be staying at in different parts of the world. And I say, yeah, I like to give feedback. I like to be honest about this feedback. I’m not nitty-gritty. I don’t want to downplay things and I don’t want to raise some negative things to unnecessary proportions but I just want to highlight if it’s dirty in the corners or on the floor or wherever the bed is not made or something like this.

Of course, I want to highlight this to people so that we get a system that actually works. But he said, yeah, because we want to keep our… he wants to keep his Superhost badge. So I can’t afford taking customers who are not giving me a five-star rating. And I thought, wow! Think about this, Petri.

The whole system is wired that way that those ones who want to have higher ratings also want to choose their customers. This puts the pressure on both sides. This is good and bad, of course. But in a bad way, it is that you don’t get rewarded for really being honest about things. This can also twist things. This basically just shows them how you can actually misuse the system. It actually goes against the whole intended way to how things are going to go. The system might twist the whole reality. That’s also one thing but it just shows that, okay, these small incidents can have an effect on the customer experience but it can also have an effect on the supplier, in this case, the Airbnb host, the supplier experience.

 Petri: What is the dark side of customer relationships? When you say no when you need to be picky and say, no, I don’t want to have you as a customer?

Paul: That’s a great question. The dark side of close relationships that actually was a study that was made in 2005 by two researchers, Sandy and Jeff. They studied and they started this stream looking at customer relationships that turned sour.

The dark side of customer relationships, and that means that you can sometimes have customer relationships, which actually turn against you. It’s not always the intended result that we should always give, give and give and give to the customer and make the customer feel super happy all the time.

Because at the end of the day, looking at this way, you also want to make a profit, assuming you’re not an NGO or nonprofit organisation. Assuming that you want to make a profit, you should do that also. Then you just start looking at, okay, what type of customers are worthwhile building a relationship with, which generate a positive result for us, a profit that is per the customer account.

Then there are those customer accounts where we pour in a lot of effort and love and passion and compassion and empathy and all these things. We make everything we can but it just doesn’t pan out. It’s too difficult or the customer doesn’t want, or it works beautifully for a while but then it turns against you because the customer becomes, or actually the customer might even be subsupplier, becomes cosy and lazy. People are in general, quite lazy, actually, we as human beings we are wired to be a little lazy. We’re not always as efficient as we proclaim to be in as we want to be. That can turn against you so that somebody is taking who you build a customer relationship with or supply relationship with that close relationship turned sour because the other party starts taking advantage of you and of the situation.

It might be intended, or it might be unintended but anyway, the result is that they’re taking advantage of it. You get less than what you’d actually give or what you pay for. There was an example in this particular study and again, I don’t want to finger point to any countries or any people but it’s out there.

It’s knowledge that is out there. There’s a car manufacturer who used an Italian car paint company to paint the cars, the chassis of the cars. They were supposed to put a couple of layers of the paint on the car. I don’t remember the exact number but let’s say it’s three layers of paint.

They did that in the beginning but then they started cheating because they thought, well, we can cut costs by just putting two layers of spray or colour of the car. They did that. They went with two, so they saved one. You can just imagine if you have thousands, tens of thousands of cars, even more, and you save one round of paint on each of the cars. It aggregates. The numbers get big very quickly.

They were caught for that. So, they got caught and then they admitted. Yeah, sure. Yeah, we did this. Of course, the customer relationship turned sour. They were not chosen anymore to continue the contract and so forth. They lost the contract. This just shows that even in an intended good relationship, things can turn sour if there are enough loopholes and the person or the organisation thinks that we can get away with it. This is the dark side of relationships. As said, it can go both ways. It can go that the customer becomes too cosy or complacent or just wants to cheat and take advantage of you. Or it might be that the supplier does that.

It depends on. There are also measures on how to actually go about this. I know there are a few methods how we can avoid this situation. It’s not as dark as it sounds that we have to run this risk but we can also avoid these risks but it’s possible.

Petri: Trust but verify?

Paul: Trust but verify. Yeah, I was referring to the methods of how to do that. One, for example, is that you have a mutual agenda that you have mutual targets set out there and written down so that you actually know exactly what you’re supposed to be doing. Then both are more invested in that. It can be, of course, the output-based model.

What you get out of the business both profit from that. That’s another way. A third way is reporting and monitoring. You said that you trust but you do monitor it. You need to have certain visits. It might be that you agree in the contract that we will do visits to your facilities. And, we don’t have to report about it in advance. We just pop in and we do basically a raid on what you’re doing. This is one method on the brutal side but very efficient. There’s also personal relationships so that we don’t rely on a few people doing the business because they might be working and collaborating.

When we have the larger part of the organisation involved in this, that we have different kinds of layers and different people who are also vested in this decision and in this methodology and processes, working models so that we can better ensure that we don’t skip any important steps or work in a subpar manner.

These are just some very basic things about how we can do things. Investment models can also be used for that. You buy up a chunk of that company and they get more savings from that company, for example.

Petri: How do you make people want to buy from you?

Paul: I think it’s quite easy in the way that if you are looking at the customer value. Many people talk about the customer experience. Let’s just differentiate between two different things here. Customer experience is the total experience that you as a customer get from dealing with someone. That can be through marketing, social media, as we said, the janitor on the premises or what the executives are saying in the media, or it can be how the person is treating you on the phone, email, whatever channel that is. That’s the customer experience and that will then result in some customer or some value for the customer.

There’s some value attached to what type of experience you have if it is a negative or positive, or if it’s actually tapping into your personal values also. That is probably going to be stronger. If we will help through the customer experience through the customer interactions, which are part of that total customer experience, if we through those instances help the customer create value for them and succeed better or solve their situation what they’re aiming at then the customer might and probably perceives us as meaningful for them, for achieving their goal for achieving their wishes for achieving their deep dreams. We’re at least getting closer to those and that in itself can then create a platform for success for us.

That means if somebody finds that, okay, I get it. I get value out of this by working with Petri, for example, and his company. Okay. And, he works in a way and they as an organisation work in a way that I think is a good way for my company, for my needs, for my wishes. Then I want to go back to you and say, okay, I want to continue working with you.

That’s a great platform for success going forward. Of course, assuming that does not generate profit yet but it generates a platform. It creates a platform for success. And that means if your organisation then does things in a nice way that I think this is the way we should be working together, and you’re able to articulate the value that I get out of working with you and through the use of the services or products or solutions that your company produces. And I then understand that, and I can also put a price tag on that. This will help me do this and this quicker, save time or generate more money or make me feel more secure if it’s a security solution, whatever it is.

Or make me live longer, for example. Then I’m willing to probably pay for that or to give something in return. It can be that I give my data. That’s the money that you make money on then. That’s the currency that you make money with, or it might be that you pay something for that.

And once the payment, which form or shape it is, if that payment for the services that creates value for me is in line with that level of value that I feel that I’m getting out of this. If that’s on a good level, then I’m willing to pay for that. But again, if you underpromise and overachieve as an organisation then your company is actually leaving money on the table.

This sounds very harsh and the reversals also apply. If you overpromise and underachieve that I, as a customer, and the one who is missing out on things. So you’re overcharging it that way. They should be in some kind of balance that is close enough and usually if it’s a good balance and the customer wants to come back if they feel that they actually get a little bit more value than they paid for. And then it’s up to your organisation or the seller’s organisation to see that we don’t burn the money along the way before it then translates into the profits for the organisation and maybe the shareholder or so, whatever we have.

That’s how we actually can make customers want to come back. We need to be attractive. We need to be known as the go-to organisation and each and every person in that organisation, optimally, should be known as the go-to person for whatever responsibility that person has. Whether he or she is a product manager or, project manager or delivery person or service person or a salesperson or marketing person, whatever it is that the customer is looking for at that instant, in those very specific customer interactions. Each and everyone optimally should be the go-to person that the customer comes first in mind is that I want to work with this person.

And that happens to be the person in your organisation. Then we have a good shot at the customer wanting to come back. I wanted to go with that that way. You see that I have maybe a softer approach in things but there’s a profit, of course, attached to that. So a profit expectation is attached to that value generation.

It’s not just about giving, giving, giving but we give and give and then you have to be able to also get in return. As opposed to forcing people to buy from you…That’s the worst scenario we can have. We force people to buy from us because we think that we have a lock-in situation or we actually have a lock-in situation, or we are a monopoly company, or we have a dominant market position and we force customers to buy from us.

Well, guess how long they will be willing to come back to us? Only for as long as they have to. As soon as they have an alternative as we discussed it with the taxi business, then they might jump ship. So you might end over overnight losing 20-30% of your business, or even more as soon as there is an alternative.

That’s why I proclaim and think very highly of looking at the customer end of things, the customer experience and customer value.

Petri: You were not always academic. Before you were actually doing sales and building sales organisations. Can you tell us something about that? Before we go into that story, there’s something funny. You just mentioned to me that you were in France, in Paris and something happened while you were with the customers. Let’s have a bit of fun and then go into your personal story.

Paul: Let’s do that. It was a funny story. It was happening already in the late nineties. 1996 it was in France, in Paris. We had a meeting and I was working for an organisation at that point in time. Before my academic career, I worked 15 years in selling and sales management in the area of B2B and B2G (business-to-business and business-to-government).

I was representing Finland where I was based at that time. We were eight people representing different countries in Europe. We met up in Paris for a meeting and we went to this nice hotel. Of course, the host was the French director.

He took us to this restaurant and we went there and we had a great dinner with French wine and French food and French everything, which I liked very much. But I didn’t know how it works. After the main course, they come and ask: any dessert, anyone? I was a big fan of cheese.

I like different kinds of cheese and so forth. It goes well with wine and the French executive told me that, well, why don’t you take the cheese platter? And I was like, yeah, I’ll do that. I ordered that and the waiter comes back after a moment with a small cart filled to the brim with cheese.

I was, Oh my God. He really understood that I really, really loved cheese. Oh, there are all kinds of cheeses there. And he brought it next to me where I was sitting at the end of the table. I thought, wow, this is going to take awhile. I started eating and I kept on eating the cheese and then the waiter comes back and is grabbing the cart. I asked, please don’t take it yet. And then he came back, he came back and the French executive looked at me. You really like cheese, Paul! That was a hint that I didn’t get it. And I said, yeah, I love cheese.

And then I continued eating. I continued eating. I’m about to explode. And the fourth time the waiter came back.

Petri: Fourth time?

Paul: Fourth time the waiter came back.

Petri: You don’t take hints!

Paul: Exactly! When he came back and I said, I really sincerely apologize but I’m so stuffed. I can’t have any more cheese. I’m sorry! I can’t have it all. And he said that’s okay, sir. And he took the cart, wheeled off and I was a little bit like, okay, well, at least he didn’t take it as an offence.

Then the French executive, he tapped me on my shoulder and whispered in my ear and said, Paul, you were just supposed to take a few bites of the cheese on your table.

Then he would bring it to the next tables, the rest of the cheese, because as you see all the other tables are looking at you. And I think we’re actually waiting for the cheese, which you have almost like eaten up already.

That was me being in the deep end of the pool in France when it comes to cheese and I was not able to swim there. This is a bit of an embarrassing story but it’s fun when you look at it years back.

Petri: Did you close the sales?

Paul: It was more of a strategy meeting that we had there still but we did succeed very well in that company. At least, it generated money with what we were doing there in Paris. That’s a nice story, I think.

Petri: Did you start with sales? Did you do something else before? You’ve also been working in startups and building sales organisations. Can you tell something about your early days and then why did you come to do what you do now?

Paul: There’s a story to that, too, as to almost everything. When I studied, I studied economics and international marketing and business. In those days, there were no courses in selling and sales management at university. I did my masters of science in economics, majoring in marketing and international sales or international business and finance actually.

Then I started working for an automotive company and that was a company I was working for also when being in Paris, which is just explaining. Then I moved from there to Germany. It was a sales position that I was in. I wanted to work in sales from day one when I left the business school at the university.

I decided I want to work in sales. The reason for that was that my dad used to work in sales. Now, he has passed away but he used to work in sales. I learned at a very young age that if you work in sales, you can travel a lot if you want to. If you were to work in international sales, you have to travel.

I just happen to love travelling. It was one of the things that I liked about my job and also the freedom to make choices. I mean, big choices also when it comes to selecting customer accounts and working on those and being able to talk to different level people in the organisation. You can talk to the CEO. She can talk to anybody. In the strategy department if you have that compelling story. You’re probably going to talk to everybody from purchasing and logistics up to marketing, up to their sales, up to their product management, up to their C-level and so forth.

It’s almost like being a consultant. Of course, I was working on the more complex solutions and so forth. Complex solution selling, you might call it. That gave me an opportunity of working at different levels and really creating business for companies. I was quite successful at doing that.

There was one company I jumped in. They hired me and I was number nine when I entered. I think we’re just short of 100 people when I left the organisation. We were building sales and being quite successful at that. When you are there then other people start saying, okay, Hey, could you do the same for our company? I was involved in about 16…

Petri: Let’s pause for just a quick question. Paul, are you a cowboy?

Paul: Well, I was a semi-cowboy. I was a semi-cowboy in the sense that if you’re referring to being successful?

Petri: Yeah. You were the top salesperson?

Paul: Yeah, I was.

Petri: Who took once the call and then the next day you were gone?

Paul: I was that and it worked out very nicely. I can say…

Petri: For you.

Paul: For me. Yeah. But that’s why I said semi-cowboy because I also didn’t just think about my profit generation mechanism and how I profit from that. But I always have been looking at, okay, how can the organisation and the shareholders of those organisations profit from what we’re doing.

I’ll always try to keep the bigger scope and also foremost look at, okay, what does what’s in it for the customer? That has been the determining factor for me to succeed in different companies because I don’t have a one model fits all. Well, maybe the one model would actually be that I’m looking at the customer and what makes them tick and what makes them successful and then derive the way I’m working with different organisations from that point.

I’ve always been very keen on building a team around me. Knowing who to contact when the customer needs something, or even as customers, I never left up to the customer to find the person in their organisation. I always did almost like headhunting in their organisation to find who’s responsible for this, who’s responsible for that. Who can help us further in that?

Back in the days when I was working in the telecom sector, I was helping at least 16 startups. Startups in the sense that either they were startups in Europe or they were established companies in the US but did not have any substantial operations or any operations in Europe.

Those were companies who contacted me and said, we would like you to build a sales organisation for us and create a salesforce. That’s what I did. Those were startups, usually, in the software and telecoms industry. That’s how I know quite a lot about how to build startups and how to build organisations that work and what you should focus on. Especially, if you’re on the innovative side of things, where you have an innovative product.

An Innovation, which you then try to bring on the market. There are many hoops and loops you need to get through. One of them is how far do we productise it before we go with it on the model in order to make it still able to flex that and to adjust it according to the market needs and so forth.

There’s a balance there. That’s what I did. I ended up recruiting a lot of people in these organisations because my job was to start from scratch. Usually, I was the first person, the first cowboy to work for them. Then my job was to take ownership and responsibility for that operation in Europe.

My job was to create a strategy. You look at do they have a strategy? Should that be tweaked or completely revamped or what should we do about it? Does it work, the same strategy that they have in the US, for example, North America, does it work in Europe or should it be changed?

Many times it needed to be changed. I did the strategy part first. Then it comes to bring those ideas and concepts, and sometimes even products, if they are ready, to friendly customers that I knew in the telecom sector or software industry or large enterprises, or even smaller enterprises and try them out and find out what could be the market for these? Who could be interested in? Why should they be interested in and what could that generate them and how should we price it? What could the business with a painted bottle be, et cetera, et cetera? I hired the salespeople for those organisations. Of course, not every organisation was successful. Some of them, I had to turn them down to say, okay, I did screen about 100 companies per year that I was looking at when they wanted me to work with them.

There was a lot of inbound companies coming and out of those were 16-17 companies filtered out that I worked for. Usually, I worked with two companies concurrently because they were in different stages so that was possible. When I hired salespeople from those organisations to build their sales team and then hand over the accounts to them that I had assigned and won or developed, and then they continued with that.

At the end of the day, I replaced myself with an executive, hired from another company from the market. I had one common problem in these organisations. The problem was finding salespeople. Finding the right type of salespeople. And that’s why I thought that, well, I’ll do the shortcut.

Why don’t I just go to universities and business schools who have selling and sales programs and contact their alumni and find good people there? I went to different schools and different countries or contacted them. And I asked, well, do you have a sales program? They said: no, we don’t.

Every university basically turned me down and they said we don’t have that. And I said, how could that be? This was back in 2008. How can you have business schools still today who don’t have a selling and sales program? How is that even possible? I mean, Petri, think about it.

You have your finance, your HR, your organisation theory. You have bookkeeping. You have everything. You have marketing but sales is not there!

Petri: Who needs sales?

Paul: Exactly! Exactly my point. Exactly. Who needs sales? Why bother? Nothing had really changed since the days when I studied it at the university level. I thought that maybe somebody should do something about it.

Petri: That sounds like an entrepreneurial approach.

Paul: Exactly. It’s a problem-solving approach. What do we do about this? Or we should fix this, right? That’s what I did. I contacted a business school in Finland, where I knew the professor a little bit from 15 years before when I had taken a course there. I called him and said: is it true that your business school doesn’t have a selling and sales program?

That’s right, Paul. We don’t. I was like, well, shouldn’t you have? He said, yeah, I totally agree with you. We should have. That’s when I said, okay, well, what if I did a PhD? In my naivety, I didn’t know what it actually entails but I asked him, so what if I did a PhD in selling and sales management? Could that maybe inspire somebody in the organisation, in the community to do something about it and start creating a program for that and start creating courses for that, then doing research in that and then making that appealing for the students?

He said, well, it could, yeah, sure. And then he said, why? I said, well, let me fly there next week. I flew up to Finland to meet with this person in question. And within two hours I’d explained to him what I could do a PhD on. What would the problem area be, and so forth and so forth.

And he helped me to reroute and redraft it. Then he said, okay, so, if you have the time and money for that. Money, of course, in Finland is not an issue in terms of education because education still does not cost but he was referring to the alternative cost of not doing my profit-generating work but rather spend some of my time on doing a PhD thesis and the courses related to that.

I said, sure. Yeah, I think I can do that. I’ll just take a sabbatical from my work and then do that.I thought that it would take one year or two years or something like this maximum. Naive as I was, so the second year is approaching its end and I’m like, wow, I’m still not even close to being ready.

Then I thought I have to ditch the projects that I’m working on. I’m not going to take on any new projects. I’m going to really focus. The third year, I focused completely on the PhD. The fourth year then I was almost finished. So four years after entering the university or business school I was ready with the PhD.

I thought that was very slow. I mean, of course, for an entrepreneur and people being entrepreneurs and fast money to business, we want things to happen yesterday. I thought this was quite a slow pace. And I said, well, maybe it’s because I was working half halftime to two first years.

Then somebody told me that, Paul, you’re obviously not aware that it takes about 5.8 years for people at this business school to get their PhDs. I was still about two years ahead of the average person as a PhD there.

Petri: What’s the number usually done for full-time students? So, 5.8 full-time and you did it only with one year full-time and two years before just part-time?

Paul: Correct. Yeah. That’s part of the equation. Yeah, it is.

Petri: And, in the beginning, you say that this is the shortcut to recruit people!

Paul: Exactly. I did. Little did I know because I was travelling. I was living in Southern France at that point in time and I was travelling there. I had to buy an ice hockey bag in Finland. I went into a sports goods store and I bought the biggest ice hockey bag I could find. And do you know what it was for?

Petri: No idea. I don’t even want to guess.

Paul: For books. I had about 30-40 kilos of books and articles printed in my bag that I was carrying around Europe when going from place to place to visit some clients and reading the books. Yeah. For real and reading the books in the evenings and reading them on airplanes, and so forth.

Petri: Talking about cabin luggage! Travelling light, you know? Yeah. I just have these t-shirts. No, it’s the books!

Paul: Lufthansa caught me once. It was when I was leaving Finland I had again stacked up some books in my bag. That was a bag I had as sports goods always in my luggage. Then I had a regular check-in back and then I had my cabin bag.

Then I have my laptop bag also with me. I had four bags that I was carrying around, the ice hockey bag weighing the most. At one time at the Helsinki airport, they actually stopped me when I was checking in the bag and I had the bag tag already printed and everything ready to go as usual.

They said, sir, would you be kind and open the bag? I said, ohh, you want to see my ice hockey things? They are pretty smelly. It’s stuff like sweaty things in there. Yeah. But sir, we need to see what it is. Reluctantly, I opened the zipper and the person is like this is not ice hockey material here.

I said: Oh yeah. I have some books here and they looked through the bag and they only found books there and binders of articles. They said, sir, this is not what sports goods bags are for, for transporting books. And I was like, yeah, sorry, I’m in the middle of my PhD thesis here so I need to carry these things. I can’t do it otherwise.

 I was nice to them and they got the problem and so forth, and being a salesperson sweet-talking things and so forth. And they said, okay, we can write off so-and-so many kilos from this but for the rest, you have to pay.

I think it was 10 years per kilo that I had to pay extra for that. It became a little bit of an expensive bag for me to carry around but this was luckily in the latter part of the dissertation period that this happened. I had to carry that I don’t know how many times across Europe and it always worked like a charm. At this time I got caught and after that, I started paying attention to how many kilos of books I carry around.

Petri: You’d throw in some skates and a towel there as well.

Paul: Exactly. Some sweaty undies and so forth to just distract them from the whole fact. But yeah, as you said, it was a long route to finding people and then it didn’t stop at that. What happened was that at the business school they have their MBA school. It’s the Hanken School of Economics in Finland. Their MBA school asked me, Paul, could you do a selling and sales management course for our executive MBAs. I said, sure. Yeah, I can do that. I can put it together but who’s going to give it? Well, we thought you would. Well, that’s a little bit a lot to ask but, okay. I can do it one year. But then you have to find somebody to replace me on it and continue with that. And now it’s like the seventh year or something that I’m giving that course. They did find a replacement but I’m still looking at finding a replacement for myself so I can actually focus more on business even in the future.

Petri: Are there now more sales departments and are there more people doing sales?

Paul: I don’t want to mention the name but there was a very promising doctoral student that I had. Actually, the first at Hanken School of Economics focusing on selling and sales management but she was recruited to a company.

Petri: That’s the reason. They are all recruited away, the good ones.

Paul: Even master’s students who take my… I give some courses at Hanken at least until the end of this year. I have had two professorships in selling and sales management. One at Hanken School of Economics, and one at the rival university, the other big university in Finland.

I had concurrently two professorships in selling and sales management at those universities. That just shows that there is a demand for that but there was too little supply. I was chosen to be that to two rivalling schools at the same time.

That just shows how much interest areas. Of course, few salespeople come back to academia. I’m one of the stupid people, one of the few in the world who had actually done that. I still sometimes ask myself…I’m not so sure it was the most intelligent move that I had ever done in my life.

But it has certainly given a lot to those hundreds, maybe a couple of thousand already students that I’ve actually taught through the years in selling and sales management. The positive side of things is they get good jobs. They’re really quickly hired. Organisations contact me and say, Paul.

Could you maybe pass on our information that we have a job opening at this area to your students, for example or your previous students with whom I have quite good contact with at least some of those, not all. This has worked nicely on a higher level, from a social perspective of my part. From my microscopic view, I’ve helped, maybe the industry has become a little bit better in terms of selling and sales management through the output of the students that I’ve actually been teaching. And also, hopefully, the research that I’ve been doing in this area. I’m going to focus more going forward now on, again, working with companies and getting involved.

I’m sitting on a board of a very interesting company. My area of what I’m looking at is how they develop their sales and how they could perform better and how they can become more customer-focused and focusing more on customer value. These are kinds of things that I’m gonna work on more going forward.

It is maybe a sneak preview of what’s coming next year and so forth years after that. I would probably keep one foot in academia but it’s getting less and less because I have more interest in working in the business area.

Petri: What is your favourite word?

Paul: My favourite word, or maybe a name is loppan. That means flee in Swedish. That’s how I call my daughter. She loves that. That’s a very common word in Sweden. If you go to playgrounds and they are kids and their parents usually call them loppan. That’s such a sweet word and very catchy when it comes to small children. I love that.

Petri: What is your least favourite word?

Paul: It must be greed. Greed, like Gordon Gecko said in the film that greed is good. I think greed is not good. I think there needs to be some target orientation but greed is not the thing in my vocabulary. At least, not the favourite ones.

Petri: What turns you on creatively, spiritually, or emotionally?

Paul: Creatively, it’s water. It doesn’t matter if I’m taking a shower or if I’m swimming in a swimming pool or a lake or in the sea, or if I’m surfing the waves somewhere in Bali sitting on my surfboard. Usually, when I’m on the surfboard or riding it, then I don’t have time to think about anything.

When I’m sitting there waiting for the waves, that’s where things come into my mind. Maybe it’s because that’s a few occasions where I can really let go within. That’s also a spiritual experience almost. I mean, not taking a shower but surfing. That’s what I would say that that’s a spiritual and also emotional experience.

One emotional experience was actually in Colorado, training executives there. I was up and looking at Sawtooth Mountain. Sawtooth Mountain, that’s up in the hills, up in the mountains. And it was just such a beautiful evening and the clouds were just phenomenal.

Lighting was perfect. And there was only the wind that I could hear. That was the most spiritual experience that I’ve had. I mean, an earthly experience that I’ve had from a spiritual point of view.

Petri: What turns you off?

Paul: It goes together with greed and stress. Certain type of stress is good but if I see that the stress is either greediness or unmeaningful then I think that really turns me off.

Petri: What is your favourite curse word?

Paul: Fan. A Swedish word, which means damn. Maybe not the most powerful words in terms of cursing but that that’s gotta be it. Yeah.

Petri: What sound or noise do you love?

Paul: When my daughter comes next to me early in the morning and she whispers in my ear and says, daddy, are you awake? I think that’s the most beautiful sound that I like hearing. Apart from that, it could be the waves.

Petri: What sound or noise do you hate?

Paul: It’s scooters. Living down in Southern France, you know the story you’ve been there yourself. You have lived there yourself and you know the amount of scooters out there.

Petri: And we are not talking about the e-scooters now.

Paul: Definitely not. We are talking about the old school, smelly petrol fumy horrible scooters. Those driving uphill next to your apartment that just drives me nuts.

Petri: What profession, other than your own, would you like to attempt?

Paul: That’s a difficult one. I have hobbies. That’s one thing. But turning hobbies into a profession like photography, for example, or surfing? Not that I ever imagined that I could compete with Kelly Slater and the guys, and be successful at that, at least, not winning them. I’m a little bit trying to evade the question, maybe in the sense that I know what I do.

I’m good at what I do. I know what I do. I’ve read the things that I do. I’ve studied them. I think I’m pretty good when it comes to my own profession but so I want to stick to that. I don’t want to become something that I’m not very good at. Maybe, it has to do with age. I get a little bit more careful with it by age that I try to stick to my guns.

Petri: What profession would you not like to do?

Paul: I don’t really know if there’s any profession that I would not like to do. Maybe work in a coal mine. That’s probably going to be one of those areas. Any profession, which is hazardous or dangerous, and which I cannot make sound judgment or decisions on. Any of these and monotonous work. Sorry for anybody doing that out there. Doing something, for example, driving a taxi, we spoke about taxi before driving a taxi, for example, just make me to go nuts.

Partly because of my back. Because I have a little bit of a bad back, sports injuries. It doesn’t allow me to sit so much. I try to avoid that. The same goes for airline captain, for example, or pilot. I couldn’t do that either because of that reason. That would be nicer but at least you get to travel. I guess I won’t do that.

Petri: If you could be a co-founder of any startup in any era, which one would you choose?

Paul: It could be Amazon back in the days when Jeff Bates started. That could be it. I think it was such a brilliant story of how he came up with a whole business and changing from what he did before that to changing into what he did with Amazon.

Now, of course, it has grown a little bit out of proportion. That I would like to run it. Back in the early days, I think that could be one of those. But I’m not saying that it would be the only one. But it probably could be one of those companies.

Petri: Any final words for the audience?

Paul: We’ve been talking about startups. We’ve been talking about corporations. Many people say that or at least I keep hearing this that okay but the difference, Paul, what you do and what you teach and what you train and how you advise companies to work, it works nicely in corporations but it doesn’t work for startups.

And, I disagree with that. Because looking at it this way, they both are usually looking at the same types of customers. It might even be exactly the same customer that you’re approaching. It doesn’t differ that much if you as a vendor are a startup, a small company, even a one-man show, or if you’re a corporation with 50 000 employees. Because at the end of the day, the customer has the challenge.

They have something they want to get sold or they need something. Understanding that avenue and embracing that idea of we’re in it for the customer and for creating value for the customer. The one who creates the most value for the customer is probably going to be the one who wins the deal.

My advice is that regardless if you’re a corporation or a startup. The executives in your organisation whether it’s you and your dog or it’s you and your C-level people need to embrace the whole idea of customer value creation if you’re in it for the long term. Of course, if you’re deciding on we just want to compete by having the lowest price.

Well, good for you for as long as it works for your company but the day might come that somebody else offers something cheaper. Then you are in the game or having to choose your strategic route again. Oftentimes, we come back to the point that, okay, customer value creation is the most important.

Then you need to understand your customer. Understand your customer. That will be the second bullet point on my list that I would say. First, understand or embrace the whole value concept, then understand your customers. And then from that, you can then derive how you work.

What’s the approach gonna be? What’s the strategy going to be or strategies that you’re applying in your company? What’s the process going to look like or processes for different customers types and software categories? What are the actions and activities that we’re going to do as an organisation? That will be the third one. The fourth one will be to have the support and guidance system. All the CRMs, the reporting, everything should be aligned with so that you actually create value for the customer and appropriate value for your organisation. That is, get value back for your organisation. So, don’t just leave it at that level that, okay, if we now have the process, we have the activities but you should follow up. Just like we spoke about that only 25% of the companies in the study that I referred to earlier had a selling process in place that they were actually monitoring. They were the ones who are the most successful ones.

You need to do that. You need to follow up on things and need to have a support system that helps your organisation work in the intended way and the intended direction. And then, each one in the organisation and who’s facing the customer either directly or indirectly to wanting to become the go-to person in his or her specific domain and field of competence and role. These are all important. These five bullet points are really, really important regardless if you’re a startup or if you are a global operating corporation. These are the same. That would probably be it.

Petri: Thank you, Paul. There’s so much information here and hopefully, we reduced a bit of the chaos and confusion and complexity in sales, but I have a feeling maybe we increased it a bit as well.

Paul: Maybe we did. Things aren’t always as simple as we want them to be. We need to understand first. When we have looked at it enough in detail, we get the clarity and then we see through the whole problem. Then that’s how we know, okay. This is how we should do it.

Business validation

November 17, 2020

You need market validation for a product/market fit. But whose opinion matters?

Finding the right type of product/market fit is crucial. It allows you to move on, get more funding (if needed) and start to plan for scaling of the venture.

There’s a danger of starting to see a lot of nails all over the place when you have a hammer in your hand. When you need something it’s easy to convince yourself of a narrative that gets you out of the pickle.

The more innovative and far reaching your product the fewer the places that are providing you with the validation you need. That’s natural since others have not walked the path you have already travelled.

They don’t know what you know. They have not gone through the mental journey from the vision of something different, to reasoning, trials-and-errors, and re-evaluating the relevant assumptions.

They don’t have the experience you have now. That’s a good thing because this is your cutting edge. This is why the market needs you. This is why you can have a market share and even dominate the niche. You can deliver something that others will realise and need soon, and they cannot get it elsewhere, yet.

The downside is that you speak a strange language and your message is unfamiliar, different and therefore strange. Anything new is a potential threat and should be treated with suspicion. At least, it can cause change and that is an unpleasant experience for most.

Don’t expect others to see your brilliance or embrace the future like you have already. You live in the future that others are not seeing yet.

You would not ask advice from people that are not qualified to answer your questions. This is what you get when seeking for business validation from the wrong places. You get exactly what you asked for: confusion, denial, rejection, and at best, a lukewarm neutral response.

Asking the right type of questions unlock the puzzle. Who are the people in the know? And even more importantly, who are the people that are not? To rephrase the latter one slightly differently: who have the most to lose? Who are the conservative ones?

To get you started with the business validation quest I give you some places that tend to be the wrong places.

Your friends and family are biased and may see you the way they have learned to see you. This may not reflect your recent changes or new aspirations.

Similarly your current customers may have a similar bias. They put you in a certain mental box or category and if you do something else they may have a hard time to see you in a different role.

Anyone who has a vested interest in your current success is a good suspect. The more dependent they are of the status quo the harder it is for them to have an open mind for changes.

Incumbents are not famous for innovation. Per definition they have the most to lose. They are not embracing change with open arms. It takes an exceptional corporate culture to dive first into new ventures that may fail. Risk-taking is not the first appetite in large organisations, and can ruin your perfectly good corporate ladder-climbing career.

If you have investors in your company or you’re considering getting some VC or other equity investments, that’s another bad idea to ask from investors in general. They are money allocation experts but you’re the innovator and the practitioner. If you seek validation from investors you’re not leading the way. You’re a follower.

General public is also a dead end. What is left?

I leave the obvious answer unanswered so that you can revisit the previous questions and do a bit of mental work yourself.

If you need help figuring out the right answer you know where to find me. It’s not that hard. Just think, or ping me.

The Almanack of Naval Ravikant

November 13, 2020

Eric Jorgenson has done a great service for all the millions of people who’re interested in Naval Ravikant’s thoughts and ideas.

The book’s subtitle A Guide to Wealth and Happiness is on the money. It collects a few decades of writings, tweets and other public appearances where Ravikant has shared his views on life, business, investing, and the purpose of everything.

There’s a lot to process. You can get a better understanding who’s the person behind the famous Twitter handle as Ravikant is known for many (a million followers in Twitter alone).

It enlightens the self-discovery journey that goes through hardships and out of the pressure comes gems that we can observe in many tweets and anecdotes that themselves do not reveal the process, the backstory and the experiences that have let to them.

Ravikant is a clear thinker that goes for the first principles. He is not afraid to forge his path that may not be that frequently travelled. It takes a lot of courage to publicly share views that may not be popular at the time when it’s easier to stay quiet.

This book is a great manual and guide to visit often. As any wisdom that passes the test of time, it is packed with practical tips, principles and takes on life regardless of where you’re in your personal (or professional) journey.

Tiny things matter

November 10, 2020

If you cannot do this small thing properly how do you expect me to believe you can do the big things right?

When you’re creating something out of nothing the small details are not exactly the first things in your mind. That’s fine, and how it should be.

But when you’re selling your solution to customers everything counts. People are not logical nor they care about scales or proportions. What is small for you might be the make it or break it for them.

When you don’t have many data points you draw disproportional conclusions from the few you have. We are also very socially attuned. We observe and take clues from the smallest of hints.

How tidy is the environment? What’s the attitude of the people? How friendly and supportive is the service? Are they taking me seriously?

The same applies to digital services. If the user experience is sending micro-signals that are not in line with the big message they start to add up. When the accumulated balance is large enough to tip the scales varies between customers.

The problem is that you tend to leave with the most insensitive ones, and they may not be your ideal customer group. The rest may have never even become your customers in the first place. They dropped out in the marketing and sales experience.

Broken windows theory states that you should take seriously minor crimes and police them properly (e.g. zero-tolerance) because they send visible signs of crime and civil disorder that can escalate later if not handled swiftly.

Zero-tolerance for bad user experience should be applied more rigorously if you care about your brand and long-term reputation. Customers take offence on the smallest of things but the trouble is that they seldom tell you about them. Instead, they stop doing business with you or do it with contempt and complain to others. This is a great disservice for you in two ways.

First, you cannot fix something you’re not aware of. Secondly, they are actively marketing that you’re having bad service and others should not patronise your offerings.

Tiny things are about feelings. Big things are about major errors. The latter are often taken care of because of their magnitude. But the tiny things done the right way will make your business become the amazing and awesome customer experience worth sharing with others.

If you can make your customers feel good that’s the closest to the business heaven you can get.

Average Joe – the tech genius could be you

November 8, 2020

Shawn Livermore – TALKS WITH PETRI

Shawn Livermore talks about the great myths surrounding tech founders, how to unleash your creativity, the secrets & magic of growth, and what is a nagging pull. He also shares his views on introverts and ladders.

Average Joe – the tech genius could be you

Bio

Shawn Livermore is a tech startup founder, entrepreneur, and technology consultant for over 20 years. He’s written books on software development and writes software in many programming languages. After raising investment capital for his startups 6 times, Shawn began to look beyond 
the code to see the bigger picture: The systems, patterns, and models of thinking that most deserve our attention. Instead of hype and hustle, Shawn focuses on tangible, factual, and replicable bits
and bytes that most people wouldn’t see or pay attention to. From small fragments, Shawn can assemble larger stories, to help people think, speak, and create like a tech genius.

Twitter | Average Joe | Linkedin

Transcript

(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri: Hello Shawn, how are you doing?

Shawn: Doing great, Petri. Thank you. Thanks for having me.

Petri: Are there any geniuses?

Shawn: There are. They’re out there but you’ll probably never meet one. And if you do, I don’t really think it will change your life.

Petri: Why do you say so?

Shawn: Most geniuses are pursuing what they would believe is important. Not necessarily what the rest of the world will believe is important. There’s a great example, Michael Kearney, a great guy. If you’re listening, love you. You’re awesome. He’s one of the smartest men in the world and he’s working on improv comedy in a Tennessee comedy club.

He’s not working on nuclear fusion or solving a disease, panaceas or pandemics. Not to say he should. He should do what he feels is right. But the intelligence factor globally and in the tech industry has not been necessarily the hinge or the linchpin of our society and their growth and their maturity in tech is really factored into a variety of other aspects of their intellect and creative juices. And that’s kinda what the book’s about.

Petri: The name of the book is Average Joe and there’s a subtitle as well. But what actually made you write the book? I think there must be a story behind it. So it’s not like you just one day wake up and then you write a book about average Joes or actually the opposite of those. So what happened?

Shawn: I was consulting for a client, a good friend of mine. I was on the whiteboard trying to explain something and he looked over and, and just said, Shawn, you are a tech genius. And kind of stopped me in my tracks because you hear these phrases and a little bit cliche but I did not feel like a tech genius.

I have been in the tech industry for 20 years. I run a software company called Product Perfect here in Orange County, California. If you need any software, call me up. This client was looking at me from the lens of understanding a complex issue that a nontechnical folk would really struggle to grapple with.

They don’t quite understand how the Internet works, how software works, how hardware works. They install a mouse and they’re proud of themselves. This is not a simple thing for clients to deal with, the technology industry or anything tech. It scares them. In fact, there’s a commercial on the radio you’ll hear that say I can’t call the tech guy. That guy hates me. I forget which brand was advertising that but nontechnical people are amazed by technical people. And friends and family when you tell them you write code or you’re working at I industry, they just, their eyes get big and wow, that’s cool.

How do you do that? How did you learn that? It looks so complicated. He called me a tech genius and he was not referring to my intellect, my intelligence. He was referring to how I was explaining complexity in a technology aspect. And so that feeling that I had at that moment, resonated.

It caused me to then spin quite a bit more. I dug into the topic of perception. The other books I’ve written in the technical, programming language focus. They didn’t really cover a topic that anyone could read. I always wanted to write a book that hit the business shelves and I could walk into a bookstore and pull it off and say, there it is. Here’s all my ideas. This is kind of 20 years in the making of everything I’ve learned and it puts it into the very narrow and very focused line of thinking of intellectual capability, creative capability and the technology industry career. Those three lines of thinking and topics flow together. They interweave and they culminate to present a thesis. The thesis is that there is no tech genius. There is no superhuman magic wand, magic dust. Yes, you have Elon Musk and yes, you have Steve Jobs and you have your icons.

They are North Stars. They are not the universe. They are shining, wonderful heroes but it doesn’t mean that you can’t shine as well and put yourself in a position to be greatly successful in other parts of the tech industry or your own little microcosm. That’s where I’m coming from putting the book together.

Petri: You did some research and you went far back in history as well. The previous episode, we talked a lot about history. Today, we are not going that much in history but I think it’s fascinating. You have historical characters there. You’re talking about Mozart. You’re talking about Winston Churchill.

You’re talking about Abraham Lincoln. You’re talking about a lot of these, even Einstein, a lot of these geniuses. But you are not the first one in the quest. There were a few other people before you. Can you elaborate a bit and tell the audience who were the first ones to do what you’re doing now?

Shawn: There were a few people in the early 1900s who sought out the genius genetic code. In chapter two, we talk about genius and intelligence and the worship of intelligence and how the tech industry just worships intelligence, can’t get enough of it. They have PhDs at Google that are hiring more PhDs and certainly nothing against getting a PhD.

But when you elevate and venerate intelligence about all other categories of work and effort and experience, then you become off-balance. In the 1900s, you have a couple of pursuits. I won’t name them but chapter two goes into them and they came back with really empty-handed.

They said, well, let’s look at their genetic code, what their father did, their mother did. Let’s look at their diet, let’s look at their focus where they farm, hunt, gather. All the way back in history, as far as they, I could tell. Kings and princes and nobility and noble blood, did that have anything to do with it? There was a psychometric analysis that you’d throw into Excel if they had Excel back then and they really didn’t help anyone by all their effort to find this. They did find a few very interesting people and examples, and that personified abnormality in the brain.

There were some interesting use cases of people who had a spike driven through their skull and the brain was affected. And it led to some of the early neuroscience activity that turned into a whole category of medicine. But the genius element of it, the intelligence element of it you can’t eat a certain vegetable and become brilliant. It just doesn’t happen. And it really doesn’t matter. It is the end result of it because the pursuits are all about the layers, the standing on the shoulders of giants, as they say. You would never have the Internet unless you had cabling. You would never have cabling unless you had electricity.

It goes back all the way down through hundreds of years ago to mining elements out of the ground. It started as a book about the tech industry and programming and tech nerds and how they talk but it ended up digging back into history. We looked at Einstein and one of the best examples of very entertaining intellectual pursuit moments of Einstein is when he’s playing his violin to help him think clearer. That’s where we get into some in the book in chapter three about creativity and how we think and putting our creative juices onto paper and how the Slow Create Framework that myself and a neuroscience professor out of UCLA helped to fashion this framework for creative thinking. Creative work really is when you plug it into a system, all the organised thinking that you do on a regular basis, you plug it into an organized system and then you apply a process against that system.

You end up with achievable, measurable outcomes. If you’re a tech founder or a soccer mom or whoever you might be in or around the tech industry You’re able to really walk away with tangible results. But anyway, you have Einstein playing his violin to think more clearly and allow his brain to do what it does best but he would listen first to Mozart.

So, you have one declared genius, Mozart, playing in the background on the phonograph or whatever technology they had at the time. And you had Einstein listening to that and he would start playing and it was almost like through space-time this genius moment was taking place in the airwaves.

You can almost magically see it in the area around them. Then he would sit down and work on his theory of general relativity in the early 1900s. It’s a very amazing moment of magical wonder but it really wasn’t magical at all. It was a lot of procedure. Yes, he was brilliant and Einstein was fascinating to study. They even dissected his brain when he died. An amazing story, some guy came in, a doctor, and somehow convinced the family member to sign off on him being able to analyse Einstein. But you didn’t realise he was gonna cut his skull open and pull his brain out.

He literally took Einstein’s brain, put it in bottles in his home office, in a couple of industry bottles, and there it sat for decades. It’s insane. Nobody really knows that. People don’t talk about it. There was a couple of podcasts series on Einstein’s brain that you can look up and it’s just some fascinating stuff. But when he did all his analysis and, of course, over the decades, they reanalysed it. They only found that it was slightly different than a normal human brain. There was really nothing. It wasn’t grossly massive or dense, or you’d think that there’d be an extra set of neurons somewhere in there.

We know very little about all that still. Working with the neuroscientists, we began to dig into how the average Joe, hence the title, can really improve their intellectual capacities and the elasticity of the brain. And then applying that to the tech industry and tech careers and what are some of the best practices that you can do in order to be as optimized as humanly possible with all of your thinking. That carries through because I’ve been through Techstars, at business accelerators with my startups, I’ve raised venture capital funding. Even in small scales for seed funding, it’s still a valuable effort I pitched over 120 times.

So I know the industry and how it all works. And founders walk around like professors at the university with their head down and their brain is spinning. They’re thinking about all kinds of stuff and they’re innovating and they’re trying to move their startup forward. Or maybe if you’re trying to learn tech, you’re listening to this, you’re on the outside of tech and you’re trying to get on the inside.

You’re knocking on the doors you’re trying to learn PHP, Perl, Ruby, C-sharp, whatever it might be, and keep going. That’s what I tell you. But the mental cycles are astounding. The amount of work we’re all doing in our brains every single day is astounding. It’s alarming, keeps us up at night, right? I just kind of geeked out on the whole book and all the research. We had a research team helping me for 18 months and there’s an enormous amount of information in the book.

Petri: What I took from the book is that it’s not really about Silicon Valley. It’s not really about tech either. It’s actually about human history. It’s about humans. How we are creating myths. We are creating stories. How we are lying to ourselves that if you are lazy, you don’t want to do the work.

It is easier to believe in some superpowers, some super people who are having something exceptional. So you can just be on your sofa and eat chips and you don’t need to bother with working out and doing those things. That’s actually the story, isn’t it?

It’s basically taking off all those fancy things and it’s just brute work and some people have some secrets. It’s not the person it’s the secret they have. And another thing is that there’s a method to that madness. There’s this process or processes, techniques, and those people know them.

And it’s persistence as well. Nobody’s saying that they’re not intellectually clever and smart people and some of them are geniuses but still the average Joe can do a lot of things. And I think that’s really the big takeaway. You had six myths you were dissecting there. Do you still remember them by heart?

Shawn: Yeah, absolutely. That the tech genius myth is based on six claims. The claim number one is that genius is required that we all in order to be a tech genius, you have to be intellectually superior. You have to have something in you that is special intellectually, where you can do advanced calculus and nobody else can. You can write code.

I think that claim number one ties to the ability to write software. When you say, look, mom, look what I can do. And they look over your shoulder and say, that’s great, honey. You grow up with these golden boy or golden girl feelings of specialness. When you enter the tech industry you touch on and you tap into that nerve once again, because now you can write code that no one else understands and it makes software run on a computer.

How magic is that? How amazing is that? That’s what pulled me in to attack it. It kicked the dopamine neurotransmitter in my brain, and I just loved it. I got hooked. That’s claim number one. The claim number two is that creation, the act of creativity is this sudden and inspired moment. It’s what Darwin called the sudden bolt from the blue.

Petri: Eureka!

Shawn: Eureka. Yes, exactly. There are some Eureka moments. There’s certainly what we call big-C creative moments. But what we find is that most creativity and most innovation is a little-C creative moment. It’s that spark that is really more of an ember. It’s just flying around in the air and it just kind of lands on a piece of brush that was ready for it. But claim number two is that it’s sudden, inspired. Claim three is that…

Petri: Let’s pause here for a bit. What I take from the book as well, and otherwise, is that sort of that Eureka moment it’s just the culmination of the work, what you’ve been doing. Maybe you have the final puzzle piece clicked and then it comes and then you realise it but there’s been maybe decades of work before that. And it’s been gradual, grinding tiny bits and trials and errors, things which are not working pattern recognition, a lot of things going in there. It’s just the culmination of the final thing when it beautifully, everything comes together but it’s just not that moment.

It’s the one permille off to all the work you had done before. But that’s the only thing you see or other people say that, Hey, this guy just walks in and does that. Then it’s just like magic and you don’t see the rest of the story.

Shawn: Oh, totally. It’s the famous potter in the book. We talk about the flow state and there’re potters that have been on the wheel for decades and they say, well, the first 10 000 or 20 000 pots, those are really hard. It gets easier after that. That’s great news! So just wait 17 years until you get to that point and then it eases up. But the hands in the clay, getting your feet…There’s another golfer who we talk about who had his feet in the grass when he was like seven or eight years old. He was learning in the backwoods of Alabama and he would dig his toes into the grass. He would feel the wetness of the morning and he grabbed the club. As he would grow into his professional career, he got a chance when someone offered it and somehow he got connected and he got a caddy and they promoted him. He would dig his fingers back into that grass and his body would feel what it felt for decades. And the fingertips of the developer in tech those are some very interesting, powerful fingertips. They can do quite a bit. They’re already knowing not to click the certain key versus the other. There’s this muscle memory that you feel is professional, no matter what you’re doing tech or not, that you cannot fabricate in a quick code camp.

You can’t do a boot camp and feel, Oh my God, I’m gonna go out… there’s a level of rhythm and iteration that your body needs physiologically something in there has to be checked. A box has to be checked before you’ll pass a litmus test for most careers and much more than that for raising money with investors. There’s quite a bit of time involved. You’re absolutely right.

Petri: Neils Bohr, the famous Danish physicist and Nobel prize winner, he once said that “an expert is a person who has made all the mistakes that can be made in a very narrow field.” And that’s just hard work. Isn’t it? It’s like all the other options are already exhausted.

Shawn: Yeah, it’s hard work. And, the listener may say, Oh, that’s bad news. That means I’m screwed. No, the work that you’re doing and certainly there’s no magic pill. That’s obvious if you thought there was, I’m sorry to break it to you. But when you invest decades of your life into a career, technology or industry, and you know that industry, whatever industry might be, agriculture to space tech to horticulture, study of squirrel fingernails, your industry is your industry and you have the advantage, a narrow, very specific advantage that 99.9% of the rest of the world probably doesn’t have. You should leverage that. That is the fulcrum by which you can advance yourself. Upon accepting that challenge, your life becomes incredibly more interesting. With the tech industry, we’ve seen tech and software eat the world.

Everything’s getting eaten up by SaaS companies in every industry. Nothing’s going to be spared from it, it’s endless. Own it. Own it is what I would say. That’s yours. Nobody else can do what you can do.

Petri: And that’s the secret. You’re also telling, well, it’s not so much of a secret anymore but the story of Dropbox. Because it’s quite exceptional. There’s so many great things about Dropbox. It opened up the whole growth hacking, even the name and the concept of growth hacking came out of Dropbox and it’s quite a magical box, which they opened for referrals and a lot of things. Can you tell briefly the story and the development? Does it go back even almost 20 years in the personal history of the main characters in the Dropbox story?

Shawn: Well, it’s 2020 today. It goes back to 2008. So that’s about 12 years. And, it taps into claim number three of the tech genius myth, which is that secrets are elusive and that you really can’t achieve secrets. The story in a brief nutshell is that Sean Ellis, who I got to sit down with for a couple of hours here in Newport Beach, California, for a wonderful interview, he told the story of he himself and what he went through and achieved in helping Dropbox achieve their world-changing growth from a couple million in value to over 10 billion. I think they were around 14 billion at the writing of the book in value. And, it’s a wonderful story. I’ll let you get the deeper version of it in the book, but essentially he met with a buddy of his Jamie Siminoff who founded Ring, which was bought by Amazon for a billion dollars a few years back.

You might remember Siminoff was on Shark Tank and they, Hey, Jamie, how’s it going? Hey, no, we’re not going to invest. And then he comes back and now he’s an investor, he’s a Shark himself. So it’s kind of cool to see that. Siminoff and Ellis are buddies and they met for coffee or a bite to eat.

They were talking about some of their experiments in the marketing domain. Ellis is coming from a growth career. He had helped three or four other companies go public and done a fantastic job of developing an experimental culture, putting in place marketing experimentation as a science and developing the rhythms of growth in those companies.

His reputation proceeds him and he’s walking into Dropbox as a value-added, heavy hitter hired gun and looking at some of their ads and some of their marketing techniques and Siminoff shares with him a very specific secret. Something that he tried, that he realised, and he coined and codified into a phrase and into a concept. Ellis bookmarked that in his brain. He just kind of stared at the wall for a second and nodded his head like, okay, got it.

Came back and waited six months to use it until just the right moment. He dropped it into one of their marketing experiments and it just blew up. I mean, it went from like, Oh, there’s a 20% increase on that one. Oh, that’s good. Bobby, keep going. All of a sudden there’s a 300% increase and everyone kind of turns heads and looks over and sure enough, the secret worked, it worked.

They took that one experiment and they A/B-tested it to death and they came up with a hundred different versions of it and then they blew it up. Dropbox took off from there. And that secret though is a great quintessential example of isolating yourself. If Ellis would have been isolated, if he would say, I know everything, I know what I’m doing. I don’t need anybody else. You all should listen to me. There’s danger there. That’s the surest path to failure. But he continued to collaborate and he invoked his network and that worked and the information was proximal. The proximity of information is very key for founders and for tech professionals, marketing professionals, innovators, you really want to be proximal. If you’re pulling yourself away from the conversation, I know introverts I’m one. We love to sit in a corner and read a book and everyone be quiet, but you really do have to carve out your calendar to have that back and forth, whether over Zoom or in person. It’s a wonderful story.

Petri: While you were talking with Sean, did you get the impression that it was kind of an accident or a happy coincidence that he got the secret? He was not looking for that thing. It was dropped into his lap by Siminoff sharing his knowledge and experience. Because you said he sort of bookmarked it, but there was no placeholder to put it immediately. It was like, okay, nice thing. I just keep that in my mind. He was not like, Hey, I need to do this, can you figure out, what could we do in order for this thing to happen?

Shawn: I think it was raw material. It reminds me of another story in the book about Groupon. But to answer your question first is was it by accident? Partially, I think it could have very well failed and the experiment might’ve led to just yet another failed experiment and they just hit the dismiss button and start a new one, new campaign, Okay, whatever and not even think about it.

Petri: The other thing is that if he would have not gotten the secret from Siminoff you have more knowledge of the case but because there was something particular, what he had figured out. If I remember correctly, it was like both of the parties needed to gain something.

If you are referring, and that’s what Dropbox did, you also gain a bit of more disk space. It was not just the friend you’re giving. Both of you are getting it, and that was the secret sauce. And then you needed to tweak and find the exact right propositions for both parties that it has the optimal value for everyone.

But that wasn’t common knowledge at the time. I’m not sure that it would have happened the same way if that piece of knowledge, that this is the thing, this is how you should be doing, because one way, giving referrals to the regular way, you give someone something, but you’re not getting anything. What I understood by reading the case was that that didn’t work. It was this magic sauce, which made the difference.

Shawn: Yeah, it was. They called it the principle of mutual benefit. The idea that party A has benefited party B has benefited and the platform by which they are both on has benefited. So it’s truly a three-part triangle. And that is spinning in the air and Siminoff was able to grab it out of the ether and put it into words. And I think that’s the trick when you can observe and you can codify and pull it out of the ether, stick it into a phrase and then share it with other people and then have evidence to back it up.

You have now found a secret. You have taken information that you digested that you have observed your data becomes transient if it can be communicated, but the principle of mutual benefit would have been discovered by anybody at some point. Someone would have figured this out and we would have, instead of Dropbox would have been some other brand that we would have been using maybe, a newcomer or an established brand who knows.

But yeah, that was the principle, but it ties into Groupon and what Andrew Mason discovered even predating Dropbox by several years is the village mindset. The principle that he discovered that made Groupon the fastest-growing Internet company in history at the time or the fastest growing company in history of all companies was the village mindset. And the village mindset is the idea and the willingness of other people to participate in my transactions. It led to the sharing economy where we’re allowing other strangers to sleep in our bed.

Investors said that’ll never happen. No one’s coming to my house and sleeping in my bed. Oh yeah, they are. And it’s going to be the biggest hotel in the world now, Airbnb.

These principles, these beliefs, they are thesis, they are theories that are easily destroyable. You can discount them very easily. Your mind discredits it because you yourself wouldn’t be willing to do something.

Mason took that principle and he was running one company and he pivoted it to save the company because the investors were unhappy with whatever they were doing at the time was some sort of journalistic endeavour.

He pivoted and rarely do pivots ever work scientifically and statistically, but this one worked and boy did it. Now, Groupon has since languished in the never-ending trough of despair, but we hope the best for them and we’ll see what happens.

But, these principles they’re out there and can you figure them out? Can you codify them? Can you put them into a phrase that can be communicated? That’s the challenge. That’s a part of this claim number three, and the book teaches you how to do that to the best of my ability and from the evidence and stories that we were able to find. It ties into claim number four, about growth, and that’s the Dropbox story, but the growth is magic that there is this magic dust.

Some people seem to feel like there’s magic dust out there. And if I don’t have the magic dust, and I shouldn’t be doing tech startups, or I shouldn’t even try. I find that to be fascinating because people like Elon Musk launching stuff into space, you see them on YouTube with SpaceX.

I love Elan. Well, no, not really, but, he’s an interesting character to study at least. I guess some of his employees say he is not very nice and I think one day he fired like 700 people and there’s a lot of articles. You can Google it and take a look and see what the journalistic press has to say about him.

But the magic dust that he carries is widely held as some of the best dust out there. Bezos and Musk and some of these guys, they just look in one direction and the stock prices move around.

Petri: Yeah, that’s what we see now. The number one billionaire in the world, Jeff Bezos. But if you think about it in the early nineties, or even in the late nineties, that was not the case. It was just a completely different story. If you also look at Elon Musk, he went through hard times. There was a time when Christmas was coming and both of his companies were bust. Well, they’re technically almost, I guess, almost like going under during the financial crisis, Tesla and SpaceX, and he’s putting everything in. In many cases, there’s this other side of the story as well. It’s how much you’re willing to sacrifice. Nothing comes easy usually. And it’s a lot of dedication.

I think that’s one of the things which sets apart those who are really dedicated. They just have sort of like a compulsion to get this thing done. They really want to see something happen and they are so driven by whatever the objective is that they just don’t give up.

Shawn: Absolutely. I think the determination is kind of everyone’s secret weapon. If you can tap into it. There’re so many stories of that. I won’t go into all of that. There’re these dreamers out there that are fanatical about their industry or their ideas. And if you’ve ever met someone with an idea, they’re like, well, I won’t tell you, because I’d have to have you sign an NDA, and investors just kind of roll their eyes.

In the first day of Techstars, when I went to this tech startup accelerator out there, many are familiar with, the first thing that we heard was your idea is worthless.

Petri: That’s not the nicest thing to hear!

Shawn: If you’re an idea person, that’s the last thing you want to hear. What are you talking about? My ideas are amazing if you only knew my brilliance.

I took that and I was like, Oh man, that hurt. And then he said, but you, you’re interesting to us. It kinda lit a little bit of okay, well that helps. It’s like a kick in the butt and a pat on the back, and then a warm hug. It reset your thinking because execution truly is everything.

How do you execute? How do you build? How do you formulate and create? What is the process by which you go to create value for customers? If you can define and improve and are you flexible and moldable and willing to stretch, bend, and evolve as a founder, as an innovator, you can position yourself in the right room with the right people and proximity again to overcome whatever it might’ve been like a financial deficit or any sort of team deficit or knowledge gap, or proximity or awareness deficit, they can fill in gaps with you and move you beyond the layers of the plateaus that you’re stuck at. I really do believe that the determination within me at least has brought me when I raised six rounds of funding in a row for my startup, a failing startup each time. I was somehow most proud of that because how do you convince investors to invest their boat money, their retirement money, their vacation money. The seed stage is very difficult to raise money for it.

In fact, many would believe that round A funding, round B of funding and the tens of millions, much easier to raise that money. Because you already have some sort of traction you’re already moving forward, but seed money. Oh my God. Good luck. That’s very difficult. It’s almost formulaic too. You have to have the recipe just right to get their attention.

But I do think that the long-term staking it out, climbing a mountain, tackling Everest in little bits and bytes, biting the elephant off one bite at a time. It does take years of your life to soak into something.

Petri: Are there any stories left out? Something you’d think was fascinating, but for some reason, didn’t go to the book. Anything you can tell, which is not between covers?

Shawn: I think the idea of the great crossover. The nerds telling stories and chapter nine, we talk about showmanship and how to communicate. Most of the time, all the folks that I’ve met that are amazing software developers, they are horrible communicators. In fact, I myself am a recovering software developer.

So even to be able to string together 10 words, that makes sense, it’s taken me a lifetime and communication is truly the number one reason that anyone gets hired. Your soft skills are truly more important 10:1 than your hard skills. I don’t care how great of a programmer you are if you don’t know how to speak to anybody. They don’t want to work with you.

The development versus communicative capabilities, I call it the great crossover because you’re crossing a chasm. You’re saying no to what traditional science tells us. There’re left and right side of the brain. And that’s been hotly debated, some neuroscientists say I ignore all that. It’s really all over the place.

Let’s just take, for example, the idea of a left-brainer, this logical thinker. And then the right-brainer or the creative mind, the artsy folks. So, developers, if you ask them to build a website, what do they say? Well, I can build a backend. I like to focus on the backend. I’m not much of a design person. Yeah. The design guys are creative weirdos. They’re over there, and they point to the other side of the company and the design people, they say, well, I don’t know how it all works, but I’m really good in Photoshop. And I can master the colour palette. That’s not really all true, is it?

The technical folks, they are some of the most creative people you’ll ever meet. They can get into the code and invert paradigms like no one else can. Programming is the ultimate extensible model. You can do literally anything with code. And to be able to learn that and develop that and morph that into something that can somehow produce value for a customer is amazing.

And then become more efficient. But communicating and taking all the signs of that and turning into palatable words that can be digested by another human being, which has no idea how code works, that’s truly an art form. And so the ability of Demosthenes back in 300-400 BC, this Athenian Senator who could not speak. He would stutter.

He had multiple different problems, speech impediments and so forth, but he put rocks in his mouth and the story is widely retold. He began to figure out how to self-correct. He dug a cave and took his light down there and he shaved his beard and his head halfway off so he couldn’t come out until he forced himself to learn how to speak.

And once he learned how to speak, he reinvented himself. Went back on the stage, created masterful, prepared works. In fact, he only spoke from a prepared set of documents. He would never speak on the cuff. In fact, a great example is they would shout his name, a thousand grown adults shouting your name to come to the platform and defend yourself or to speak on a topic.

And he refused. Only if it was written. Only in his way, in his little weird world, would he produce the perfect jewel of spoken ideas. And I love the story with Demosthenes and it gets even deeper than that, but…

Petri: Pick your battles!

Shawn: Yeah. Pick them very carefully, but his limitations were inverted. And so now, instead of him being at the behest of the crowd, he kind of controlled it. He flipped it on its head.

I really believe that. And that’s why I created the Sustainable Mystique Concept. This triad of communication that if you follow the Sustainable Mystique Triad, anyone, I don’t care how left-brainer you are classically speaking. Anyone can learn how to communicate.

They can learn how to put their words into a very narrow and very focused groove and push the inflextions and push the belief systems, the patterns of details of secrets, all the subject matter of their craft through that paradigm and out the other side comes fascination. The audience looks at you and says, wow, this guy, this gal, how did she do that? How did they do that? I am intrigued by what you have to say. And I’d like to schedule a follow-up meeting with you. So check out chapter ten. Chapter nine talks about how to speak and how to reposition your thinking toward the notion of generating fascination. But that’s probably the most valuable take away other than chapter three, the Slow Create Framework. There’s a lot there.

Petri: It sounded like for a moment that you were telling or explaining this is how you become a tech genius.

Shawn: Yeah, it kind of is. And that’s the way the book kind of felt when I started the book and there was this desire to disprove it. To say, Oh, I’ll show them. And halfway through, I realized, no, no, no, that’s not right. It’s really, I’ll show them. It’s inverted into that. And I’m twisting my hand in the air right now if you could see me. This idea that you start off by saying Elon Musk is not special, I can be Elon Musk. And then you just disprove that and say, no, Elon Musk is special. He’s done some great things. Jeff Bezos is very special. They do have something more what Thomas Carlyle in 1840, the Scottish philosopher that we opened the book and chapter one with, he talks about this Great Man Theory.

This great man was something more. Who are these people? These noblemen, these princes? Why do we try to crown kings? Why do we adore and worship humanity? Why does that happen? It is because everyone wants the great man with something more. Everyone wants to worship another human. And that’s just kinda how we’re hard-wired.

But the reality is you can be the tech genius. You can twist the paradigm and you can “become the myth.” It’s all over the website. I use that phrase “become the myth” because it’s the truth that you can… I know that I speak with ignorance of your scenario of whoever’s listening is, you don’t know me and what I’ve been through or what I’m dealing with in my adversity levels.

And, certainly, if you’re in a dirt floor and you don’t have Internet access, you don’t have access to education. Well, that is different. And there’s some pyramid of needs that we need to address there first and get you help. But as you develop in your career, across the world. Just found out this morning, the book is going to be translated to Chinese and someone picked up the rights. So excited about that. Hopefully India.

Petri: Wow, congrats!

Shawn: Yeah. Thanks. We hit the best sellers list on Amazon for the first weekend and hope to hit that again soon. But, I think people resonate with this idea of becoming that myth of being that tech genius of twisting that paradigm. And if there are any formulaic answers then what are they?

Let’s dig into that and practice those rhythms and up our game. That applies to anyone in or around the tech industry. Meaning if you’re already developing for 20 years, great! If you haven’t written one line of code, great! Both categories of people can up their game, they can improve.

Petri: You also mentioned there the theory of someone who said that there’s Big-C and Little-C creativity. We already spoke about that one great moment where everything becomes clear, but in reality, creativity is something with it’s really mundane. It’s what happens every day and it’s these tiny things and everybody’s creative.

It’s so normal. It’s so average that we should not even talk about it.

Shawn: Well, it’s additive, right? The building of thesis and theories and hypothesis in the creative process itself was something that Graham Wallace in 1949 and prior had developed this replicable pattern of creativity and his four steps come together. Those turned into something else called thought fluidity.

Another gentleman called it the nagging pull. This nagging pull, this pebble in your shoe. What is it? What am I trying to figure out? What am I doing? What’s left? What’s the unsolved? That is a small-C moment. Those firing neurons they’re additive. They continue to compile and build up until the composition of the idea is more readily available to your precious thought process.

It starts subconsciously and then it builds. Working with our neuroscientist out of UCLA, we put together this model that then helps to foster pulling out of your subconscious the small moments. Putting them out into paper or onto digital PDF and being able to very rapidly, very quickly recall to memory where it was, where you were stuck on last, what you needed to change.

What the other element was in the formula and then fashion it up and put a bow on it. And make it something that can be spoken out of a mouth and that others can truly understand. But the Eureka moments are few and far between, and I wouldn’t go looking for them. It’s like the search for secrets. They are additive and they compile and they build up over time. But in the subject matter, you’ve gotta have your hands deep in that subject matter, continuing to crunch through your patterns, details, and secrets.

And be organised. One of the things I had noticed, this is actually a huge tragedy in our industry. Everyone is so freaking disorganised. They’re so darn smart. But you ask them, Hey, where did that one idea that you had go? Oh, Oh yeah. I forgot about that. Or, Hey, did you develop that? Did you put a business plan together? No. Well, whatever. The business model canvas that’s out there where you can plot out a business model. Most people can’t even get themselves to take the time to organise their thoughts for the day and calendars and so forth. So that’s why that’s so great framework, I think it really has legs because it truly organises all of your ideas into canvases. And then those canvases stack up into a pipeline and then you crunch through that pipeline and you never forget anything.

Petri: And in the middle of the canvas, it’s not exactly in the middle, but I think somehow I put it into the centre, is the ladder. The mindless part, it’s the work, isn’t it?

Shawn: Yeah, we call it the Mindless Work LADDER. And so that LADDER is an acronym. You let go of the details of the subject matter of the problem domain for the L.

Petri: Playing the violin? That’s what Einstein did. Wasn’t that actually his method of going into mindless?

Shawn: Playing the violin? Yep. It’s stepping down that ladder and his violin work activated what’s called the default mode network in your brain. Most of the time when we’re walking around making decisions on a daily basis, we use what’s called the ECN, the executive control network. We’re saying, Hey, should I pay this bill or that bill? Should I eat a burrito or a hamburger or a salad?

These decisions are trading off the future versus the present. There’s a lot of factors that are going on, but the ECN is firing and scientists used to think, well, that must be where all the energy is being used by your brain. And that must be where all the activities are happening. Well, actually, when that shuts off and you start daydreaming, the default mode network fires on and it’s this binary switch on/off.

When one is off the other is one, and so forth. They keep handing it off, passing the baton back to each other. The default mode network consumed 60-80% of all the brain’s energy of that detectable pattern, at least. We know that that’s happening. We know that when we daydream, we figure it out. We’re staring off into space.

There are plenty of innovators and even professors, as I described earlier, walking around with their head down, what are they doing? They’re crunching data, man, they’re a server farm. They’re just crunching through algorithms, figuring out, why should I do this or that, or the other thing, and how do I solve the math problem or how to restructure the business or whatever the subject matter is. The clay is still being pushed.

A thumb is going in, fingers going and there’s all this morphing and modelling in their mind that then eventually gets brought over to the other side as the baton is passed. That’s the L as let go. A as antenna, you become an antenna. D is the drift and daydream. E is to emerge. And R is to recharacterise the problem.

As you remerge back from that mindless work moment, you then have a better purview, a better perspective of the problem domain, and you can recharacterise and address the unsolved. This ladder becomes especially helpful when you’re in the shower. You just kind of daydream.

You’re thinking about stuff. When you’re taking a walk, a quiet walk, perhaps or doing the dishes or sorting numbers, sorting laundry, anything where you start drifting, that’s mindless work. The advantage you have is to take a moment to bait the hook as they say when fishermen before they throw the hook into the water and this fishing hook, I didn’t invent that analogy that’s been around, but you put something on the hook, you throw it in and you just kind of sit around and wait, what’s happening while your mind is kind of feeding off that then. It’s nibbling.

Its fishing ideas are kind of just swirling around the system, kind of this beautiful analogy of the subconscious activity. And sometimes you get a nibble. Sometimes you feel that tug and that’s where that Mindless Work LADDER comes in handy and you plot it onto the canvas, the Slow Create Framework.

And you’re able to document, Oh, you know what? I think I got a nibble, let me write it down. And you have that at your cubicle or at your desk at home. And you work through your creative juices in a systematic way.

Petri: Probably one of the reasons why people are like you said so disorganised, or they don’t put these things down or develop them further, is that because that switch is always on. You don’t idle. You put on Spotify or you are always in active mode and you need to be bored, completely distracted in the sense that you don’t get any stimuli because that’s what is needed when you’re folding the laundry or you just paying bills. You don’t really put your mental power in there. Those moments don’t happen that often.

It’s the same thing when you’re the CEO of a company, how much time do you have for thinking? Those walks and those moments where you can go down the LADDER. That’s what it takes.

Shawn: I think it’s so important. Yeah. So important. So critical. A lot of CEOs have carved off their whole mornings to think and they don’t answer email until the afternoon, or they don’t do the heavy lifting. They wanna use their mornings where their brain is at its optimal state, arguably with all the toxins drained from the night’s sleep and you wake up, you get your fresh coffee.

If you’re a coffee fanatic and you feel good about life again, and the serotonin levels, I’ve read some scientific journals that talk about serotonin levels, being more balanced in the morning. And they degrade as the evening progresses. So, no offence to late-night workers. I mean, Hey, if it works for you that’s wonderful. But scientifically speaking the mornings are where a lot of really wonderful brain activity can happen. And I do think it’s critical to take that mental health walk. And we all say that phrase, especially in the era of COVID, we’re all working from homes. It’s so critical to keep that mental health balance, of course, obviously, but in creative aspects and from the perspective of innovation, if you’re not allowing your mind to reset, recharge, level off, you’re missing out. You’re missing out on the great capacity that you carry with you. I think Thomas Edison said it best that the chief function of the body is to carry the brain around. Our brains are just so powerful.

I sometimes walk around as a programmer interacting with the physical realms as if it’s some sort of friction environment. I have to wash my hands. I have to get up. Oh geez. My body needs attention. I need to take a shower or whatnot, feed food and so forth. What a lame paradigm that is. If it only worked like software where you just kind of click a button and then a billion things can happen.

And code just runs silently like magic, right? Like our bodies are the ultimate opposite. They need so much. And yet if we take care of our brains chiefly, we can run like software. We can be as optimized as possible. I cannot understate the power of that as an innovator, as a startup founder, or anyone in tech. You’re responsible to care for your brain. If you’re not doing it, you’re missing out on hitting that plateau of optimal capacity.

Petri: There’s so much neuroscience, history and other stuff in the book. So what’s next?

Shawn: What’s next for me? What’s next for the book? What’s next for humanity?

Petri: Did it invoke some other curiosities, interests and questions, new rabbit holes to go into?

Shawn: I’m getting a lot of interest in the Slow Create Framework. I’ll probably do a book on that. The publisher says they might have some interest there and put it into another round of effort on it and formalising that, creating a course on that. You can check out slowcreate.com and by the time you hear this it might just redirect you somewhere, but something will happen there, I think.

I really believe that there’s a few startups still in me, and I’m probably gonna be looking into some of the curiosities that I’ve been toying with over the years and see if I can develop that and continue my craft personally. But writing is a wonderful outlet and it’s a great use of my mind. I’m looking to continue that pursuit, but not sure. We’ll see.

Petri: So you have some secrets! Come on, you just said that it’s so important for introverts to talk to other people. Now is your chance, tell us your secrets!

Shawn: I wish they were that amazing.

Petri: We don’t care. Just spill them out!

Shawn: How to get my two-year-old to go to sleep on time. There’s a rhythm there. There’s a pattern. I’ll share that in my next book.

Petri: What is your favourite word?

Shawn: I think story. If it comes to intellectual pursuits, I think the word story, because it changes everything. When we learn how to tell stories and cross the chasm, I think that ties into leadership conversations, management, leadership but story is powerful.

Petri: What is your least favourite word?

Shawn: I don’t really think I have one. I don’t know.

Petri: What turns you on creatively, spiritually, or emotionally?

Shawn: I think the introduction of new paradigms that I have not heard before. Intellectual stimulation where someone says, they discovered that gravitational waves may be more detectable than previously thought. I’m like, Oh really, going down a YouTube rabbit hole with that. But whenever scientists are saying something new has entered the scientific domain, I want to know about that and why that matters and what that’s gonna mean for the world.

I think that ties into inflextions and what a venture capitalist, Mike Maples, describes as four types of inflextions that we talked about in the book. But the ability to see the future, that’s really fascinating. And how do you see the future? If you could look at who raised money in the last ten years and what they were able to do, a lot of the folks that did it and that grew into unicorns, they were usually able to get out of their time machine at just the right moment and tell the investor what the future’s like. Mike Maples calls those guys see’ers. They can see, and getting a hold of one of those, putting them in your portfolio. That’s their number one priority as an investor. And so how do I become a see’er?

You have to really know what you’re doing in a specific category. You can’t master all things. Although, some would argue the generalist specialist kind of paradigm right back and forth there but I really err on the side of caution of specialism in knowing my subject matter better than anybody else. That’s what really fascinates me is when that new information hits the market.

Petri: What turns you off?

Shawn: Traditional business that is ignorant of change and working with some of my clients as a consultant, as a software innovator I try to suppress any sort of gag reflex when they start talking about their legacy software because that’s why I exist to convert those legacy systems into brand new web-based systems.

So again, if you’re out there, Google me, look us up. Product Perfect is the name of our firm but I think the touchpoint of a business in its technology footprint is very critical and it drives the overall success of the organisation. Having an openness to innovation and moving the company forward is really critical. When they don’t, it’s unfortunate for them.

Petri: What is your favourite curse word?

Shawn: I don’t really curse.

Petri: Yeah, I noticed we share a secret as well.

Shawn: Yeah. I’m a Christian and I would just try to live a little bit squeaky, clean life as much as I can as a follower of Jesus but I certainly am not judging anyone who does. And I’ll say, oops, or I’ll say damn once in a while. Is that, is that naughty?

Petri: What sound or noise do you love?

Shawn: The sound of my children.

Petri: What sound or noise do you hate?

Shawn: Sound of my child… I’m just kidding. Other people’s babies when they’re not well-disciplined. My own kids, oh, that’s fine. I know what they’re upset about but when somebody else’s kid in the supermarket screaming I just assume the worst about their kids, right. So I know I’m not alone out there.

Petri: What profession other than your own would you like to attempt?

Shawn: I think writing. Software development and software architecture is my go-to but writing is probably second.

Petri: What profession would you not like to do?

Shawn: Sanitation.

Petri: If you could be a co-founder of any startup in any era, which one would you choose?

Shawn: Hm, tough one. There’s so many good ones. There’s a lot of great companies out there. I hesitate to say Google but I was getting started in tech 1999-2000 right when Google was being formed and I got letters from Stanford, I could have gone. I could have been rubbing shoulders with Larry and Sergey, who knows but.

Probably wouldn’t be ready for them but I think transforming Google from a PhD academia focused organisation, being a part of the DNA of that and turning it into more of a very laser focus culture that serves the enterprise a little more directly, just my two cents.

Petri: Any final words for the audience?

Shawn: Check out the book, averagejoetechgenius.com. Appreciate your support. And thanks for reading it. I think you’ll hopefully learn something. There’s a hundred thousand words about this topic. I’m hoping someone out there learned something and hit me up online, Twitter: shawnypants and averagejoetechgenius.com. Thank you!

Petri: Thank you, average Shawn!

Shawn: Average Shawn, I take that! Average is not bad. We’re all on a journey from average to genius. That’s the way I frame it. We’re all on that journey.

Money now and money in the future

November 3, 2020

How to balance your short-term goals and needs with your long-term vision and mission? What is the way to have a strategic mindset when you’re building your business?

Money now and money in the future is a term I coined long time ago. I will explain the details in the video, and you can find the transcript below.

Video transcript

Money now and money in the future. This is the topic today. It’s something I’ve been using over the years. It’s kind of classic. It doesn’t get old. It’s something which guides you all the way when you’re building your company. Those who know I have been using it over and over again. And I’m sorry if you heard it too many times.

But for those people who don’t know what it means, let’s dive in. There’re no redundant words in this sentence: money now and money in the future. All right. Let’s start from the beginning: money now. Money now is the short-term. It means that it’s always a good idea to make some money now, at this moment, in short-term. It doesn’t say how much money you’re making at this point.

It just says that you making some money. What does it mean? Well, if you only starting now, could you get one customer? One client, who is willing to pay for you? It doesn’t need to be much, but they need to be a paying customer. Giving you money. Because it’s a very strong indicator of a lot of things.

First of all, it will tell you that you’re doing something which is so valuable that somebody is willing to give your money. So you know that you are on a right track. It is also an important point for the customer because they are willing to give you money. It’s also indicating just the tiniest bit if you just have one customer or you’re starting, but it’s indicating that you have traction. There’s already a market. At least, a small one to get started with. So there’s a lot of good things about the money now part. Obviously, the biggest one is that you actually are getting some revenues. You’re not diluting yourself.

You are not selling your company. You are actually getting customer money.

And the next bit, the ‘and’ word means, it’s not ‘or’ it’s ‘and’, that you have to also think about the future: money in the future. So it’s a balancing act. You need to think about both at the same time. So if you now making only a little money, you are still finding your traction, and you’re still finding your product-market fit.

You just know and you keep in mind with your decisions and your purpose is to, your objective is to focus on the long-term where you’re scaling it. Where you’re making the most of the money,  most of the upside. Those things, which are actually really the purpose why you are building your business. And having this balance in mind is very important because it’s easy to slip on the revenue side if you’re lacking funding and you’re bootstrapping and it’s hard. So it’s just easy to make decisions where you are chasing the money, doing those things which are maybe not building the future. Maybe they actually diverting you away from those very things which are actually building the future company you aspired to do from the very beginning. But because of your lack of funds at the moment, you can get distracted and ‘money now and money in the future’, hopefully, can help you to keep this in mind. So if you making compromises in the short-term, you better think about the future part as well. Let’s jump into the future. What does it mean? It means that this is now the long-term, the biggest strategy, the big game. You cannot just only focus on the short term, but you cannot also focus purely on the long-term.

You need every step of the way build from this moment to the future. Build your reputation and your trust. Gain the trust of the customers. Build a good user experience. Find the pain points. Provide so much value that you can scale the company that you can really build a business for the long-term and the decisions you are making need to be aligned with that goal in mind.

And because the ‘and’ word there, that’s a really annoying word there in the sentence. You cannot either just focus on the long-term and forget the now part. But you need to make money now. If you only focus on the future, it’s easy to divert the focus, and kind of sucking into the dream world where you think that you are building something which is valuable. You think you’re doing the right things.

Maybe you’re doing things that are fun for you or for the team or for everybody involved, but you’re not making money.

This is why the balancing act is so important. It also helps you to focus on the objective of the company from the day-to-day also a bit more to the long-term. If you start to realise that, Hey, we are actually not making money in the short-term. We are not actually getting those indicators from the customers.

They’re not signing up. They’re not paying us enough. our attraction is not working.  The product-market fit is not there. Maybe it doesn’t make sense to focus too much on the future if you cannot make it work now. We need to make it work all the way and this is the top game. This is the hard game. But this is the game where you make sure that you are aligned and you can build a successful company that grows. Still, you need to do that lean startup way of trials and errors. You fail and pivot but hopefully with this ‘money now and money in the future’ it will nag you in the back of your mind, in your everyday decisions, and it will help you to balance and guide you along the way when you’re building your company.

Till next time!

The Book of Real-World Negotiations by Joshua N. Weiss

October 30, 2020

We negotiate all the time. When it really matters it tends to be that we are in a situation that is new and different. It takes practise and experience to learn from mistakes.

Joshua N. Weiss has put together cases demonstrating different situation and how they were carried out. The stories vary from the outset and power dynamics but they resemble situations that you may face in the future.

One of the big learnings is that your mindset will define the way the negotiations will go and the expected outcomes. If you’re going in with the typical win-lose way of thinking it will limit your options.

A commonly held mistake is to consider negotiations as a process of compromising something of significant value for closing the deal. Weiss calls this type of negotiation the lazy approach.

A better approach is to split the difference where it’s possible to move forward and both parties are just a little bit unhappy.

A sad myth is a notion that you have to deceive or manipulate. This tries to find exploits for discomforting the other party and taking advantage of the situation. This is a very short-term view and you can expect to get payback later.

When you are considering negotiations as something that only weak parties do and you force your way thru it does not differ much from the previous conception.

If you’re having a long-term relationship you tend to be careful not crossing the fine-line where you permanently damage the relationship. Getting it all for short-term gains, even if you could, at the expense of the long-term is very short-term thinking that does not forecast a lasting relationship.

The book presents five principals that guide you through the process. You start by investing in preparation and not planning. The latter is a rigid and closed-mindset approach that has difficulties to adapt to the changes and requirements of the actual negotiation.

The second principle talks about approaching with a mutual gains mindset that cultivates the relationship. You will need all the goodwill when things get tough.

If you have ever been in a tough spot creative problem solving comes handy when you are really committed to finishing with a successful outcome. Creative problem solving is not compromising where the focus is finding a solution (any really just to move on). Creative problem solving circumvents the roadblocks and looks the real objectives from an entirely different, unexpected perspective.

Managing emotions plays a huge role and the better you can handle yours but even your counterparty’s emotions more effective your process becomes.

The final principal reminds to look for hidden dimensions that are not spoken about but influence or even drive the real objectives.

Each case example describes the situation, walks through the negotiation process and outlines the lessons learned. They also introduce valuable concept such as Post Settlement Settlement by professor Howard Raiffa where after you have reached an agreement you ask a simple question: “Is there any way that we can make this agreement better for both of us?”

By revising the new agreement you may be surprised to find that there are still benefits that have not been materialised and additional value could be gained by implementing them as well.

If you’re not familiar with ZOPA (zone of possible agreement) and BATNA (best alternative to a negotiated agreement) maybe it’s time to brush-up your negotiation skills?

Your Music and People, Hell Yeah or No, and Anything You Want by Derek Sivers

October 28, 2020

When Derek Sivers talks people listen. This year he’s releasing two new books and they are generating a lot of buzz already. Chances are you have already heard him on Tim Ferris Show (part I, II) or The Knowledge Project.

Sivers’ style is minimalistic with words. The messages are to the point and packed with wisdom. They look so simple that it’s easy to speed through them, and the books are quick reads indeed.

But make no mistake, Sivers has taken his time to think about them or he has personally experienced the events and now passes the wisdom to the rest of us.

Your Music and People is one of the best marketing books you can read. It addresses musicians but it applies to any marketing really. What better use case than the music industry where the entry barrier is low and it has had been through the digital disruption already?

Sivers talks in a language that is easy to understand. You don’t find business jargon and it’s easy to follow his advice and take action, immediately. You could even consider his book a practical step-by-step guide for setting up your marketing strategy and even the tactics. There are also tons of stories and entertaining moments as in any of his other books, too.

Hell Yeah or No picks up the story after Sivers sold his company CDBaby.com, and was facing existential questions what to do next.

He was in a situation where you don’t need money or attention. What is worth doing and why?

He digs deep and discovers the fundamental aspects of life. Your actions reveal your true priorities and values even though you may not admit them to yourself. He evaluates the opportunity costs of doing something locally or globally.

We all have the same amount of time every day. No money can buy you more. You can buy other people’s time and compress your timelines that way by delegating and letting other people help you.

He discovers his utter uselessness and the joy of living for oneself. Life is a continuous balance between the present with instant gratification and the long-term plans that often imply restrains and investing in the current moment.

Sivers has been ahead of the curve for many years. He calls himself a solitary socialite and he’s also famous for answering every email you send his way (within reason).

If you’re still new to Sivers’s story there’s a similar format easy-to-read book about his entrepreneurial career called Anything you want. What Your Music and People is for marketing Anything you Want is for entrepreneurship.

He illustrates with vivid stories and turns of events his life from a teenager into a full-time musician, and a business owner whose hobby turns into a serious venture with a successful exit.

I could have filled this with quotes from the book but instead, I urge you to go and check them out yourself. Sivers shares everything online and you can choose the medium that suits you the best. He even read his books as audio versions so there’s no excuse not to tune in and get some refreshing perspectives.

Leading with your vision

October 27, 2020

Getting continuous feedback is a must. But leading with your vision is even more important.

There’s a fine line to lead with a vision and doing something nobody cares enough to hand over their money to buy it. The difference is timing. If you’re ahead of the market you cannot get reliable information from the market.

They don’t see yet what you’re already seeing. The time lag can be significant and you may run out of money before others align with your view. There’s a great chance that the future resembles your vision but does not rhyme enough to work for your company and product.

When to read weak signals from the market and act upon them or just trust your gut feeling and keep going is something that you have to learn by doing. John Bogle had a vision and it was only years later he learned there was a theory about his beliefs and even after a successful confirmation by academia it still took many decades for his vision to bear fruit in a substantial manner. The name of the book where the story is told? Stay the Course – The Story of Vanguard and the Index Revolution.

Disruptive innovations are unfamiliar, strange and speak a different language. They are foreign with their mindset, assumptions and even the starting point. To accept and embrace them you may need to give up something first.

If you’re not willing to let go something familiar and ordinary, you’re not ready and open to give a chance to the new. It’s harder to be an outlier that does the heavy-lifting of figuring things out by oneself and change the paradigm in one’s outlook.

Many rely on peer confirmation and social acceptance. With new products and radical innovations, these are not available in the early phases. It calls for independent minds that are not afraid to stick out of the crowd and look strange.

Tiny pockets of the future are around us. Some people figure out some aspects of the future faster than the rest of the people. They are the trendsetters, innovators, misfits or just plain visionaries.

When you’re building new innovations the signals the first adapters send may not align with the later early adapters and masses that follow. Their values and motivations may differ so much that there’s not enough common ground to call it the same target market.

Even if you succeed with the very early adapters you may still fail with the mass market.

Success through failure, innovation and imitation

October 25, 2020

Johan Norberg – TALKS WITH PETRI

Johan Norberg talks about the misfits, rebels and innovators that push the reluctant society into progress, the role of entrepreneurs and why this is a scary moment in time. He also reveals why founders are only getting 2.2 per cent of the value they create and who’s getting the rest.

Success through failure, innovation and imitation

Bio

Johan Norberg is an author, lecturer and documentary filmmaker who specializes in the big questions, from liberty and progress to entrepreneurship, globalization and the hidden dichotomies shaping the world. He is a native of Sweden, a Senior Fellow at the Cato Institute in Washington D.C. and the European Centre for International Political Economy in Brussels. He is a frequent commentator in Swedish and international media. In 2018 he received the Walter Judd Freedom Award, previously awarded to luminaries such as Garry Kasparov and Ronald Reagan.

Norberg has written over 20 books covering a broad range of topics, including global economics and popular science. His breakthrough title, In Defence of Global Capitalism (2003), was published in over 25 countries. His latest book, Open – The Story of Human Progress (2020), is a grand odyssey through history’s ever-changing tides of connection and isolation, exchange and protectionism, open borders and closed minds. It has been praised by The Economist as ”amusing as well as illuminating”, ”clear, colorful and convincing”.

His previous book, the celebrated Progress: Ten Reasons to Look Forward to the Future (2016) was chosen as the Book of the Year by The Economist, Guardian and Observer. It has been translated to 20 languages (so far).

Twitter | Website | Wikipedia

Transcript

(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri: Hey Johan, how are you doing?

Johan: I’m very well, thank you. How are you?

Petri: Not bad at all. I’m just thinking why we have to always fail in order to succeed?

Johan: Because I think that any type of learning process must be built on experiments and often crazy experiments to go any further. You know what why nightingales sing so well? Researchers recently looked into this. Nightingales up here in the North, they don’t want to spend the wintertime here.

They move to Africa for a while. And the interesting thing is that the researchers have found that they keep on singing. Male nightingales keep on singing in Africa, even though they don’t fight over the females there. They don’t fight over territory or anything. So, why do they do it? Well, they’ve learned that they sing in weird ways, crazy ways. New syllables and noises and most of it doesn’t make any sense.

And it turns out that the nightingale’s they spend the wintertime experimenting with new strange noises and new songs. And most of them fail miserably. They don’t make any sense. It wouldn’t attract any female nightingale, but once in a while, they find that great pitch. And then they return to Sweden or Finland and they sing that great song and they get new territory and lots of females, and that’s how they win out in the end.

So even the nightingales have to experiment and most of the time fail to make progress. Well, then I think it makes even more sense for humans to do it.

Petri: In your latest book, you are also saying that Homo Sapiens is basically just an entrepreneur by another name. What do you mean by that?

Johan: Yeah, I think we are traders by nature. We’ve come this far only because we innovate and we imitate. And that’s the two things that really sets us apart from, well, even from the nightingales and everybody else in the animal kingdom. We have an amazing ability of systematising knowledge that we learn from our experiments and our failures and to learn from each other and to imitate the others and the great ideas that they have so that anytime someone stumbles on to a better idea we all learn from it.

Compared to animals, we are not very quick. We’re not very strong. We don’t have a natural panzer. We can’t even fly. We were bad at swimming, but we do have something else. We have each other and the ability to borrow and steal the best ideas and insights from others and combine it with our own and then move forward.

Petri: I think you call that in the book as a culture. That’s the definition of culture, isn’t it?

Johan: Yeah, this is cultural evolution. I mean, every animal has this natural evolution whereby the body and the instincts and what have you develops and then in some sort of adapting to the environment, but then thanks to three things that developed specifically in human beings: intelligence, communication, and cooperation we stepped on to a new level of cultural evolution. You can see that in your mirror. When you look yourself into the mirror, you can see why we are superior. Because we actually have whites in our eyes. We have white sclera surrounding the cornea of the eye, and that sets us apart from the other animals.

Chimpanzees and the other apes, they have brown sclera so as to hide their gaze from others. In contrast to human beings, at some point in our evolution, we started to benefit from broadcasting our attention to others. Whereas the chimpanzee wants to hide. If they find, look there’s prey to eat or potential partner, they want to hide it so that they can get it for themselves and nobody else steals it.

But because of our ability to cooperate, it makes sense that everybody else notices when I look at potential prey, for example, or a predator, because then we can cooperate in circling it, throwing stones at it and thereby we can make much faster progress than everybody else and learn from what everybody else is seeing and doing.

Then we can accumulate so much knowledge and whenever anybody stumbles onto something that improves the world, well, the rest of the world can learn from that as well.

Petri: What was the most surprising thing you learned while you were doing research for the book?

 Johan: In a way, the big surprise that I built a lot of the book around is about a previous misunderstanding that I had about the world, where I thought of modern development, The Enlightenment, The Industrial Revolution and onwards liberal democracy as a very Western Eurocentric development.

And that’s because just like so many others, I started to read history in reverse. Because it happened here I wanted to find what were the stepping stones and the ladders that we climbed to reach this place. And then obviously it’s not difficult to find it. That’s sort of the Renaissance of the Italian city-states, Magna Carta and the Roman Empire and the Greeks.

And there you have it. One nice single trajectory that put us here. But then when I started to read history, I stumbled on to a couple of problems with this attempt to read history. One of them being that I had to explain away one thousand years for basically nothing happened in Europe.

Even went into reverse our development, our scientific knowledge, our commerce and so on. Also, the fact that these things, these stepping stones, these ladders so to speak, they happened in almost every other culture historically, and that was a little bit troubling to my perspective.

I could see that it happened in the pagan cultures. It happened in Confucian cultures. It happened in the Muslim Abbasid caliphate, and it happened in Catholic and Protestant places. The Song dynasty in China 1000 years ago when Europe was so poor that most of it wasn’t even interesting to raid for nomads on horseback.

At that time, the Chinese Song empire already had the nautical compass, the printing press and they fought with gunpowder. The three inventions that Karl Marx thought ushered in Western bourgeois capitalism, writing in the 1860s. That tells you we’ve had golden eras everywhere throughout history. It’s just that in most places they were destroyed by the establishment and by reactionary backlashes. It didn’t happen in Europe and that’s what set us apart. Not any sort of simple trajectory.

Petri: But it was not because of a lack of trying. That’s what I learned from the book as well. There were these incumbents and people in power who wanted to keep things because it was so good for them.

Johan: Yes.

Petri: But you can probably explain how did that happen because I think that was really fascinating. I can see parallels for what’s happening here at this point as well. Let’s check the history first.

Johan: Yeah, it’s in every single culture. There is something called Cardwell’s law after the technology historian, Donald Cardwell and it says that innovation always faces resistance from the groups that think they stand to lose from it. And that’s often political and religious elites. We think that their power is threatened or old businesses with old technologies and workers’ skills and trade unions who don’t want any sort of innovation.

There’s always this tension within every culture between open and closed. And then in certain places that backlash, that Cardwell’s law, it faces so much resistance that it’s destroyed. But in some places, it managed to survive. Often, we think that there must be something about the European elites, religious and political and commercial elites, during the Renaissance, The Enlightenment and The Industrial Revolution that they must have been wise or thought about things more long-term than in other places.

But no. When you look at the record, they fought just as hard as the Chinese emperors and the caliphs and the robber barons in other cultures. It’s just that the European elites were much worse at doing this. They failed. They couldn’t keep up with that innovation. And that’s partly just because of luck. Because Europe was a more decentralised place with more independent political entities, independent cities, universities, and always some sort of rivalry between them, which meant that when the Chinese emperor thought that now we are being threatened by this innovation, let’s stop it. Then the whole continent abided by his ruling. But when the French king said the same thing, the troublemakers could always move across the border and move to the Dutch Republic or England. It was always difficult to coordinate oppression and repression in Europe. I think one of the most fascinating examples in history is how China gave up it’s the greatest armada that the world had ever seen. They travelled the world half a century before Columbus

Petri: With bigger boats, they were 150m at least?

Johan: Yeah. The flagship of Zheng He, it was some 135 meters compared to Columbus’ Santa Maria, 20 meters. So basically the rudder of Zheng He’s flagship was bigger than the whole of Columbus’ boat. That whole venture they could have discovered the new world was all shut down because of a power struggle within and among the rulers and China and the emperor just said stop.

And the greatest armada that the world had ever seen rotted, and some of it was burned. And some tried to do that in Europe as well. They weren’t that interested in pumping lots of resources into these dangerous and risky ventures. Columbus had a hard time trying to find his route to Asia as well.

He couldn’t find anyone in his own Italy to sponsor his trip. He asked the Portuguese King, and the Portuguese King said, no, that’s stupid. Let’s not do that. Had this been China, that would have been the end of it. But he could continue in a fragmented Europe to search for sponsors. He went to England and to France and he was turned down again and he went from king to king for some 20 years until eventually, the Spanish king said, yeah, why not? Let’s try this. And the rest, of course, is history.

Petri: This is exactly like another day in startup life.

Johan: You had exactly 20 years of going from king to king or investor to investor.

Petri: Knocking on doors and nothing is working and everybody’s against you. And nobody’s interested in what you’re doing because it’s too weird, too strange. So you just keep on pushing.

Johan: Exactly. At least you can take some comfort in the fact that you don’t have one single person to go to, the Chinese emperor, where you have to kowtow to him and try to impress him. There are alternatives.

Petri: While you were doing your research, did you find out how close it was? How dangerous was the situation? Because when China closed down, it was Genghis Khan who took bits and pieces from all the cultures. And didn’t he actually then bring it back to Europe and all the developments which were happening?

Have there been close calls in a sense that they could lose all or most of the knowledge? Become like Tasmanians.

Johan: Yes, it has been very close. And I would say that probably sometime in the late 16th century and early 17th century, it was very close that Europe went the same way as these other cultures that failed. And that was because then it was fairly close that a single royal house got control over the whole continent.

And this was then the Habsburg family. And they reigned on so many different thrones at that time. They were in Spain and the control then Belgium and the Dutch, and they control the Holy Roman Empire and Austria and so on. They were fairly close in attacking and submitting France to its rule as well.

And at that point, some historians say we could have gone the same way because then they would have oppressed in a synchronised fashion across the whole continent. The 30 years war at the same time, it almost ruined Germany and Austria, wasn’t much left there. We saw increased oppression from both Protestants and Calvinists, and Catholics have tried to keep it up with others and independent-minded eccentrics like Giordano Bruno were killed and famously Galileo Galilei had to apologize for his thoughts. So, it was close. We were saved perhaps in this version of the story, perhaps it wouldn’t have worked long-term anyway, but we might have been saved by the Dutch. Because the Dutch, they rebelled against the Habsburgs at this time. They didn’t like the idea that the Spanish Inquisition and the high taxes were coming for them. They rebelled and they started to fight back. And during a couple of decades, through innovation in finance and in ship-building, they managed to create out of nothing.

Basically, they had nothing. They didn’t even have land. They had to build it with shovels. But with innovative methods and commerce, they build the richest country on the planet. And they fought back the Habsburgs and created the independent Dutch Republic. And because of that, they also basically invaded England in 1688. The British, they don’t want to admit to this, but that’s actually what happened during the glorious revolution because England and France were very close to an alliance to destroy the independent-minded Dutch. But then William of Orange, the Dutch leader, invaded England with more than 400 ships with the help of the British parliament. That saved England from the possibly authoritarian despotism of the Stuart Kings. Then England became more Dutch and was more open for The Enlightenment and The Industrial Revolution as well.

 Petri: In the book, you also mentioned that the Dutch fleet was enormous. It was bigger than what was 50 million people from other nations together. There was Germany, France. and was it Spain as well at least? And 1.5 million people managed to do that. I am actually sitting now in a place with this pretty much the 1.5 million.

Estonia. And Estonia is kind of leading the digital revolution from the government side. Could Estonia be the new Dutch in a way that now we are entering into the digital area because of Coronavirus this year kicked-started this phenomenon that everybody is pretty much isolated and now we need to do virtually everything? And then nation borders and physical locations don’t matter that much. Do you think there’s something like that happening or do you see anything from the history that we could maybe learn or see that could happen?

Johan: Yes, this is the lesson of history. It’s not about numbers. It’s about those numbers representing innovation and ability to create the new. The Dutch, they were 1.5 million people, but they managed to create a fleet that was bigger than the combined fleets of Spain, Portugal, France, England, and Germany, with a combined population of something like 50 million people.

And the difference was that the Dutch had institutions that made it possible for innovative and eccentric people to come up with new ideas and then quickly to find through decentralised sources funding for them and to put them into practice. For example, they had better ship-building techniques.

They reduced the time of cutting beams by something like 90%. And they did it at half the cost. Whereas in all those other places, in Spain, Portugal, France, England, and Germany, they protected the old shipbuilders through guilds and regulations. And therefore they weren’t as innovative. And therefore the Dutch could resist simultaneous French and English invasion in the 1670s. That tells us something about a country like Estonia today. It’s not really, I mean, there’s some strength in numbers, obviously. The more people, the more people that can stumble on to new ideas, but if you are open if your systems are open and your minds are open, then you can maybe look to the rest of the world through exchange and communication, and constantly being in tune with what goes on in other places and use and borrow and steal their ideas and combine it with your own. The openness of a place like Estonia could be the decisive factor in the long run.

Oftentimes actually, if there are fewer of you and perhaps even feeling a little bit vulnerable, close to major powers that sharpen minds a little bit. And it makes you perhaps a little bit more open to innovative ideas that can make you more powerful.

Petri: Was that the case with the Dutch as well? I think they took quite a bit of immigrants. So it was not just that they did all the brilliant things. They got a lot of other people to help them and that was the innovative platform if you will. This is the same thing in Estonia. It’s a tiny place. The local market is so tiny that you cannot do anything here. If you want to have any success, you have to go immediately abroad. So the mindset is exactly that you have to go elsewhere. And there’s not much here to do by itself. Is this the only way to actually make this happen or are they actually in history lessons where you could come from a rich environment and not out of necessity, could it be Norway?

They have all the oil money, and now it’s not exactly the necessity to do things in a sense as in some other places in the world.

Johan: Yeah, I think that it’s not the resources that you have. It’s not even the people you have. It’s what you do with it. And again, go back in history to the Dutch. Everybody thought that they would fail because they were few. At first, just 1 million. So they got 500 000 immigrants and increased their population that way.

They didn’t have any natural resources. They didn’t even have land, but they had openness to new ideas and to openness to surprises. And that works, that functions everywhere where you create these links with the rest of the world. And back then, it was often a Republic of Letters where your most innovative thinkers and engineers began to correspond through the new commercials postal system with people in other parts of the world and thereby accumulating more ideas and knowledge.

Now, obviously you can do that better with digital technology. The one thing that doesn’t work is oil money. That’s having too much natural resources. That’s bad for you in several different ways. One of them is that it poisons every discussion. I can’t enter a taxi from the Oslo airport without facing a discussion with the driver about what to do with the oil money.

It focuses people on the wrong things on distribution, on spending rather than on creation. And also there’s always this temptation and vulnerability that destroys other sectors of the economy because talent and resources go into that sector. And also it then has an effect on your currency.

It gets more difficult for other exports than that particular one. Oftentimes, those countries with too much resources just end up fighting over the spoils instead of creating new ones. Now, Norway was lucky because they found oil a long time after they had created stable institutions of rule of law and democracy.

They just made it. They survived, but it’s not for everybody because it often poisons your culture.

Petri: You’ve been travelling quite a bit, doing internationally, globally things for many years, decades. Can you give some advice, knowing so much about the history and knowing that we are having challenges this year starting the new decade. And sometimes it’s a good time to start new businesses, sometimes a good time to build new things when there’s a lot of volatility in the market and also in the political systems around the world. What is a good place to have as a base? If I could move anywhere in the world now where should I start my business? What is a good place to build something? I could actually probably get people around the world now they can live wherever they like, but you know, where should I headed?

Is it Europe? Or are we going to what happened to China after the Song dynasty?

Johan: Well, Estonia is not a bad place to be with the kind of mindset that exists there compared to too many other places. The problem with much of Europe is that it’s so fixated on past triumphs. Old empires that were successful now being somewhat nostalgic and fighting to protect their old model.

That makes sense from a human perspective. You want to do that obviously, but that might make it difficult for you to reach the next level and to see the new opportunities that are being created. Estonia doesn’t have that. It’s a much younger generation with a better spirit, I would say.

But I think that there are countries like that all over the world. But the great risk as a business, as a country, as a household is that you become used to your own successes and they devour you. They destroy you because you constantly want to repeat the same kind of thing. And that’s how many great societies and businesses have been undermined historically.

You want to protect the old. It’s so easy to become the Kodak of the world destroyed by the digital camera. Then obviously the great irony of that story is that Kodak was one of the pioneers with a digital camera. They had it. They could do it. They could develop it, but they just thought, nah, that’s not our business model.

We make the most money by just selling film to analogue cameras. And that I think is what we do in all our societies. Protect what we’ve already created in a great way. Unfortunately, then that might leave us all as Kodaks in the long-run because sooner or later someone else is going to pick up that digital camera, develop it and turn it into something better and then you will be destroyed.

Perhaps it’s better if you destroy your old business model than if you let yourself be destroyed by others.

Petri: Have you been studying Africa lately? Is that the new golden opportunity for everyone?

Johan: When I talk to people in several African countries, they tell me that they are surprised that so few Europeans go there. And they’re telling me that the Chinese do. Obviously, the Chinese government and Chinese businesses in a big way, but not just that, it’s also kind of the Chinese backpackers almost looking for new opportunities in a scary wild environment where it seems difficult and dangerous to make headway, but obviously that’s where you can make enormous profits in the long run, if it works out right. It’s a very difficult and unstable political situation in so many countries. And that’s the reason why we avoid it, but that’s also what makes it interesting. And to me, at least, it’s somewhat depressing that we don’t see a younger generation of Europeans making the same kind of choices.

Petri: Sweden I think is quite a peculiar case. Sweden was really poor some hundred years back. Then it became one of the richest countries in the world and had one of the lowest tax rates as well. And a lot of success and then something else happened as well. The welfare state kicked in, but now Sweden has been renewing again.

How can you do that? Can you explain it? Because that’s quite exceptional. Or am I mistaken here or have I just missed all the other nations who can do the same thing?

Johan: No, I think you summarised it in a good way. It’s not unique, but perhaps Sweden is a little bit more extreme than others. Because until 1850, we were poorer than other countries and with more heavy government interventioninto the economy. And then we opened up faster and more than almost any other country: radical deregulation and opening up of the economy. And then we had 100 years of rapid economic growth faster than any other country than Japan. Then we became more extreme the other way again, thinking that look now we’ve built all this wealth, so let’s just begin to redistribute it and think about how to consume it.

It was a miserable failure. Because suddenly the country that had grown faster than any other country began to lag behind the others rapidly. And we didn’t create a single net job in the private sector for almost 40 years. When we saw the results of that, and especially in the great financial crisis of the early 1990s in Sweden, from the left to the right politicians agreed that, wow this was a spectacular failure. Let’s not do this again. Let’s go in the total opposite direction. And then there was a consensus on opening up Sweden again, deregulating, lower taxes. And we got back to more of an entrepreneurial Sweden again. It’s not that different from what other countries have done, but we’ve done it faster and more dramatic in every step, in every part of this long history. That tells you something about Sweden, that we have a tradition of looking for consensus. You don’t want to be the odd man out in a country like Sweden. We are a traditional homogenous population of small property-owning farmers. You want to be like the neighbours.

So when they became socialists, you wanted to be a socialist. When they became radical laissez-faire liberals, you want to as well. So it’s like we have these more dramatic turns. It’s more difficult to find critics and to be accepted by others when you critique the order of the day. But once a sufficient number of people have changed their mind, you want to change as well. That sets Sweden apart a little bit apart from other countries.

Petri: That’s really fascinating to see also that Scandinavia, the Nordics are pretty much leading the innovation in the startup field on the global scale as well if you look into Europe. Obviously, the US is leading in the total numbers, but they are sucking in people from all over the world and everybody’s moving in there. Most of the people, at least used to be doing that, immigrating and going to Silicon Valley and then listing their companies and selling them there. But Sweden has been really powerful in that sense as well. And is it cultural, or is it the immigrants?

Because I don’t think now Finns are doing the same. It’s not exactly the Danes and certainly not the Norwegians. What is it in your drinking water?

Johan: I think there is something cultural. And I think that is a result of having been a very trade-dependent country for a long time. Lots of imports, lots of exports. We learned early on that our big businesses are major multinational companies that were the old manufacturing kind that were all created some 130 years ago. They were dependent on openness. We were too small a country to come up with the best way of creating steel or telephones, but we can borrow it from other places. And we had too few consumers to rely on our domestic markets. We had to go abroad. We had to be constantly attuned to what was going on in other places.

There’s some cultural link. Even when we were fairly politically closed society, we had open minds to what was going on and still, it’s the case that when international companies want to try new products, they often try Sweden because we’re fairly early adopters. And when you have eyes that wide open to what’s going on in other places in an almost sometimes a little bit nervous fashion, you’re afraid that you might miss the next big thing. Then it gets easier to catch the next wave and to integrate the ideas that are being presented elsewhere and that comes with the business travellers and the immigrants and the outsiders and to make them your own.

The moment we started then again to open up the economy in the 1990s they could begin to turn those ideas that they often borrowed elsewhere. And they could build new major companies again: Skype, Spotify, King, Mojang, and so on.

Petri: It seems that a lot of the nation-states are closing up. They are building walls. If not physical, then they put in some other types of walls around them. And this is catching like a virus. How do you see this decade going? Are we now globally going to close down or where are the new Dutch cities?

Is there hope to have this new Renaissance coming? Or how do you make sense of this mess where we are at this point looking forward to the next 5-10 years?

Johan: This is a scary moment in time. It reminds me of historical episodes where those golden eras in certain cultures began to feel the forces of closed becoming more aggressive and they turned inward which resulted in nothing more than losing access to the brains and the skills and the innovations of other cultures. And that was the beginning of the end for those places.

There is something similar going on right now. The great backlash against globalisation and open societies generally. We can see both radical left and radical, populist right that have one thing in common that they don’t like surprises.

They don’t like diversity. They don’t like the fact that we live in open societies where what happens next could come from anywhere. They have a Perfect plan for our future. And, that’s always very, very scary. This could be a transitory moment. It could be a fleeting moment that just passes by.

I think those moments are often related to a sense of crisis for the old model. Historically often, great depressions or invasions, natural disasters or pandemics. And in a way, we have now been living in a perfect storm of crisis like this. We’ve had the Great Recession, the financial crisis, an old political establishment lost a lot of voters’ trust.

We have a new geopolitical situation where it feels a little bit more scary to be Western than it used to. Terrorism. The migration crisis. We’ve had the pandemic. And all these things traditionally lead us to being more closed-minded because when we become afraid of the world, it triggers a societal fight or flight instinct. We want to pick fights with someone, with scapegoats or foreigners, or we want to hide behind walls and tariff barriers because traditionally that’s how we survived that particular threat. Because that particular threat was often a predator or a rading tribe.

Now, of course, it doesn’t make sense because the threat is a virus or a lack of innovation or something like that. And then it doesn’t make sense to fight or flee but rather to cooperate and to find better ideas from strangers rather than beating them up. But tell that to our stone-age brains.

That’s the difficult thing. And then we become attracted to the demagogues. Those who want to tell us that they, and only they, can protect against this dangerous world. When that happens in one place, it triggers the same instinct in other places. Everybody wants to fight and flee in the same manner.

And then there’s in Europe, an opportunity for the authoritarians and populists. Now, often that doesn’t sustain itself because something else happens. The economy gets back on track. We managed to deal with the virus. We have a new breed of politicians who manage to defend openness in a new and better way.

And that’s the end of it. But once in a while, the fence-sitters, who haven’t made up their mind, end up on the closed side and begin to build those walls and create a more hostile international atmosphere and begin to stifle open minds and free speech. And that’s the end of those civilisations.

Let’s hope that’s not one of the periods that we’re in right now. The one thing that makes me an optimist about the world as a whole is that the world is a little bit fragmented. We can screw up big time here, but there will be other countries and other places who will continue to make scientific progress, technological innovation, and great business progress.

The good news is it’s going to survive somewhere. The bad news is it might not be us.

Petri: And that’s the thing I picked up from the book as well, that the fragmented is good because then you have a more robust, complex system overall because there are more chances that somebody will make it like what happened in Europe earlier in The Industrial Revolution and the Renaissance times.

That gives hope for us and the overall tone of books is optimistic. But at least I cannot avoid the fact that much of the progress is just by lucky coincidences and the uncertainty kicking in. It’s not by human cleverness. It’s more like that we just couldn’t do anything else. And it just happened to us.

Johan: This is something that never ceases to amaze me. When you look at all the great things that all of us agree created a better world for all of us. Everybody hated it originally. Nobody wanted it. Almost, except a few eccentrics because we hadn’t seen the proof that it works and will improve our world.

We only saw that it threatened the old way of doing things. So it could be the first vaccines and we still see hostility against that. Everything from the credit card to the Internet, from the bicycle to the car. The great majority and the elite thought that this is worthless, impossible or stupid to quote a management book with the best book title ever.

Had we had a vote with everybody, should we apply these new technologies and goods and services, obviously everybody would say no. The latest one I heard about recently was the invention of the fork, to eat with. We had the knife all the time, but the fork was much more controversial.

And Pessimists Archive, one of the great podcasts on innovation, explains that when the first folks arrived, people said, no, that’s disgusting and it’s immoral and it’s dangerous. You might hurt your mouth if you use it. And some said it’s the work of the devil because it looked like one of his tools.

And when president John Quincy Adams began to use a fork in the dining room of the White House in the 1830s, I guess were there, people said, this is the end of the American democratic experiment because now we use forks. And obviously, it’s hilarious to hear about how people fear new technologies and innovations.

But we are not that different from them. We react in the same way when we hear about genetically modified crops or gene-editing or electronic scooters, or whatever. Because we can always imagine, when we sit in our own living-room, great disasters coming from this and how it ends our traditional way of life. But it’s very difficult to see how it can be used in a good way and how people can deal with the problems that will appear sooner or later. And that’s an important insight about human nature. Progress comes from eccentrics. And it’s only when they opened up a crack in the great wall of conservatism and managed to do it for a long time, that the rest of us see that, wait a minute, this is pretty good. Let’s use this. Let’s make sure that everybody gets access to it. Because that tells us something about our inherent reactionary, the reactionary in all of us and why we have to restrain it to leave room for progress.

 Petri: There were also these staggering statistics. 2.2% is the amount of social value the original innovator, the entrepreneur, is actually getting from whatever he’s doing to enhance and improve the society. Do you remember, is it looking back many decades, centuries or is it just from the recent times that you only get that tiny amount of the total value created?

Johan: This is actually a quite shocking statistic. It’s from William Nordhaus, economist and Nobel Laureate, who looked at innovative businesses what he called the Schumpeterian profits after the Austrian economist, Joseph Schumpeter, and his idea that progress comes from creative destruction that we implement new technologies and business systems that make the old ones obsolete looking at the recent decades where did the profits end up? The surplus that was created, how much ended up in the pockets of the greedy entrepreneurs and how much ended up with consumers and the rest of society with savings and the ability to produce more? His conclusion from this model that he’s building, is that something like 2.2% of the value of their innovation is given to the greedy entrepreneurs. Just two, just a little bit more than 2%, despite their first-mover advantage, despite often patent protection. It means that the rest of us just sitting at home, watching Netflix and eating pizza, we got 98% of the profits from these new technologies and business systems that were created and better business models because the profits for the entrepreneur is quickly competed away.

Because almost immediately people start to imitate it and create something similar. But the benefits to the rest of society that remains there in place for all of us, which obviously begs the question: why do they do it? Why do they work so hard and risk all their savings and alienate friends and family by working day and night to come up with strange new inventions and goods and services?

Even if they’re lucky, they get 2% and the rest of the world who complain about their greed gets 98% of it. Well, it must just be that they have an exaggerated belief in their own abilities. One of the things that make entrepreneurs tick. Or it could be the joy of discovery and creation, but that’s so much. Or it could be, and I think it comes down to a little bit of everything. If you manage to do it, if you manage to revolutionise a particular sector, create new revolutionary technologies, you create so much value. So many billions that even 2.2% of that makes it all worthwhile.

Petri: Indeed. And also the one puzzle I never figured out is that maybe you can help me and tell me when you have made those successes, 2.2%, then maybe that’s tens of millions or hundreds of millions or even billions in some few cases. What’s the urge then to give it all back to society? Can you explain that to me?

Johan: This is a very strange phenomenon. I hear it all the time from successful businessmen. They say that look now I’ve become so wealthy through my endeavours. So now it’s time to give something back to society and to engage in charity or some other projects. And, that’s just fine if that’s what you want to do. If you think this is the best use of your resources to improve the world. That’s great. But I will never understand this urge to think that after having been successful, you have to give something back to society. Wait a minute, you just created businesses and goods and services that created enormous value 98% of which went to society. You got 2%. If anything, society should give something back to you. This is the same sense of shame that religious and Marxists thinkers have always tried to attack business people with that there’s something bad about succeeding and about wealth in itself.

That’s a great shame because the very fact of making profits means in a free market, where you got those resources from people who voluntarily bought your goods and services. Then making a profit is proof that you have given something to society. It’s proof that you have used certain resources, natural resources, the time of yourself and of workers. You have used them in a better way than anybody else could do at that time. You have made sure that those resources are being used in the most efficient way to give something to society, to consumers and to other businesses. You should be praised for doing that, not feel ashamed.

Petri: Another thing related to the other side of the coin…I’m now directly quoting from the book: “two-thirds of the average person’s material wealth is determined by where in the world they happen to work.” Two-thirds, that’s huge! Imagine you’re a coder somewhere in Asia or Africa or wherever two-thirds of your wealth is not dependent on your skills it’s dependent where you can work.

Johan: And that tells us something about the importance of the whole ecosystem of a functioning dynamic economy. It’s not you alone. It’s not what you have. It’s how you can combine it with what everybody else has there. It’s the capital and the human capital in that society, and definitely the institutions.

If there are institutions like rule of law, safe property rights, freedom to experiment and innovate, that makes a huge difference. Even if you have exactly the same kind of education and human capital depending on where you are it determines two-thirds of the average person’s material wealth, because it’s not enough to be a brilliant engineer or author or doctor if you are surrounded by people who cannot create the complementary ability, technology that makes your skills really valuable to other people. That’s one of the reasons why migration, if it works out well, is one of the quickest ways of improving wealth in the world, by making sure that people who lack opportunities in countries with bad institutions, if they can only move across the border to a place where it’s better then they can increase their wealth by some two-thirds. That’s why some economists talk about open migration is really a trillion-dollar bills on the pavement that we could just pick up by making sure that people end up in a place where their skills are really used to the best of their advantage.

Petri: Do you think that’s going to happen this decade? Because the physical location doesn’t matter anymore. Technically if you can, obviously not all the jobs and all the work, services can be provided remotely, but pretty many can be. Is that something you see that starts to happen or can happen or what are the things you think can be also hindering the development?

Johan: The web and the digital world has made it possible for us not to kill distance, but to at least slightly decrease its obstacles to making people meet. Anything that can be digitized we can now work from a distance with one another and make it happen in a better way. And that’s obviously of great importance to the whole world and to everybody involved.

However, not everything can be digitized and much of our service economy is based on things like meeting other people. I mentioned doctors, you have to be there, to at least some degree, close to the patient.

Petri: I would love to have a remote dentist.

Johan: We’re not quite there, not yet. But that dentist can obviously read up on new knowledge about what goes on with teeth. Even though that information comes from the other side of the world, make use of technology that is being developed elsewhere. But that meeting is necessary. It’s still mostly for information that we’ve reduced distance to that extent.

I also think that we’ve learned something from this pandemic. It’s wonderful that it happened now and not 20 years ago because then we can do podcasts like this and we can meet with our colleagues, associates and friends online. But at the same time, there’s so far, at least, the lack of the kind of surprise meetings that often takes place in offices and cafes and lectures where you bump into people where you suddenly hear those things that you didn’t expect, where you’re suddenly surprised by the talent and the charisma of that particular person that you didn’t expect to meet. And the kind of water cooler effect…

Petri: Can I pause for just a second because we have a mutual friend and he’s been actually in an episode as well. Hampus Jakobsson, he explained in the episode that he was coming from New York flying, I guess to Europe, and he just happened to have a professional clown next to him in the airplane.

Johan: Things that only happen to Hampus!

Petri: Yeah. This was just a quick comment for people who haven’t listened to that episode. It’s worth listening as well. I’m not going to tell what happened there so you have to go and listen to it yourself.

Johan: That’s exactly what I’m talking about. We need to meet that surprise clown on the plane once in a while because that broadens our perspective. And if we only walk around in our online world where we just look for the things that we know that we’re interested in. There will be a lack of serendipity that makes many great things happen.

I’ve met so many people who’ve told me that their business was the result of going to this sort of market fair, this seminar thing where they thought that they were there to meet the speaker. But it was really the people that they met during a coffee break that gave them this new insight or they changed business cards and then suddenly came up with the next thing to do.

And we’re not quite there when it comes to the digital world yet. We could be if we continue with virtual and augmented reality and continuing with some version of Star Trek’s Holodeck, where we can create openings for the serendipity. But so far, I don’t think that Zoom, Google Meets, Teams are getting us there.

Petri: Going back a bit to history, but not to the public history, more like personal history. The way you’ll be describing the role of the entrepreneurs has not always been like that. I think if I understood correctly, you had the opposite view and that opened up the world of history for you as well. Can you elaborate a bit?

Johan: Yes, that’s right. If I sometimes sound like a missionary when it comes to things like entrepreneurship and global progress, it’s because I have the missionary zeal of a convert who started to believe in the opposite.

Petri: A tiny Marxist inside!

Johan: Something like that. And when I started to learn about the world, the one thing I knew was that big things were bad and big governments, but also big business and industry really ruined the world, created an awful bad work environment and polluting the planet as well.

I wanted to believe that there were some good old days in the past when we lived in harmony with one another and with nature. I really only started to change when I learned history because I had thought of the past before the Industrial Revolution as a nice excursion to the countryside, that’s much better than polluted cities, right? Only I had thought that I would be able to carry antibiotics there and indoor plumbing.

Petri: Maybe an iPad as well?

Johan: Exactly! My favourite bands and so on. When I read history, I understood that that was not really the case. And when I read up on my ancestors’ history in Northern Europe, I realised that they didn’t live ecologically. They died ecologically because when they had bad weather over there, that meant starvation. Because they didn’t have modern infrastructure. They didn’t have large scale trade. They didn’t have high yielding crops or artificial fertilizer and so on and so on. And that got me interested in the horrors of history and understanding that I should be lucky to be alive right now because most people throughout history had a life expectancy around 30 years and by now I’m older than that.

I should be really grateful for this development. 90% of the world’s population lived in extreme poverty. Now, it’s lower than 9% despite incredible population growth. And that created an unending obsession with progress and the people in the institutions that make it possible because we cannot take it for granted. Because there’re just a few generations that have experienced this kind of opportunities that we take for granted now and then. So that’s why I’m a bit of a missionary.

Petri: What is your favourite word?

Johan: I love the word atmosphere. It could be because it’s an old Joy Division song I like. But there’s some sense of openness in it and I like the sound of it: atmosphere. There’s some openness in it or perhaps horizon, which is somewhat similar.

Petri: What is your least favourite word?

Johan: Can I mention a Swedish word? Because then I would say nipple, which doesn’t sound too awful in English, but for some weird reason in Sweden, it’s called bröstvårta, which means breast wart. Which is the worst possible word for a nice object, a nice entity that I’ve ever come across.

Petri: What turns you on creatively, emotionally or spiritually?

Johan: Now, I should say something because of my thesis about creativity, about meeting interesting, surprising, talented, gifted people. But that’s not it. I think it’s going out and to run, exercise actually. It sounds very introverted, but that whole experience of I’m doing it and letting the mind just flow, without any particular object in mind and feeling the endorphins that’s when I get most creative. And if I can’t do that, a glass of wine might do the trick.

Petri: What turns you off?

Johan: I think that would have to be closed-minded people. And that includes myself in certain instances. It includes people who agree with me as well, but who face every new challenge and idea with rejection. Just because I don’t recognize it, it’s bad. That’s the one thing that ruins everything.

Petri: What is your favourite curse word?

Johan: Oh wow. I’m not a great cursor. My father has a great curse word and I use that once in a while. It might sound a little bit anachronistic, but it has a tremendous effect on people and it’s by Jupiter. Isn’t that powerful?

Haven’t heard that one before.

Petri: What sound or noise do you love?

Johan: I love the sound of my espresso machine starting in the morning, my Rocket machine. That brings joy to me. Wait a minute. No, another one. My cat, my Cornish Rex, when she’s pairing making that purr sound that might be even better. It sounds a little bit like an espresso machine, actually.

Petri: What sound or noise do you hate?

Johan: You know the sound the computer makes when it doesn’t agree with your command? It might differ from…

Petri: Too well!

Johan: Exactly. And it differs a little bit from computer to computer, but it’s kind of  [imagine your worst computer sound here or listen to the audio version].

Petri: Instant feedback!

Johan: Yeah, yeah. Not all feedback is created equally!

Petri: You’re failing!

Johan: Exactly, bad human!

Petri: What profession other than your own would you like to attempt?

Johan: Well for a long time, I thought I should be a musician in an electronic music band like a Kraftwerk version. Perhaps I would still like to try that, but I think it’s closer now to try something else a little bit more humble. I’d love to have a kind of a book cafe serving coffee and wine and discussing books and having authors over for lectures.

That would be my greatest water cooler experience of meeting creative people and avoiding them by looking down into books when I get fed up.

Petri: You should do it remotely. Thus, combining Bolt or Wolt the service is done locally, but it’s remotely just connecting people.

Johan: Yeah, well that could work or perhaps a holiday would make it even better.

Petri: Or sponsorship from Rocket or any auto great espresso machine provider.

Johan: Yes, exactly. That’s the essential.

Petri: What profession would you not like to do?

Johan: I would hate it to be a CEO of a major company because everybody else has a stake in you and you are responsible for everything. And I’m so impressed by people who manage to do it. I think I would drown and lose myself in that.

Petri: If you could be a co-founder of any startup in any era, which one would you choose?

Johan: I’d love to be a co-founder of Plato’s Academy in ancient Athens and pick up great pupils…

Petri: Wow, high ambitions!

Johan: Yeah! Pick up great pupils like Aristotle and so on. Perhaps that’s too high of ambition and they would see right through me…

Petri: That was about the longest establishment. Wasn’t that for many centuries? So it’s probably the oldest company in a course of history in that history in that sense.

Johan: Yeah, that’s right. It wasn’t really formed like a company so perhaps it doesn’t fit your description of a startup like that but it worked for almost a millennia or something like that. It took until the 530s or something like that when the Justinian emperor shut down the Academy because philosophy threatened religion. But being able to create something like that and having Plato there, but particularly pupils like Aristotle who would continue to discover logic and empirical sciences and many of the greatest humanities. That would be nice. But I fear obviously they would look right through me thinking, what’s that guy doing here? How did he ever come into our band?

Petri: Any final words for the audience?

Johan: Well, gratitude, is an underrated virtue. Being grateful for what we have. We also have to be a little bit discontent because from discontent comes progress. We want to solve problems, but if we’re not grateful for what we have, then it’s easy to despair and to become hopeless and to think that nothing ever really works. Nothing can be done about the problems that we have.

That’s where we are when it comes to many issues in our era. Lots of doom and gloom and the planet is going to end soon. And I often think about, look, where would I have been had I been born in any other era? If I had a time machine ending up arbitrarily somewhere else in time, how awful wouldn’t life be if I ended up in the past? If we look at the whole of Homo Sapiens existence as just 24 hours, condense everything that has ever happened into 24 hours. Then everything that created the modern world and the modern lifestyle and our opportunities, our life expectancy of more than 70 years, health, wealth, liberal democracy, individual liberty.

All of those things came in the last 200 years. And if we condense that to 24 hours, that’s just the last second. We’ve had some 86 000 seconds when people didn’t have that. We were born and we live in that final wonderful second. And if that doesn’t make you a little bit grateful for what the world and existence and all the innovators, entrepreneurs, and eccentrics throughout history have given you, then you’re a little bit of a bad person.

Petri: Thank you, Johan! This was an enormously fun, great and a bit hard journey as well. And that’s an inside joke just between two of us.

Johan: I know exactly what you mean. Thank you so much. This was great fun.

What to look for in investors?

October 22, 2020

Growth companies may need external investors. How to select the right investors for your company?

Consider your investors as long-term partners. Once you are in the relationship it lasts for years and it’s hard to change the situation if you’re unhappy or have a buyer’s remorse.

Money is the easiest part. That’s the very definition of an investor. They provide you with funds. It’s the lowest common nominator.

But even the basic level can have pitfalls. Are there some special conditions or covenants that channel back part of the money or are you also trading in favours or other side deals tied to the transaction?

This leads naturally to ethics. How compatible are your values and world-views? When things are going well there’s not much to worry about.  But where challenges arise the true colours come up quickly. Those with right values and aligned business purpose will stand with you and it’s easier to do things the way that may not be the easiest, shortest or cheapest. You appreciate character when it’s easier to ghost or weasel out.

One of the worst scenarios is where your investor uses the challenging situation to their advantage and as leverage against you for their gain. This can happen at dear cost to the company, employees and even to other investors.

How much do they understand your business and the industry? If the investor candidate grasps quickly what you do, the benefits, the value prop, your position, the potential and the whole nine yards this indicates that they are comfortable with the business dynamics in your field. It’s always easier to communicate with someone if you speak the same language. You can focus on the substance and the core issues instead of explaining the basic lay of the land and dynamics.

This is your insurance in bad times, too. If you investor knows the domain they are better prepared for changes in the overall market and the company-specific situation.

A proxy for the opposite is where the investor considers your case as a financial investment. There are exceptions but if the focus is quickly on numbers and financial matters this can tell that the investor does not understand the industry, the business model or the finesse of your business. Managing by numbers and risk factors work better in established businesses but it is often a formula for disaster in a highly volatile and unstable environment that startups and growth companies are in. The more limited the understanding the more rigid and formulaic the approach tends to be.

How experienced is the investor? If your investor is just starting the journey of angel or institutional investing (e.g. a new VC) then you’re the practise case. This may sound like a good opportunity but caveat emptor should be applied and shouted loud and clear non-stop. You’re just calling for trouble to yourself but when you realise the true cost of your choice it’s already too late. Then you’re in a damage control mode that is never fun and all options are costly.

Investor inexperience can manifest in many forms but one of my personal favourites are the situations (and there are many variations) to shoot oneself in the foot. You know you’re in the deep end of the pool when an investor does not understand their self-interest and creates havoc for everyone as a result. It’s a sad state of fairs when the entrepreneur needs to teach the ropes of the trade for the investor and show the light why a certain course of action benefits the investor (and the target company).

Insecurities, ego issues, fears and ignorance can bring disharmony and even break some ventures as a result. You may even miss your exit window entirely as Tero Mennander explained in his episode.

The topic is vast but the main gist is simple. The better you research and the better aligned your investors are with your core values, motivations, objectives, expectations and business perspectives the easier the ride will be. The art is on the preparation that is often overlooked or even skipped.

Select your investors with care. Your success depends on it.

The cottage industry mindset

October 20, 2020

You start small. There’re the very limited amount of resources and you have a lack of almost everything. Things don’t scale and they don’t even need to do at the beginning.

Gradually, if you find the product-market fit resources become more accessible. The limitations become evident in other parts of the business. Your processes may not scale.

Things become inefficient and your response time slows down. Communication does not work as well internally and externally. Feedback from customers may already have layers.

Most of the above issues are management and leadership challenges. They can be solved with the right tools and expertise.

I’m talking about something else, more vicious and tacit: a mindset from the early days when you did not need to consider too much about other people and processes since there were few and everybody could gather around a pizza or two.

There’s nothing wrong with lifestyle business if you want to build one. But if you’re aiming for scale and the large impact that’s another matter where the trouble is around the corner soon.

If your mindset is not updated beyond your own capabilities and resources it’s hard to make things work. The calculus is different when you cannot just use your cash flow thumb of the rules and simple measures.

Contributing margins, variable costs, resource allocations and limitations become important. You may run out of working capital even if you’re growing.  Losing money on every new revenue unit coming in can kill your company.

That’s what happened to dot-bomb companies when they were expanding rapidly and growing hyper-fast. The costs structure was just growing faster and every new sale meant more losses and running out of cash faster.

Exponential growth is hard to grasp. It’s even harder to manage and plan. If you’re not paying attention and learn to live with that mindset you may not be well-equipped to handle the next challenges.

The worst scenario is that you may not even ever reach that point where the problems emerge. Why? Because your mindset is still in the minor league. You never manage to make the jump to the majors.

A survival mode is not the same as thriving. If your goal is just to come by and have enough cash to cover costs that’s not a growth company mindset.

Don’t waste anyone’s time, yours included by thinking that you’re doing something when you’re not clearly having the growth mindset.

It’s not hard but you need to be aware of it. How do you handle things where you have 100x more what you have now?

Revolt against the 30 per cent middlemen

October 18, 2020

The last decades have cut out some middlemen but created new ones.

Airbnb, Facebook, Google, Amazon, Uber are familiar names now but they did not exist before the Internet. Apple is fighting in court against the revolt of Epic, Spotify and others who consider the 30 per cent App Store fee too hefty and unreasonable.

There is a multitude of examples of digital rent-seekers who were bringing us benefits when we converted from the old analogue world to the digital era. Now, the centralisation and consolidation have progressed to the point that the new rebels are the old guard.

While reading Out of the Ether and the early history of Ethereum it reminded me of the decentralisation basics that have been brewing for so long. The work is not done yet. There’re more middlemen to cut and the centralisation and consolidation of power are nowhere near finished. It has just shifted and shaped to other formats.

As the early Bitcoin enthusiast discovered the limits of Bitcoin and started reimaging alternative ways to carry on the mission the 30 per cent (industry standard) fee structure is a big enough business case to target for disruption.

Gradually the technology starts to mature enough that we can block by block shift away from the centralised models. There are so many benefits to give all the power to users directly. It’s evident that this is the direction we are going.

As clear is the counter-force that Johan Norberg illustrates in his latest book. Disruption and innovation are always faced with fierce opposition from the incumbents, elites and others benefiting from the status quo.

It is over ten years ago when Satoshi dropped his anarchist Zero-to-One style revolution that did not ask for permission. I’m wondering when we will see more of this level disruption.

The history is full of leaps that start from people getting fed up with the current ways that are becoming excessive. Education is one of the sectors experiencing this now thanks to Coronavirus and its impact to on-site service provisioning.

What was considered acceptable before has become too much. The subscription-to-everything model is not yet high enough in the fed-up curve but that is a clear trend that will face its counter-force in the future.

The first indications are already laid by Revolut and other payment service providers that make it easy to manage, block and cancel subscriptions with a click of a button. Small monthly streams combine to large flows and when you start to see the overall impact it’s easier to consider alternative options.

This is the eternal cycle of innovation from new to old and new again. What are the ripest industries and business models to reshape in this decade?

Out of The Ether

October 16, 2020

It’s over ten years from the origin of Bitcoin. The landscape is now fundamentally different than it was in the early 2010s.

Out of The Ether does a good job of illustrating the journey from Bitcoin enthusiasts towards something else and their quest for decentralised money, programmable global computer and everything between.

The main character in the story is Vitalik Buterin who the reader follows from his school day years till today. It’s a journey of self-development, discovery and personal growth.

Buterin is an exceptional person and it is no coincident that he’s the founder of Ethereum. The book tells the story how it is possible to build a new blockchain ecosystem from scratch at the time it was already thought a difficult if not a mission impossible task.

There has been a lot of drama in the development of Ethereum. Buterin needed other people to help him to realise his grand vision. The people who answered his call came together for various reasons: some of them for less idealistic and monetary driven motives than others. Nevertheless, it was for Buterin to figure out the right moves and developments in the midst of management, leadership and external challenges.

One of the defining moments for Ethereum was the launch of DAO that raised more funds than was originally anticipated. Soon afterwards, the automated smart contract was hacked and everyone who had a monetary interest in DAO was about to lose their stake.

Leising chases the Ether thief throughout the book and describes how the Ethereum community and The Robin Hood Group (RHG) jumped into action for saving the funds from the crypto thief (or thieves).

The story of Ethereum and the actual heist are full of drama, twist and turns and it has enough material for many sequels and even prequels.

Out of The Ether captures the sentiment and the atmosphere of the crypto space in the 2010s. There are clearly different phases from the early days to euphoria with Lamborghinis and ICOs, and the more mundane reality with slow progress and tons of technical and business challenges.

Disillusionment and bias

October 15, 2020

Apollo space shuttles were pretty primitive with their computers. Most of the calculations were done on Earth with mainframes and only the instructions were carried out on-board.

Humans are even worse. Where’s our mainframe? We are only doing edge computing with few data points that are skewed and riddled with all types of biases.

We are operating with limited data and operational instructions. The difference between success and failure is often not in more data but in more accurate acknowledgement of the limitations themselves.

It can be called humility. It can be called honesty or openness. It has many faces and ways but the underlying theme is the same. The better you appreciate the fact that you’re operating with a very limited mental model that does not reflect too closely the reality the better off you are.

It keeps you sensitive to adapt and adjust your behaviour based on conflicting or new information. Continuous learning and curiosity help to become more accustomed to changes, and humility keeps the ego in reins: you’re not your beliefs.

Any longer-term venture is full of hardship. You start walking with conviction and the journey teaches you the ropes as you progress. The more rigid your approach the easier it is to train-wreck your mission.

The trick is to keep your North Star but be flexible how you get there and even when you arrive there.

The biggest battle happens inside yourself.

Consistency in marketing

October 13, 2020

Change takes time. The results take even longer to show up. The hardest part is not to give up or change the course while waiting for the impact to materialise.

The temptation to switch and change things is everywhere. In investing, it’s called day trading or just trading where you’re chasing after the short-term fluctuations in hope of profiting from them.

Value-investing takes another approach where the short-term does not matter that much since you’re plan is to let the market figure out what you’re already knowing and expecting to happen. Timing is not something you can predict but if the fundamentals are on your side you should see the market prices converge and agree with your view in a longer-term. Usually, that is starting from 3-5 years and further along the line.

The same works in marketing, too. Building a loyal customer base, getting the brand recognised, formulating and setting a tone for your message is an adjustment process. First, nobody knows you. You’re the new kid in the block. Gradually, if you show up continuously, you become a familiar face with a familiar message and you gain recognition.

You will shape and form your place. The clearer your message, the more consistent your positioning and the more awesome your total user experience the faster you may become recognised.

This is not rocket science. Neither it is easy. The hard part is not so much the actual doing. If you’re passionate about the topic and you’re willing to commit to the process the results should show up in time.

The challenge is to be patient. The temptation is to twiddle with things: take shortcuts to get something measurable and tangible. The trouble is that the ways to achieve them might deteriorate the overall accomplishment.

More clicks, more followers, more views, more everything. Getting something is easier than getting the right kind of results. If any views, clicks and sales leads will do that’s one thing but if you’re after the overall success you need quality in everything.

Bailey Richardson touched this topic in my recent interview where she mentioned that building an audience takes its time that may not necessarily align with the business goals or timelines.

If you force something to happen faster than it naturally does something will yield. That is quality, the overall process or the final outcomes in the long-term.

Short-termism can be impatience in disguise. Doing something for the sake of motion regardless of the effects is detrimental but at least you did something, right? It takes more guts to stay the course and stop twiddling. And, showing up and trusting the process whether it is marketing, investing or something else with longer-term impact timelines.

Building communities with the standard you walk past

October 11, 2020

Bailey Richardson – TALKS WITH PETRI

Bailey Richardson talks about community building on Instagram’s early years, The Social Dilemma phenomenon including her interview in the documentary, and how to find yourself in hedgehog cafes in Tokyo.

Building communities with the standard you walk past

Bio

Bailey started People & Company with Kai and Kevin in 2016. Their mission is to help people bring their people together. They interview extraordinary people organizers on their podcast and they published a book on how to build communities today.

In the past, she grew the early community around Instagram, where she was one of the first employees. She has also worked at IDEO, StoryCorps, Pop-Up Magazine and The California Sunday Magazine, made a short film about a Pinoy inventor named Dado Banatao, interviewed Russians who are LGBTQ about what their lives are really like, asked Casey Neistat how to make and share videos people love, and started a Queer Pool Club.

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Transcript

(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri: Hey Bailey, how are you doing?

Bailey: Good. How are you?

Petri: I’m pretty good. And it’s so awesome that you were in my show because you’re the latest movie star!

Bailey: Yeah, I’m having my what I assume will be my only movie star moment of my entire life. I think this is as much as I want to do, but there last two weeks has been my movie star moment.

Petri: I think you’re just getting started. Maybe there are already some other people casting you into things you don’t know about yet!

Bailey: That’s awesome. I’m hoping to be in a superhero film at some point. Maybe that’s my step up from this Internet documentary straight into Wonder Woman and putting it out there right now. Someone please, please select me. I will compete for the position.

Petri: What is the social dilemma?

Bailey: I can tell you what the film is, but are you asking the bigger question?

Petri: You can take the questions whichever way you like.

Bailey: I’ll take it maybe the most straightforward way. This film just came out called The Social Dilemma that I was interviewed for about a year and a half. The backstory is that the director is a guy named Jeff Orlowski, who went to the same university as I did.

My freshman advisor messaged me a while ago and really encouraged me to talk to him because she really liked him and appreciated his work. And so I spoke to Jeff and his team, and I really liked him. And he told me that he was working with Tristan Harris and a number of other people in tech to make a film about how to make tech more ethical and the state of social media.

And he had read an article that I was in the Washington post just about two years ago. It was about my decision. I deleted my Instagram account and a reporter found out about it. And I spoke out about my personal relationship to Instagram and that decision in the article.

And he had seen that and asked me if I wanted to be involved in the film. And I was just explaining off the air that I’ve never done an experience of the major film before. It was very new to me but I was interviewed for two hours. There were like three cameras on me. They set up a whole set for it. And at the time when you’re doing that big period of interviewing I didn’t know where the film would go, what it would look like and kind of slowly went to Sundance. And then I found out it was going to be on Netflix and all the way through I thought maybe no one would really watch it.

I’ve found being in technology that there’s a pretty limited number of people that care about tech outside of their personal experience of it. Things like Facebook and Instagram, people care about their lives on there. But I don’t usually think that the general world population cares about industry news or industry critique. But it has just been a huge film, for a number of reasons. One of which is we’re all stuck inside and maybe Netflix is just extremely powerful right now, but lots of people have seen it. It was like the number four film in the US and the number three film in India. It has just been way more popular and distributed than I expected it to.

We were joking because I think I’m in the film for like seven seconds including the trailer. And so it’s just a funny relationship to a film where you just sat in a room in front of the camera. But when something gets put up on Netflix or made into a film it has weight to it and people relate to that in some kind of very special way.

It’s a film about social media and how it shows up in our lives today and how it’s affecting society and how people connect to each other.

We can talk about that more if you want to, but a lot of people are talking about that and going back and forth on the Internet right now about what they got right and what they didn’t get right.

Petri: Well, that’s one thing to think about what happened before, obviously you were one of the first ones in Instagram, within the first 13 employees in the company. You were really figuring out social media. I think Instagram was probably the first one really getting to the mobile and genuine mobile app or social app. Facebook and others were just converting and they came later.

What do you think? What is the next one? I think that’s more interesting. TikTok is already old news. What’s going to happen in the next 10 years? What is the thing now? We are in 2020 and 2010 was 10 years ago. So there’s probably something new coming up and people are tired of…if you’ve been deleting Instagram and do actually know how many people from the documentary don’t have their personal accounts?

Bailey: I do know that there’s this trend of a lot of them not letting their kids use Instagram or social media. I know anecdotally that a large number of the original 13 employees, including the two founders of Instagram, really don’t use their account very much.

I think there’s something about these things that maybe there’s like a line with usage of…Maybe there’s like a light almost addiction where you use it kind of regularly. But when you work on the products, when they’re what you’re thinking about all day or even cruising through or testing on all these mobile devices these engineers would have on their desks testing, making sure these apps work. You just get so deep into it.

I was on it so much because I worked on it that I was happy to be off of it when I wasn’t at work I wasn’t on those things. It’s pretty common for people to intentionally figure out at some point if you work on social media that you need to build a boundary between yourself and those spaces.

Some of it is maybe philosophical. Some people think it’s not good for them. Although, I think some of the science is inconclusive on that. But some of it’s just like I spend enough time in a digital format and a digital interface and when I’m not at work, I’m going to not do that and I need boundaries to get there.

Petri: Let’s get to the amazing Instagram stories a bit later. How about building some communities first?

Bailey: Great. Let’s do it.

Petri: Yeah. This year has been a bit weird. Is this the weirdest year ever, at least in our generation? A lot of people need to go online. A lot of startups need to figure out how to reach their audience, how to do sales and marketing nowadays. Can a startup, growth company build a community, or is it just a fancy word for just regular customers?

Bailey: I can tell you what I think. In the last 30 years since the Internet has increasingly become a part of every everyone’s life or most people’s lives, I think it’s really changed how we relate to the word community. When I’ve interviewed people… For context, I’ve interviewed just tons of people who organize communities and ended up talking to everyday people about community that I just happened to meet because that’s what I focus on professionally.

When I talk to people who are over the age of 60 or 65, the word community to them is very physical. It’s like the town they live in or their neighbourhood or the church that they go to or where they practice something spiritually. And because of the Internet, we’re able to connect to each other about a passion in a different way, in a non- geographically limited way.

People who follow the world get that innately, but I find that a byproduct of that has been that people are using the word community in a pretty nonspecific way. We detached the word from our physical location and we’re trying to like land it again. There are different people with different takes on this. It is basically an audience.

A community is a user base, a community. For me, it’s not. And I think this is an unfolding argument that is still in the midst of being played out. But if I take aside, for me, I feel like a community is a group of people that face each other instead of face the stage as it were.

It’s people who are actually connecting to each other instead of just to a public figure or a brand or an organization or a product that they appreciate. They’re not facing the stage. They’re facing each other or they’re able to interact with each other somewhat regularly.

It’s important to have a line in the sand there for what is a community and to me, it’s people who keep coming together or something they care about. It’s not just any passive group. It’s a group that actually engages with each other. Just in terms of definition, I’m not talking about community as just another term for your social media following or an audience or an entire user base, which I think a lot of tech companies are using that euphemism or even just like your customer support organ. I’m trying to land it in the modern evolution of what maybe my grandma would have thought it to be.

I think it is possible for startups to emerge from a community or emerged to serve a community or grow a community. We talked about how I worked at Instagram in the early days and Instagram grew with a group of people that iPhonegraphers in those early days. The first users were visualists who had new technology in their hands. An iPhone 4 that had a great camera. One of the first really great cameras for smartphones.

Petri: That was a great phone!

Bailey: Yeah, it was a great phone. Instagram launched right then when all of a sudden all these designers and tech people had a camera in their hands that could do so much more than any other kind of thing that we had in our pocket or the whole previous world that we had lived in or the previous version of human life.

Instagram served that community and there are other examples out there too, but I hear you may be jumping in.

Petri: Yeah, I’m just eager to ask the two questions. They are so trivial and so important. Which one was first iPhone 4 or Instagram? Was it done in a way that, hey, this is an awesome phone. Now, we can do these things or was it before? And the more important question, what was the very first published picture?

Bailey: Oh, great questions. I’ve actually never fact-checked this, but as far as I know, the iPhone 4 was first or news of the iPhone 4 helped drive Instagram’s product. Kevin and Mike, who started it, knew that the camera was better and they knew that the hardware everyone was using was going to improve. And that was part of why they included photos in the product.

The very first picture is a picture… There are a couple of complications to it. Because one of the reasons Instagram was so great was everyone who was in the beta talks about it like it was such a special beta experience, which I have never really heard anyone say that in any other context. The beta app was called Bourbon and the company actually was called Bourbon, Inc. until it was acquired by Facebook.

Petri: I wonder when it was established what was the establishment where it was done…

Bailey: Yeah, exactly. Kevin and Mike were cocktail nerds back in the day. This app was actually a location-based product to start with. They thought maybe locations were the centre of it. And one of the early users actually became an early engineer, a guy named Gregor Hochmuth, and Greg was a photographer.

His dad was a filmmaker and also an engineer. He was using different apps that had filters for your photos when he would upload his locations on Bourbon. And Kevin the founder’s girlfriend Nicole saw Greg’s pictures and was like, why don’t you make more pictures like that? Like Greg’s, I like those.

And so Kevin, the founder, decided to write code that made filters. He took the first photo in the beta with those signature Instagram filters in Todos Santos, Mexico while on a vacation of his flip flop. I know what the photo looks like and if you Google it, you can find it. I think if you scroll far enough back in on Kevin’s account, you can find it.

But it’s a pretty uninspiring photo, in my opinion. Kevin’s not a bad photographer, but nobody needs to look at a regular dudes flip-flop.

Petri: When you started on Instagram, you were also checking what’s been done before. YouTube was one of them. It was early days of Youtube as well. So what did you learn from YouTube and what did you do differently or Instagram did differently? You came a bit later on. The use case was a bit different.

Bailey: I actually think I’ve studied YouTube since working at Instagram but I’d say the biggest piece of inspiration was lightly Tumbler, but mostly Flickr. A lot of the people who were early Instagram’s suggested users had been the younger people in the wave of Flickr photo-sharing. I’m not so sure Flickr was like a different product and they didn’t go mobile. They have now, but not super successfully. They have people who are really passionate about photography and sharing their photography publicly.

Petri: It’s more a pro thing. It’s not casual photos. It was more…

Bailey: Yeah, it was intentional. And, they make them available to other people publicly. Public photo-sharing was a big thing that Instagram decided to do that a lot of investors said would never work. That decision to actually want to share publicly was like a key insight and a key bet. Flickr had done that years before, and they had seen a community emerge. There are people like a user Pei Ketron and a user Chris Connolly and a bunch of the folks that really set the tone in the early days of Instagram had been in the Flickr community and had had meetups with other photographers that they liked and followed and created online relationships with each other.

And I actually think that more than anything, our users taught us. Those people who had been a part of the early Flickr community they led creating such a generous and warm place on Instagram. This culture of meeting up with each other and supporting each other and giving each other creative feedback, which I think you can do in photography about the composition or the lighting or whatever.

We learned a lot from Flickr in terms of just creative sharing and that creativity. And certainly YouTube, early there were decisions that they made that were quite similar to the ones that we made, which were about curating and elevating great content on the site.

YouTube if you find the drags of YouTube this content can be pretty bad. I don’t necessarily mean offensive or political, I mean, just low quality.

Petri: The devices were not awesome at the time. iPhone 3 at the time or whatever. I don’t even remember. How could you actually make videos at the time?

Bailey: The quality was low and also making a video is just hard. It’s much harder than making a good photograph. You have to edit it together. There’s a lot of elements and this woman, Mia Quagliarello, who actually now helps interview for a podcast. She’s a correspondent on our podcast.

She was the first community manager at YouTube. And community for them meant some parts support, but mostly editorial, which is what it meant for Instagram too. And her job was to feature really great use cases on YouTube. Use cases that illuminated what was possible on the platform outside of just like the pedestrian or average content and to make sure that when people came to YouTube, they found things that were entertaining or interesting.

That was a lot of what we did on Instagram was setting the tone and also expanding what people thought was possible or what was available on this little app by curating it. And by intentionally looking through the platform to find the most interesting use cases and to elevate them.

That was something that YouTube did very early on and that we absolutely followed.

Petri: There’re so many things that my buffer is overloading. But summarizing and trying to pick the golden nuggets from here so other people can build communities as well and maybe businesses. First, some passionate people come together for whatever reason, photographing or whatever the common cause, which puts them together.

Then they start to do things together. Then if you are building a product, which is helping them in some way or form. Then you’re just observing what they are doing and you pick up, curate. You’re not telling this is the way it’s supposed to be done. This is the way we designed it. You listen to the community.

Do you let the community drive the direction of the product as well?

Bailey: Yeah.

Petri: How much did you say that, no, we don’t want to go that direction. We actually want to go that way because that’s what I’ve business reasons to go that way?

Bailey: Yeah. I think there was some of both. This is where I give a lot of the credit to the product team. Our team was like…I’m stealing this from SoundCloud’s first community manager, a guy named David Noel. He described his job as being the sponge that absorbed all the water from users out in the world. And then he had to squeeze the water back to the product teams. And that was some of what we did and noticing there were times when too much time would pass before we had worked on creative tools and the filters weren’t getting used or other filter apps were getting popular and kind of surfacing that insight back to the product teams and letting them decide whether or not it’s a priority. There are decisions throughout instagram’s life, where we did do something that the community wanted. And there are examples where we didn’t. I think one big example is regramming. The decision to not build that into the product.

Kevin and Mike had a really strong perspective that you should be sharing your photos from your life or like photos that you’ve chosen to post instead of just putting things on your own profile that are from other people. They could have generated a lot more content early if they had let people regram, but they never put that in the product.

Now, it is something a lot of people were doing by going into other apps and figuring out how to do it. But it just wasn’t the top priority for Instagram, nor was it the vision of the space and experience that the product team thought would be the most meaningful to people. I think there’s a little bit of both. There’re some of these problems that we see people running into and we can solve. Another example is like the ability to delete your own comments.

If someone comments something on your own photo and you don’t like it, you can remove it. That’s something the community team is really aware of and can bring back to the product team, but there are other things that the product team decides isn’t right for the direction the company is going in.

Petri: Thinking Instagram, it has quite distinct values. I’m talking about the original Instagram and probably not the Facebook times so much. It’s quite family-friendly and nice in the values considered to, for example, to more laissez-faire Twitter. Was that intentional in the beginning? If you start to see that we don’t want to have that type of community. We want to be more friendly or something. What are the ways to guide and try to get the right type of people to the community?

Bailey: The number one way to create a culture is to set a standard. One of my favourite quotes is the standard you walk past is the standard you accept. When someone comes into a new room, like a dinner party or a new room online, we pay attention to social dynamics and what is being featured or the way people are interacting.

We absorb those and we replicate them. And for us, we had some tools to set the standard that people would walk past. One of them was we had this suggested user list in the early days. Often on the Internet up until that point, a lot of people who were suggested users on like Twitter, for example, were just famous people.

It was just like people you might know, and it’s kind of a growth tactic. We need to just get content in your feed. Follow these people: Lady Gaga, Justin Bieber, or whatever. On Instagram, we handpicked those suggested users for probably three or four years every week or every two weeks.

Petri: Or was it you who handpicked them?

Bailey: Me and then some previous people before I had joined put the first list together, and then I did it for a long time. Then we started building a team where we had a woman who worked in Brazil, a woman who worked in Japan. People around the world who could do that for their own countries and cultures. When you signed up for Instagram, you would get some suggestions of people to follow.

There are people on your contact book and then it was people who were suggested. And that would be people that we found who were taking their own photographs. Mobile photos was the requirement. If you were just finding other photos or using a DSLR, we didn’t feature you because it was confusing to new users.

Like how did they do that? If most people were going to just be using their mobile phones and we wanted to show them what not totally unreachable quality content was, but what interesting quality content was in terms of mobile photography. We would find all these different people all around the world.

There was a man who rode around the world on his bike in London and cycled completely around the world and shared his story on Instagram. There was a man in the air force reserve who was in charge of refuelling planes, and he would take pictures from his mobile phone laying on his stomach looking out the windows as the beam of a plane with fuel would attach to a fighter jet.

There was a guy who was a monk early in Nepal who was taking photos on Instagram. There’re so many different creative use cases. Our team was in charge of putting those people forward with what’s possible. And that some level of creativity and thoughtfulness in your mobile content was what Instagram was about.

And it was also part of what we did. We would see did these people that we were suggesting or we were going to put on the suggested user list, did they respond to their comments? Were they kind? Were they warm? At the time, there were a lot of other places on the Internet, including YouTube, which the comments were a joke.

They were so dark. People were so mean to each other. And Instagram was a very friendly place in the beginning. And I think some of that was because, like I said, the standard you walk past is the standard you accept. And we were really intentional about the first experiences people had on Instagram and who they followed and what was elevated as what the platform celebrated.

Petri: So you’re saying as well that people were also observing how you should respond because obviously those people were also been on Youtube. Maybe they were giving some nasty comments there, but then they look around and see that, well, Instagram doesn’t really work that way. Maybe I just have to use kinder words here.

Bailey: It groundswells when the people who have a big following treat you kindly that like chose you. That’s how I should be acting back. So I think that people are pretty socially attuned. Maybe even more so than we give them credit for.

They don’t understand the ins and outs of product development, but people are pretty socially self-aware and aware of the spaces that they’re in. At least, I believe that.

Petri: When you joined Instagram, Instagram suggested you some famous people. It was not such that you have some content to look, but it was also setting the tone for your experience of what to expect and how to behave or what’s that a consequence or you just realized a bit later? Or was it intentional that you want to show the good role models before you start to push your own content and ways to do things?

Bailey: It was a hundred per cent intentional and it was intentional all the way from the beta group. And before I worked there, Kevin and Mike were very intentional about who their first users were. Because there’re two words in social media. One is social and one is media. And I think Instagram in the very early days felt as fresh as maybe like MTV did in the early nineties or late eighties.

It was just different. The content was different. It was fresh. It was exciting. It was unique. That’s one of the challenges for whatever’s next. There might be many things that are next, but people need to feel like this is fresh and exciting and new and different.

And at the time other social media platforms…In Twitter, there weren’t really pictures. And on Facebook, it was a lot of pretty low quality, very personal photos. Me with my friends doing something like standing in front of a view and Instagram was more about people’s interests had an artistic aesthetic bent to it.

The quality of the photos were higher. We knew that there was also just something about people realizing this is a new and exciting place that could be only communicated if the people you saw when you logged in the content you saw when you logged in was new and fresh. It was very intentional.

All of these things were very intentional who we put in front of new users and why. One thing I see in people who are building platforms and building social media spaces or spaces that aspire to be social is oftentimes almost the science of acquisition is so well discussed. How to build virality into your product, how to acquire new users, make embed codes.

We make a web version. We make it possible to other platforms and VCs are like breathing down founders’ necks trying to see numbers that are just like how many people are in the platform. Although, I think savvy VCs look at their engagement levels, but I often see people just go straight to acquisition and straight to new users and just trying to pour new people in.

And with a social platform if you don’t have engagement if you don’t have a quality base of content and people creating that content to start with. You’re going to have a leaky bucket. New users are going to come in and there’s not going to be anything for them. You have to grow more slowly than I think many people want to.

You have to create a culture and set a tone with a small group of people before you just start pouring new people into the space.

Petri: Is there a critical mass, how many people you need to get to have a strong community started after which you can start to grow more, scale the community? Are there any numbers or can you give some kind of guidelines that when it’s time to crank up?

Bailey: It depends on the product you’re making. Maybe something like Instagram with the single-feed versus like Quora with all of these different questions and answers. It’s probably different answers for different people. But Paul Graham has a good arbitrary number, which I’ll just use here.

And I use it with a lot of people because I think sometimes you just need to set goals and run at them. He says, get a hundred people who love your product, who really love it, focus more on that than the total number of people. If you have a spreadsheet of names of hundred people who love your product, that is your first goal as a founder, like love it.

And that, I think is what I tell people to do. A hundred of the users that you want, who love your product. That is the first step, and it’s not the step number 10. At a later stage of your company, you’ll have different numbers and you’ll have different goals, but you can’t skip step one, which is to get a hundred people who love it.

 Petri: Do you start to curate or nurture new leaders too, because obviously you cannot do all the things by yourself and you should not do things for people. I read the book, it’s a really good book. Everybody should read it.

Bailey: Thank you.

Petri: How do you do that in a proper way? Because, as you mentioned on Instagram’s case you had people pretty much in all the different nations, knowing the local people and how to start to build the communities in those places?

Bailey: You need to have some understanding of your business opportunity. Where do you want to go next? Where is the next stage of this thing and what community do you need to grow in order to get there? In Instagram’s case, when we launched Android we didn’t have many users in Brazil or Korea at that time because it’s such Android heavy countries.

In Instagram’s case, in terms of developing new leaders, we knew when we were launching Android, that people were going to join in countries like Brazil and in Korea, where Android was really strong. And when they joined, we needed to have people to show them in a suggested user list who spoke their language and to photograph the cities they lived in.

I spent a lot of time looking for people who were already on Instagram using iOS in Korea and Brazil to feature for our Android launch in the signup flow. Thinking about the way we describe in our book, no matter what community you’re trying to build or cultivate, whether it’s a digital one, whether it’s an in-person one if you want to grow the community, the key to growing a community isn’t management and it’s cultivating leaders, new leaders.

When you’re cultivating new leaders, you want to look for two things. One is, are they genuine? Are they showing up because they really believe in the purpose of the community, whether it’s spreading creativity or emotional support or fandom? Are they sincere in that connection to the community’s purpose?

And then are they qualified? Are they able to do what you might ask of them in that leadership role? For Instagram in a very straightforward way that was could they take quality pictures and were they regularly contributing?

But for a chapter-based community or a physical community, we spoke to a woman in our research who started something called the queer soup night, which is an event-based fundraiser that happens like once a month in pre-COVID times in New York where a queer chef makes us soup and then people come and it’s donation only.

And all the money gets directed towards one nonprofit each session. She got all these new chapters that wanted to open the queer soup night in Portland, a queer soup night in Gainesville. And she makes sure that the founding teams, their version of qualification is they need to have a background in cooking and a background in event production because if they don’t have those things, they’re not going to be able to put on these events.

If you’re at a stage where you’re thinking about trying to grow a community, Look for people out there who have already shown up if possible or are connected to your brand or your business, and depending on your business opportunity try to figure out if they’re genuine and qualified in their ability to do what you’re asking of them.

Petri: Is it actually possible to build purely a digital community? I mean that often we want to meet people in real life, IRL. Nowadays it’s maybe not even possible. It’s a bit more low-band communication. There’re a lot of Discord groups.

There’re a lot of different Reddit subgroups, stuff like that, but are there real communities in that sense? Is it hard or is it easy or is it just different? What is your take?

Bailey: When I was first working in community as a profession back in 2012, a lot of people talked about the community landscape as is it an online community or an offline community? And up until COVID, I would say that pretty much all communities are both. There’re some exceptions. There are some offline communities. Maybe like basketball teams or something don’t have a watering hole online where they communicate. Everyone’s not in a WhatsApp thread or a Facebook group or something. Increasingly I think a lot of these offline things have some digital space where members can communicate to each other. And in terms of online communities, it is exactly what you said.

For many online communities, they form because geographically people aren’t living near each other who have a similar interest in personal finance or flying or gender politics or some physical disability or challenge that they’re facing. But often you hear these stories about these online communities wanting to meet up every once in a while, or members wanting to meet each other if they really develop strong relationships.

Both of these things are a hundred per cent possible and they both really do exist in the world, but both of them in pure forms. But I think increasingly you see communities want to do both. Both meet up in person every once in a while and also communicate online when they don’t usually meet online.

But the trend that I’m seeing that I think is most interesting, is that I don’t know if it makes sense to actually do your first action to start a community offline anymore. And I’ll tell you what I mean. The people that I spoke to who work at Facebook on the groups teams, they’ve seen so many versions of people almost like posting on Facebook or starting a group to see like, hey, are there any other people out there like this?

And sometimes that feedback and digital space is either clear enough that yes, there are, or no, there aren’t that someone then can go forward with the investment in a deeper way. It’s almost like the first natural thing to do these days would be to put something up on your Instagram or your Facebook or social place.

And say, hey, does anyone want to start a run club with me? Or does anybody want to talk about chronic illnesses or does anybody want to nerd out about Star Wars or the latest Star Wars and to maybe fire the first signal online because of the most socially low risk and then from there to possibly do things in person or to do things that are more physical. I’ve seen a few versions of that where a choir that started in Toronto just started with a Facebook post of, hey, does anybody want to do this? And they get a resounding yes. And then they begin this in-person choir. The Internet is maybe at its strongest in a normal world, non-Covid world as a place to prototype and test. Is there anybody else out there like me and can I see that really simply and quickly with pretty low social risk?

Petri: I see a few things here, which might be a bit difficult nowadays. One of them is obviously the discoverability. There’s so much content. There’s so much stuff there. And even in your examples, there was almost like local people doing stuff. Maybe your friends or someone in your Facebook group, if you’re still there, Facebook friends or something. You usually reach out to people you already know but if you’re all alone and you’re the only Star Wars person among the trekkers you need to go somewhere else. You can go to some groups, subreddits but I think it just feels like that there’re so many opportunities and the cancel culture is another related issue a bit further on. It’s so easy to start something, but to actually make it to work in a bit longer term. I don’t know how quickly people usually just give up. There’re so many of these groups and after a while, there’s nothing left. It’s just completely quiet.

Bailey: I hope that someone works on the next place where people can find things that they’re passionate about because I was pretty skewed in Instagram because I worked in it. But I felt like a lot of people were able to meet other people who had really similar interests to them through that platform.

And I think YouTube maybe still does this in some way, but there’s how much stuff on those platforms right now. Also, there may be gobbling up all the smaller spaces, like the old forums and blogs where people would have connected before. One thing that we like to say when I’m talking to people about starting a community, is that it needs to come from a really personal place.

And talking about companies who are successful at this. I think that’s one reason why a lot of companies aren’t successful at this is that we can make decisions in our business lives and our professional lives that are so strategic. That makes sense in that context.

Businesses are about making money and surviving through making money. But I think a lot of the best, most thriving communities come from like an extremely personal place. So much so that the original organizer or founder or the person building the product and service of this specific community will stick with it enough for it to build momentum. Even when no one’s showing up they’ll keep doing it week in and week out, weekend and week out, weekend and week out. And just accrue that momentum over time. And if you’re just giving a community two to three months to get to 10 000 whatever you have some really hard strategic business goals.

You might be able to just buy people who care a little bit less but still meet that goal. And you might want to twist and bend your approaches for doing that. But community organizing is really an act of devotion and rallying passionate people takes time. You can’t really cheat code it.

One of the things that make building a community and building a business sometimes at odds is business priorities can shift and change. And sometimes the timelines are so tight that perhaps you don’t let a community breathe for long enough.

Petri: I’ve been picking up a few trends. One of them is that this might be the decade of more personal things, just like personal brands. Now COVID is putting a lot of people to do stuff online and starting to write newsletters or to start to use their own brand instead of building a company brand, obviously, there can be a company behind it but the idea that you see your face first, it’s more authentic. We probably are going in that direction in the next few years. The other thing I was just thinking was The Social Dilemma, the transactional nature of everything. We’re getting tired of that. Everything is so transactional, there’s so much of everything. It’s just like, you will swipe up or down or left or right whichever way, it never ends. And it’s just more and more, just a continuous overload. We want to slow down, more quality over quantity.

Personalities, authentic people I think is something which we are missing after all the plastic stuff and nice filters that are evening everything out.

Bailey: I hope so. I think both of those insights are really spot on. I remember realizing that the top YouTube accounts and the top Instagram accounts, besides YouTube’s own channel and Instagram’s own channel, which they had competitive advantages for growing, those are all people. The first brand doesn’t show up until like number 50 or something, or even further down the line.

And I remember noticing that and just thinking, I actually think we’ve been making a false assumption all along that people actually care more about brands or packaging things up as a brand. I think it had to do more with the distribution channels we had for information and who could buy a billboard and who couldn’t.

But now that media is like so accessible it’s pretty clear that human beings relate to other human beings. So much more powerfully than they do to a symbol or a company. In fact, a lot of people reject brands and companies and just don’t trust them at this point. The first insight is really right.

I don’t know where the biggest trend that I see happening in that direction is. I heard someone once say that platforms can offer fame, love and money to people. And often a platform just offers one or two of those things. But increasingly there are more platforms that offer all three. It’s like three very core human instinctual cravings fame, love and money…

Petri: Which platforms are providing you with love?

Bailey: Um, great question.

Petri: Because money was not in TikTok, for example. Previously you would get a lot of fame. Maybe a bit of love from the people as well. But money was out of the question. Fame and money that’s like YouTube as well, isn’t it?

Bailey: Yeah. I think there are some corners of Facebook groups from people I’ve talked to and maybe like a WhatsApp thread or certain Slack groups where they don’t have as many metrics about fame. Where you can actually feel sincerely connected to other people or bonded.

One space that I’m really curious about that I think does all three of these things, there are two platforms. One is Twitch and the other Substack. They’re both built around individual creators who people choose to follow as a trail guide either into on Twitch’s case, typically video game or in Substack’s case a topic that they want to follow this writer into.

There’s this core kind of creator who’s generating most of the content, but there’s all of these ways for the audience to interact with each other, which is new and exciting. And for those people to build relationships and also to connect back to the creator, and then they’re also offering streamers and writers a chance to get paid. In Twitch’s case, either get tips from their audience or get ad revenue from their content.

And then on Substack’s case to make revenue directly from their readers who appreciate these writers and what they’re saying. I am really interested in those three models because I think the promise of exposure, which is what I think people came to Instagram maybe for love and some now maybe more for fame.

But the promise of exposure feels maybe a little bit like monopoly money. It’s like, okay, so I have all these followers on Twitter, but I don’t know them. And, what does it do for me? Unless you’re Kim Kardashian or you’re pretty high up there it’s not necessarily a secure living either.

I’m curious about people who are actually going through economies of scale, able to support themselves doing their creative passion whether it’s video games or writing or we’ll see what comes next. But the downside of that is exactly what you said, which I talk about in the film. Which is that damn, it really starts to feel like the entire Internet is just a giant mall.

Every corner is about some kind of transaction. And that does get really tiring. And it makes you hope that someone’s going to come and do something radically different outside of just some of these like side projects that pop up. But I wish there were spaces where everything didn’t feel quite so transactional.

Petri: What are the places you hang out? You already mentioned some of those, but are there some emerging, new digital ways of finding the new instagram? Whatever it is, or maybe it’s just like offline and just to drink coffee and forget the rest.

Bailey: Yeah. I definitely do get a lot of joy from playing sports with friends. That’s my purest space. Digitally, a couple of places that I really like to be, one is I have enjoyed these voice-only apps. And I’m in Clubhouse, which is this semi-beta app, where a bunch of different people are in there and they can open up a room and then just have a conversation.

I don’t know if Clubhouse is going to get it exactly right. But I think there’s something interesting about that. About live conversation that’s not video or photo-based. I think that’s interesting.

Petri: Is it high quality enough? I was discussing with another person who was the lucky one to get an invite to the club as well. He said that he doesn’t feel like listening to them. It’s so low density in a sense of quality. You’re spending your time and you cannot just double speed or triple speed through discussing.

Bailey: That’s one of the tensions right now. They’re getting more professors and musicians who are playing in Clubhouse and people who are hosting conversations about topics that they’re really well versed in with people they’ve selected to come in. I feel like I’m able to listen in on three professors from two different from different universities around the world, and maybe some practitioners all together in the same place.

The other night I was listening to a woman and economist interviewing two of the leading psychological scientists, who were talking about social media and kind of in response to this film The Social Dilemma that I was in and I was in the audience. And so was Clubhouse’s founder.

And these professors were able to ask the founder questions that they had. And I just realised, I always feel like that one of the big challenges that we have is that people who are doing the deepest thinking about the world, academics and fellows are often really physically separated and not able to have casual conversations from people who are doing the building.

And then it was happening in their own Clubhouse. And I thought that was really cool. Sometimes there are really high-quality conversations and sometimes they’re extremely casual ones and you kind of pop in and out and just like bail on things that you don’t want to be in. One of the tensions is feeling you aren’t just there to listen to famous people.

If the quality is going to be good, maybe you’re just there to always be in the audience and not participate. It’s almost like too intimidating versus when the quality is low maybe you can participate as a regular person, but maybe you don’t feel like the content is super interesting.

Petri: Sounds like the new TedTalks.

Bailey: Exactly. That is the closest. It is like taking the experience of what I’ve heard the early Ted conferences were like online, just in terms of a lot of different, really interesting people, but it’s kind of like exclusive too, right? It’s exclusionary. Not anyone can get in there and you have to get like an invite and all that kind of stuff.

When those kinds of businesses or platforms try to grow the model doesn’t always hold. You feel like you’re always having a special conversation when you’re just putting with a stranger on the Internet who don’t have context about. I wonder about that, but I do think these voice apps feel alive and dynamic. But because you’re not in there with your photo or your video, it doesn’t feel so image-based, or about my body or how I look. And I appreciate that.

Petri: You can also do other stuff. I did an episode in the summer with Tom Mayer from Voicehub. That’s the European Clubhouse. We were talking about voice and maybe it was me who was phrasing this the decade of audio because there’s so much stuff. One of the cool things is that you can actually do other stuff because the video is not on. You can really chat and talk and jump in when you need and otherwise just make an excellent espresso or something.

Bailey: People are kind of sick of looking at their screens. And to be able to shut your phone and be there and go about and do whatever you want to do. Also learning and interacting is really nice right now especially during the pandemic.

But a couple of other platforms that I’m in and I’m excited about. One of them is in beta right now, but you can download it and it’s called Beams. It’s developed by a bunch of different Europeans and the product is a list product.

You can go like break a story or list of things or recommendations or recipe into picture and text, picture and text, picture, text, picture, and text. And if I want to share it with you, I want to share my favourite restaurants in New York City, or I want to document my favourite surf spots in New York or a recipe that I just cooked.

It allows me to just make a list that I keep forever and I can share and send to someone that wants to see that once they see something I know a lot about, or I care a lot about.

Petri: So it’s like Foursquare meets Notes.

Bailey: Yeah. It’s almost too maybe like a Pinterest that you make yourself except it’s kind of linear.

And I just get excited about that space because I think if you make a list or you break down the process of building something, you’re talking about something that you experienced, that you’re really loved and you’re really passionate about, and you want to share that experience or that knowledge with someone else.

And I find that people are most lit up and the best version of themselves in terms of their social interactions when they’re talking about their passions. They’re talking about things that they experienced or that they know a lot about, or they care a lot about. The format does a good job of pulling that information out of people.

I’m excited about that and we’ll see where that goes. And then the final thing that I’ll mention, which is kind of fun and a little bit radical is that one of my good friends who was an early engineer at Instagram has built an app called Untitled. And it’s not publicly available.

But it is old Instagram, so it’s Instagram without an algorithm. And it’s just the feed and photos and a user-curated discovery page. And he made it just because he missed this old format and he wanted to be able to see what his friends were up to and see creative things in the world.

And to have this version of Instagram that was made intentionally for my small group of friends that we get to use to see each other’s lives that don’t have major business incentives or an ad-model or this pressure of fame or posting too much and curating the hell out of what you post is awesome. I’m so happy with it. If I just had this, I would be totally content with seeing the people I cared about lives and the people I just don’t know by one degree of separation. There’s a lot that’s going to happen in the next three to five years and we’ll see how long this business has survived.

I feel like the market is dominated by some extremely wealthy, big players that tend to just buy the small guys. But I think we’ll be delighted and surprised by a lot of things that come out in the next five to seven years.

Petri: You mentioned passion. It’s all around us nowadays. And this is something I’ve been thinking. Everything is about passion economy more or less. You should consume things where you deeply care about the brand or you know what’s happening then you connect. Is this basically where everything is leading? You should be conscious of whatever you consume, whatever you do and should be passionate about those things? Is that getting a bit too much as well? Can I just be a bit stupid zombie sometimes and just not be too passionate about everything or is this the direction we’re going?

Bailey: I think that’s a great question. And it feels like a very realist European thing to say to an American. Yes, you’re totally right. There is a lot of that though. When I see the content on TikTok. There’s a lot of like goofy, funny, dumb I’m going to say shit. There’s a lot of goofy, funny, dumb shit on the Internet. I can watch a dog skateboarding down the street and just be like, wow. That’s funny. It’s not my passion. That’s funny. There’s a world out there for both of those things. In terms of the stuff that you share with total strangers, I just see that as a pretty good connective thread between people when you’re trying to acquaint yourself. If you can find with another stranger…whenever I find out someone’s a surfer, I love to surf. I can just get to another level with them instead of just being like, oh, where are you from? Where do you work? And, so I think kind of helping people connect over things that they know a lot about, or they give a damn about allows people who have no other context for each other to go a little deeper. So that’s why I get excited about it. But I totally agree with you that not everything has to be in that orientation.

Petri: How do you find people who love hedgehogs?

Bailey: The easiest way…

Petri: Don’t say you came to Instagram because of that!

Bailey: I know, well, there’s a lot of great ways and I am a person that loves hedgehogs. Let me tell you about that. The thing that is great about the Internet is if someone is really into hedgehogs, maybe they post a lot of photos of hedgehogs. They follow also a lot of hedgehogs.

Depending on whatever platform you’re on where there’s a follower model if you find one person who loves surfing or loves Shih Tzus, or is really into latte art. If they’re creating that content they a hundred percent are following people who are also like them. And so you can kind of go through these individually curated almost rabbit holes for sure.

Google still does a pretty good job. I am a hedgehog obsessed person and I was in Japan in January before the whole world shut down. And there are all these hedgehog cafes where you can walk in and hold hedgehogs and get your picture taken. Even in another country, I can just like put that I’m like hedgehog Tokyo.

So it’s not too hard to just find the tip of the iceberg and then it’s your job just to burrow in through different follower graphs is one great way.

Petri: Are there cafes like that in New York?

Bailey: This is going to reveal how much I know about hedgehogs. My permanent residence in the United States has been in New York and California. And those two States outlaw hedgehogs because they are carriers of foot and mouth disease. They’re not here. And if they are here, they’re illegal and I would love to know about them.

If anyone wants to drop me that tip, please let me know.

Petri: Am I in trouble now?

Bailey: If you’re listening and you have a hedgehog.

Petri: That was clever. You’re putting it out in my show.

Bailey: Yeah, exactly. Please, please pass a line through Signal or Telegram and let me know.

Petri: But unfortunately you’re not in social media. So you’re hard to find.

Bailey: I am, I’m on Twitter. You can totally DM me on Twitter. I leave that up for sure.

Petri: What is your favourite word?

Bailey: Right now, my favourite word is pepperonis. It’s a great word.

Petri: What is your least favourite word?

Bailey: The first thing that comes to mind is stupid. I don’t like the way it sounds and I don’t like people who call other people stupid. It’s an empty word. It’s a cruel, empty word.

Petri: What does turn you on creatively, spiritually or emotionally?

Bailey: Conversations with other humans. Eye-contact. People who are good listeners trying to be a good listener, creating something new through conversation with another person.

Petri: What turns you off?

Bailey: I think ego or I don’t know if ego is the right word but ungenerous motivations.

Petri: What is your favourite curse word?

Bailey: Hm. Cool. Probably bugger. Bugger! Especially the way the English say, which might be like a super horrible word. I’m sorry. That’s a great one though.

Petri: Is this becoming a trend? All the Americans I’m interviewing they’re just speaking, the British words. Is it fancier?

Bailey: Oh, my God. Yeah, we’ve just been totally propagandad that British English is beautiful and appealing. A hundred per cent I fell to that.

Petri: What sound or noise do you love?

Bailey: I grew up in Northern California. And there’s a sound of ruffling eucalyptus leaves and the forest leaves that when the wind would go through them that is very soothing for me.

What sound or noise do you hate?

Living in New York, if you are driving and the light turns green and you are not already moving your car right when the light turns green, you get honked at. It’s almost laughable, but just pushing you to be faster honk. That’s totally unnecessary in New York. It just drives me totally crazy.

Petri: What profession other than your own would you like to attempt?

Bailey: Loved to have been a sportscaster, for sure. I feel I would have had a ton of fun doing that. Live interviewing athletes or calling games. I would have loved to have done that. I love sports and I have a lot of fun being live and dynamic with people on a microphone. So I would’ve loved that.

Petri: Are you sure you don’t have a Twitch account?

Bailey: I should get one. That’s a good idea. That’s a genius idea. Excuse me. I need to go to it right now.

Petri: What profession would you not like to do?

Bailey: A lot of people in tech land love software engineers. They’re kind of the kings of the castle. The actual lived experience of sitting on my ass in front of a computer with a console open cranking Red Bulls and listening to techno music or whatever to stay in the flow state. I would hate that and will not be my thing.

Petri: If you could be a co-founder of any startup in any era, which one would you choose?

Bailey: That is a fun question. It’s hard to know that I’ve truly canvassed the options. One company that I really respect is This American Life, the radio show, which is really big in the United States. They make this deceptively simple, hour-long radio show that is so high quality.

And they only need 20 people to do it. And people who know it love it. They just like, just gush about it. And people who don’t know about it don’t know about it. And it’s a healthy, small business. That’s just extremely well respected. So I think something like that where it’s not too complicated to run.

You just do one thing and you do it really well and people really, really appreciate it.

Petri: Any final to the audience?

Bailey: The final words are the big thesis of that we got from all the communities that we met, who we were really impressed by, who were thriving and benevolent. Successful communities of all kinds, which is you build a community with people, not for them. With the Internet and the tools that we have today, it’s so much easier to communicate with, empower, find and connect other people who are passionate about something that you’re passionate about. But the orientation is different than what we’ve had for a long time, which is to build for others. And it’s really powerful to empower other people instead of just trying to do everything for them. Consider how you can be more progressively collaborative with other people in your life and empower people instead of control or manage and define the relationship with other people.

Petri: Thank you, Bailey. I think you’ve just solved the social dilemma.

Bailey: I hope so. Good Lord. That would be a hell of an accomplishment. You heard it here, people somewhere on my Wikipedia page where we’re going to say that I solved this when I need a Wikipedia page first.

Petri: Well, we can fix that,I guess with the audience. Everybody just contributes a bit. Do it with us!

But Bailey, we may need something from you as well. How about some Clubhouse invites?

Bailey: Oh, yeah, God, I need to earn them. It’s amazing. They only give them to you if you spend a lot of time in the app.

Petri: Can’t you just open the app?

Bailey: I could. That’s a great idea. There you go. Problem solved. I can do that.

Average Joe

October 2, 2020

Superheroes are fun to watch. It’s easier to put them into a box of something special. Most of us want to subscribe to the notion of extraordinary tech geniuses.

It’s cool to be working with some epic company and startup founder who is enjoying the limelight. Yet, the reality is that hindsight bias is always perfect. Success is evident only after the fact and before there’s lots of hype and hustling.

Average Joe tackles the heroism of the startup land. It unearths stories and research around how we learn, create and build. It provides practical tools and more importantly common sense to the hype-driven overdrive that is not actually anything new. The Great Man theory was already circulating in the mid 19th century.

Average Joe is on a mission to bust myths. It explores six different angles on the stardom and entrepreneurship and brings calming balsam for those who think they are not worthy and good enough to build their company.

The first myth is that it takes a genius to do something extraordinary. In reality, creativity is something everybody does. We may not have many eureka moments that spark amazing fully-developed ideas but neither have many of the people we consider geniuses.

Little moments of creativity are tiny steps and sparks that we encounter in day-to-day life and upon which we build our next steps of data gathering, analysing, ideation and conceptual mapping. Little moments take effort, and more work we put in the bigger the outcome. No genius gene needed. According to Robert Weisberg creative thinking is ordinary thinking and to create is ordinary.

The book reveals the creative processes of famous people from Einstein to Mozart and Winston Churchill. What appears as pure genius work is mostly hard relentless pragmatic iteration.

There are also some in-detail stories of famous tech companies or products that have made major breakthroughs in the last decades. The scientific research is intertwined with practical examples and revelations of little know behind-the-scene details of the actual work and slow progress.

The good news is that most of the creative process is just that a process. Is not tied to the person if you know the ropes. You can learn it and become better with practice.

For example, Einstein used thought fluidity as his method of getting a lot done. He worked simultaneously with many problems and switched between them often. In 1905 when he released four of his famous papers he had been working the problems for years before. The culmination of work is one thing but the actual brute force is another part of the process.

Nagging frustration of unsolved problems makes us push through and it takes subconscious work to put the missing pieces together. Einstein played violin and piano for letting his attention to slip into a daydreaming and mindless mode where the subconscious problem solving takes over. Mindless work can be anything from cleaning your house to sorting email as long as it does not require active attention but can be auto-piloted through.

The book introduces the Slow Create Framework developed by UCLA professor Jesse Rissman and the author Shawn Livermore that can be applied to any industry and any creative process requiring problem-solving. Our brain works with slow speed. We need to ponder, do back-and-forth type of iterations and start-and-stop often. The results can come fast but the process requires that you slow down your active mode. The framework helps to make this a regular practice if you don’t have a routine already.

Patterns, details and secrets are at the centre of the process. Patterns we learn by doing and details we gather with the knowledge and action. Secrets reveal themselves from the patterns and details, and unearthing secrets is part of the cyclical process that we spin for jumping from the unsolved to the nibbles of synthesis using the mindless work that finally unlocks the problem and reveals the desired inflexion.

Average Joe talks about the same topic that The Social Dilemma raised into the general public’s awareness last month. Tech industry has become very good at manipulating people’s behaviour to their advantage. In itself, it’s nothing new and other industries have been using the same methods for decades such as marketing and advertising but the amount of data, personalisation and intimacy of our devices make the issue more pronounced.

Mobile games and apps have become addictive, and this has been inflicted on us mostly with our consent. Yet, hacking our biological vulnerabilities is something that is a big ethical question for everyone to consider.

It is no secret that many entrepreneurs are contrarians, stubborn and have the beginner’s mind that is curious and fresh for asking the innocent and basic questions. First principals thinking and questioning of everything without yielding for social pressure is something that may be required to innovate big time. These are tools that can be learned.  

Edwin Land was puzzled by her daughter’s innocent question of why a picture cannot be immediately seen after taking it in the analogue era. It took Land many years, and numerous processes and problems to solve before he could introduce the Polaroid camera to the public in 1947.

Average Joe is someone who has a narrow focus, solves interesting problems and is adept in an articulate speech that tells compelling stories about the work he’s doing.

If you don’t want to subscribe to the gifted winner tale you have hope but the bad news is that it may require a considerable amount of ordinary work to make a breakthrough.

Good luck average Joe!

From products to an experience mindset

September 27, 2020

Jurgen Appelo – TALKS WITH PETRI

Jurgen Appelo talks about failing to find a product/market fit, how you pivot, adapt and move on in turmoil as well as shifting up to an experience mindset. He also warns about dangers in Canada.

From products to an experience mindset

Bio

Jurgen Appelo calls himself a creative networker. But sometimes he’s a writer, speaker, trainer, entrepreneur, illustrator, manager, blogger, reader, dreamer, leader, freethinker, or… Dutch guy. Inc.com has called him a Top 50 Leadership Expert and a Top 100 Leadership Speaker. Since 2008, Jurgen writes a popular blog at NOOP.NL, offering ideas on the creative economy, agile management, organizational change, and personal development. He is the author of the book Management 3.0, which describes the role of the manager in agile organizations; How to Change the World, which describes a supermodel for change management; Managing for Happiness, which offers you practical ideas to engage workers, improve work, and delight clients; and most recently, Startup, Scaleup, Screwup, which contains 50% inspiring stories and 50% practices to follow and dives into the major topics that business leaders and entrepreneurs are confronted with throughout the business lifecycle.

 LinkedIn | Twitter | Website

Transcript

(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri: Hey Jurgen! How are you doing in Rotterdam?

Jurgen: Hey Petri. I am doing well here. Thank you!

Petri: You started the corona experience a bit earlier than others. Last year you were on a summer holiday and a lot of things happened.

Jurgen: Indeed!

Petri: Can you explain how this drama started and then just like the Corona thing it never ended? I guess it’s still going on, but maybe you can explain what’s going on?

Jurgen: You’re well-informed. Last year, I went on a big vacation to Canada that was to celebrate my 50th birthday. I look like 23, of course, but I’m actually 50 years old. I invited friends and family to join me on parts of that trip because it was two months that I was in Canada touring all over the Eastern part of the country.

And right at the beginning, I think that at the end of the first week I had my first accident. I fell at the end of a hike in a forest on my face. I broke my teeth, I tore my lip. I broke a finger and it was a ghastly experience. I can tell you but I decided in the car on the way to the hospital, no, I’m not going back home, this is my vacation. I stay here, whatever happens, they can’t kick me out.

Petri: How many weeks were you in your experience?

Jurgen: That was the end of the first week and I still had eight weeks ago.

Petri: Did you already turn 50 or it was like, okay, this was still in the first 50 years?

Jurgen: No, I turned 50 2 weeks later with my hand in the cast. So that was the first accident. And then I had another one later, I broke a toe at the end of the vacation.

Petri: But you resisted. You were just going on, no turning back now!

Jurgen: Yeah, exactly. The funny thing is I had been reading about Canada, of course, upfront and they warned me about the bears and the other dangers in the country. But nobody warned me about the rocks. They are much more dangerous apparently.

Petri: I bet they are fighting back.

Jurgen: Right. Exactly. Well, Canada was not able to kick me out and I had a super enjoyable vacation. But that was just two of the things that happened to me in 2019. I also had a bit of a problem with my startup that sort of failed temporarily last year. I say you only fail when you give up and I haven’t given up. It’s more or less in a hibernation state and you could say at this moment and ready to reboot. I lost a lot of money on that. And other things happened. I fell off my bike in Brussels and I fell while running and I had all these accidents all year long. Basically, I prepared for 2020 when the rest of the world had entered into a state of suffering.

Petri: I wonder what you had been eating in Canada if you haven’t been to falling in all the possible places and ways before.

Jurgen: To be honest, there’s a lot of french fries in Canada, a lot of fatty food I was not very impressed with. I was impressed with the scenery and impressed with the people. Very nice. I was not impressed with Canadian cuisine. There’s a reason why there are no Canadian restaurants in the world because why bother.

Petri: You’ve been writing many books and it seems that at least every 10 years you write a book about the experience for you’ve been learning that the previous decade and the one which came out last year, it was called Startup, Scaleup, Screwup. And the company you were just describing, Agility Scales, that was pretty much on the works while you were writing the book. So what happened? So is this just like another pivot or can you walk through a bit how it gets started and what about the reasons that you needed to sack the team and, and put the company in hibernation?

Jurgen: The idea for that company was, and still is, that I believe we need more gamification, more intrinsic motivation to achieve organisational change. I was inspired by all these apps that we have on our phones that use gamification to motivate us to change things in our personal lives like mindfulness apps and I use running apps and, and all these personal apps that we use.

And I thought, okay, how about extending that to organisations? We want people to change behaviours on teams and in their companies to either be more agile or to initiate a digital transformation or whatever. The idea was let’s try gamification with an app. I hired a team and put a lot of work in it, put a lot of effort in it. I did crowdfunding and everything.

And in the meantime, I wrote a book Startup, Scaleup, Screwup, which was fun. There’s no better way to learn something than to write a book about it is what authors often say. I did a lot of research into starting up and preparing to scale up, but things didn’t work out. That’s something you know as a startup founder that there is only a small chance of succeeding and you start against all odds believing that you are the one who will beat the odds. Of course, because if founders we’re not delusional like that, nobody would start a new company. We all believe that we are the ones who are going to beat the odds and apparently, obviously I didn’t. Things failed and didn’t work out.

We did not achieve product/market fit. People said nice idea, a nice app, but they were not using it. And the whole point of the app is that people have to use it, of course. While we ran out of money, I said, okay, I need time to rethink this whole thing. I had to say goodbye to the team. They fully understood that we had failed together. I had to focus on other ways of earning my daily income. And in the meantime, rethink the idea for Agility Scales. The company still exists. It just doesn’t do anything at the moment but everyone still has their shares and everything.

And that’s perfectly normal and this happens all the time that startups fail and they flounder a bit and then they reboot with another way of trying to achieve the same thing. And that would be a pivot if you try it again but differently. And I’m in the middle of that.

Petri: Just a bit of tongue in cheek, so did you not follow your own advice or the advice in the book is not correct or it is just so damn hard to make all things work for a product/ market fit?

Jurgen: Well, it’s damn hard, indeed. And nobody says that a book will give you a guarantee of succeeding if only that were the case. You can give a tremendous amount of tips and suggestions and follow them yourself, but that might increase your odds a little bit. But still, there’s a huge chance of failing because there are so many odds against you.

Things happen in the environment that nobody or very few people predicted as we see this year with the coronavirus crisis. There were very few people who predicted that but everyone else has to suffer the consequences. These things are just part of business life.

Petri: Did you follow the design thinking and lean startup methods in your own development in the company?

Jurgen: Yes. At least, to the extent that we could but never enough as it turns out later. The whole idea of design thinking on startup is that you need to have short feedback cycles with your customers and you show them experiments and prototypes and see how they respond to what you come up with.

And we did that well in the sense that we had continuous releases. And, we had so many interviews, so many conversations with our early users. That was good. What we did not do well was the idea of just observing how people behave in their natural environment.

Just seeing what their problems are and where your solution could be used to overcome certain obstacles. That is what we did not do. We basically had a backlog of suggestions and requests from users and then we implement the suggestions and then they were not using the features. That’s super frustrating when people ask you for stuff and you make it, and then they’re not using it because it turns out not to be motivating for them.

In hindsight, we listened too much to what people wanted and we were not focused enough on what they needed given the environment in which they worked. Because perhaps an app was not an obvious choice. Maybe we should have looked better at how people work with each other in their environments.

And maybe we could have come to the conclusion that using an app with team members that would not be an obvious way to go about it given what we wanted to achieve. We were stuck in this direction of having an app and trying to make that work and then soliciting for ideas. Lots of people had lots of great suggestions and then we implemented them and then they didn’t work.

We did well in terms of feedback cycle and getting input, but we did not do it well in terms of just looking, just observing people. I think that’s not just for me but for many other people a great learning opportunity that you sometimes just need to shut out the conversations and just use your eyes and observe what is happening here.

Petri: Sounds to me that you were having some assumptions. One of the assumptions was that you need an app. And from there you started to take the input.

Jurgen: Correct.

Petri: Another way would have been to do it by you just go in there like Kadri Tuisk, just a few episodes back, was talking about that she was in the 500 Startups at the time, in the West Coast, and she just went to a lot of offices. Sometimes she was pretending to be a co-worker or with some other cover story. She was just observing people what they were doing and that was a way to get a lot of information. And not having that it needs to be an app. Maybe it could be a desktop thing or something else it would work. But it’s hard, isn’t it? It’s quite hard to actually infiltrate offices and go to the people and knock on the doors and say, Hey, can I come in? I don’t bother you but I will stare at you intensively for hours.

Jurgen: Sure. Yeah. Everything is hard. Entrepreneurship is hard. Nobody ever said that it was easy, it’s fun and it’s exciting. And because it is difficult, if it was easy, it would be boring. It’s something that is fun to try and fun to do, but indeed, as you said some avenues that might be the better ones could be the hardest, and then it’s easy to take another road that seems easier.

But that actually gives you false information or false positives, but you thought you could get the same information only in an easier way. In hindsight, everything is obvious. They call that retrospective coherence in complexity science terms. Looking back, everything is always obvious, but then when you’re in the middle of things, things are not obvious.

Even with six, seven people on a team, you make decisions together which in hindsight you think, well, that was stupid. It was totally the wrong thing. We had six, seven smart people on team we discussed for hours and none of us saw this and saw this coming. You feel like an idiot all the time as an entrepreneur.

Petri: That’s a great learning experience as well, and I think this is the way to also to succeed, being humble and always open to the signals. And they are usually not the strong signals. It’s like weak signals coming. And another thing, what you say is that you were listening to a lot of signals and wishes from the customers.

But I think there’s a difference that if you ask would you like to have this or would you buy to get this. A huge difference there, it’s easy to say that, yeah, probably I would like that thing, but to hand over the money and say that I desperately need this thing. Is there a way to actually get to the latter one?

When you’re testing things that could you somehow get the sort of revealed preferences from people in a way that this is more actionable and they have to commit a bit more to the whatever they’re requesting?

Jurgen: Well, I wish I had the perfect answer to that. And, I don’t. I realised and I wrote a blog post about that that something we did wrong was we had something small that didn’t work. And, based on our own assumptions and our ideas and some input from customers and then we added things in the hope that that would make the app work. Usually suggestions from users and then it still didn’t work.

And then we kept adding things in the hope that one of these new things would finally make things work. And then ultimately we had a big thing that didn’t work. You keep adding stuff hoping the next feature is going to be the one that’s going to be the killer feature that everyone was waiting for.

And then, nope. Nope. This one didn’t do it. Nope. This one didn’t do it. That’s the wrong approach, evidently. I learned from that you just have to keep trying things until you have one thing small that works and only when you have one thing small that works, then start adding stuff, making it bit bigger while keeping it working.

And as long as you have not something small that works, don’t even bother adding stuff. You should just replace stuff, throw things out and replace with something else until you have something small that works.

Petri: In Startup, Scaleup, Screwup you also state that lean start method has things which are missing in the beginning. And then the design thinking it’s cutting corners at the end and you have some ideas on how to improve this process. And you have your own name for that as well. Can you elaborate a bit about that?

Jurgen: Sure. Well, first of all, the way you phrase the question implies that lean startup and design thinking have a beginning and an end. And, I would disagree with that because they are iterative approaches. There’s not really a beginning and an end. They are circles, basically iterative approaches of things that you would need to do to make things work, to run experiments and try things out and show prototypes.

But indeed there’s stuff missing, in my opinion, in the famous picture that says build, measure, learn. It starts with “build”. Well, what do you build? Where do the ideas come from? The lean startupers say get out of the building, go and see where your customers are trying to get their jobs done and observe what they do.

Same as design thinkers do and they call it empathising. But it’s not in the picture. The picture just has build, measure, learn. I think half is missing, which is that whole part of design thinking is great at. Design thinking says empathise and then synthesise and then come up with ideas, hypothesise.

Or they sometimes they do use different words like ideate whatever. There are different design thinking models but that’s great. Design thinking models explicitly mention those steps from getting out of the building and empathising with customers. But then they take a shortcut at the end, which is the learn thing in the startup build, measure, learn.

In design thinking that is not specifically mentioned that step. It’s sort of meant implicitly, but I appreciate that it is an explicit step in the startup. What I did, I merged the ideas. I said, well, it’s 90-95% the same thing that they’re talking about, only they come from different parts of the world.

Lean startup is obviously from Silicon Valley and the startup scene with Eric Reese and Steve Blank and other famous people. Then others came up with design thinking stuff. It came more from the corporate world where companies want to create new products that would be innovative and successful.

And they turned that into something defined as design thinking, closely related to service design, which is very similar. They mean the same thing. An iterative process, lots of prototypes, minimal viable products, look at how people behave. What is their job to be done? And then you run tests and experiments. All the same thing.

I turned that into a new picture. I said, well, I don’t like the word circle because that makes it a bit like a discrete step by step thing, which innovation isn’t. I know from experience that it is a messy process. It is anarchy. You can do things of various steps on the same day just depending on constraints and which people are available, et cetera. In the morning, you could be observing customers. In the afternoon, you could be checking the results of the latest test, and so on. I said, okay, I’m going to call it vortex because I found that as a synonym for circle.

And I thought that’s a great word. Vortex is nonlinear dynamics. That sounds powerful, turbines, whirlwinds and tornadoes. Those are vortexes. So vortex is a better word. I called it the innovation vortex.

I mean exactly the same thing as design thinking and lean startup. I have no disagreements with what the methods are meant to be. I just don’t really like the pictures that they usually come up with. And in particular, the design thinking pictures, they often look very sequential with five steps after each other. And that’s just very wrong because then it looks like a waterfall process and that’s not what you want.

Petri: What comes after lean and agile?

Jurgen: What comes after lean and agile? Yeah. That’s, that’s a question that people ask me sometimes. I’ve always said that maybe at some point we’re not going to call it agile anymore, but it’s…

Petri: …business as usual, you mean?

Jurgen: Yeah. It’s just business as usual. Yeah. It’s just the way we run things nowadays. Like fish have no word for water. That’s a part of life.

There’s no way back. A few people use the word cyber nowadays. That’s a word we use in the eighties for cyberspace because that was special. But now the Internet is everywhere. It doesn’t have the word cyber around us anymore. We have it now that thing that we predicted in the eighties.

I think with agile is the same thing. The word might go away. But, I do think, and that’s a realisation I had just recently in the last couple of weeks, the next problem to solve is the holistic experience of users and customers. What I mean by that is we made a switch in agile and lean thinking from projects to products, which is a good thing. You don’t hand off something to another department when you’re done or you are responsible for a product across its lifetime from start to end. End-to-end responsibility is something that everyone is being taught in the agile world, but the word product is everywhere.

Product backlog, product roadmap, product owner, et cetera. Everything is about the product. Actually, the product is only part of the entire experience of a user and a customer. They have more experiences, touchpoints, with the company. I’ve been asking this week on Twitter and Facebook of my followers: do you have examples of products that are great, but overall the experience sucked after all? And then usually it is where customer service disappoints you or marketing is a huge pain or whatever. There are reasons for people quitting their association with companies or not using products anymore. Even though the products are great, they just don’t like the business, the company as a whole, because of other parts in the organisation. Vice versa is also possible. I had people say that some products were mediocre at best, but still, they love the company as a whole, because of its philosophy, of its purpose, of great customer service or the marketing is awesome or they add free lifetime upgrades or whatever.

We have to realise that the product is just one part of the entire experience that we offer to customers and users. And even when we switch from project to product, we are still sub-optimising. We are still basically handing off something and say, well, this is the product, good luck with it. This is what we are responsible for. All the rest, service, marketing, finance, et cetera, you need to be with other people. That’s not our stuff. Well ,then that could lead to still dysfunctional results in the company. For the customer, for me, it doesn’t matter to me, which part of the experience is product and which part is service and which part is marketing. It’s all one company that I am paying to get my job done. I think that’s the next step that we should make in agile.

Petri: Have you already coined a term like experience design? You start from the experience and then you build that first and then you put the other blocks in there, like the physical or the intangible digital products in there and the solutions. But you start with the feeling.

Jurgen: Well, the word journey is often used by marketers, the user journey.

Petri: But that has an end and beginning already, it’s from A to B.

Jurgen: Yes. The beginning is becoming aware that a company exists without paying them yet, but there’s already a relationship. That’s where your journey starts. You arrive at the website or you download an app from Play Store or App Store or whatever. The journey starts off before there is even a customer relationship. It starts earlier. And the journey ends when the customer or the user says, okay, that’s done. I don’t need this product anymore. Or they don’t like it anymore. Then the journey is over. That entire journey from beginning to end that is one experience. Now, the word user-experience sadly is already used for something smaller, which is the actual interaction of a user with the product. But I think a bit more holistically here.

The word practice of journey mapping is well known in service design and design thinking. We need to do more of that. There’s something that I myself also need to do more of. To give you a very practical example. I have been impacted by the coronacrisis myself.

I did a lot of speaking engagements in the past. There’re so many invites I got that. I could accept only half, maybe less. And that maybe makes you a bit arrogant at some point. You say, well, this is the product that I have take it or leave it. I have others if you don’t like it.

I was so busy I turned it into something that was somewhat standard. This is the offering that I have. I’m happy to come over, but I cannot customise endlessly because I have no time for that. But now, I don’t have that luxury anymore. The world has changed. There are basically almost no events.

I am doing other things now, but I am trying to customise the experience more. Last week I was in Southern Germany and the organisers also had to adapt their approach because normally they would have invited hundreds of people to an event location. But of course, that didn’t happen. They just invited me and a couple of other speakers and they did live-streaming from a studio. That was awesome. That was a new experience for me.

Petri: And it looked awesome! There are some tweets the audience can check in your Twitter. He was there, an impressive setup!

Jurgen: That was super cool. It was also for me a new experience. It is good for organisers that they come up with new ways of organising it because people still want events. They just cannot be at traditional events anymore. But that makes me rethink my role as a speaker.

Instead of offering something that is a standard package, well-defined, these are the benefits that I offer. I have to be more of an interactive element in that experience and just check with the organiser. Okay. What is the experience that you’re trying to offer to your customers and what can be my contribution here?

That’s exciting. I’m trying to apply it to myself as well. To get rid of the product mindset and then switch to a more experience mindset.

Petri: I think this is actually a really good opportunity now because we cannot do it live and the live also sets some limits. You need to be somewhere in the stage and there’s a lot of people, not everybody can talk at the same time, ask questions. It doesn’t really work. Now we have the digital ways of doing things. We can take a lot of questions in. People can join from their own side of the world and speak directly and even have a video picture there as well. This is a great opportunity to enlarge the circle in a way to make it more engaging.

Obviously, the tools are not exactly there yet. We already have some ideas about how we can get more people involved in these activities. I think the live is going to be the new gold in a way that people want to have this like previously before in the physical but really interactive sessions, even with their peers.

Jurgen: Yeah, for sure. There will be a lot of innovation. Never waste a good crisis is an old saying. It’s cliche, but it’s true. Event organizers and speakers and others are scrambling to come up with new ways of solving people’s problems because the needs are still there.

Companies still want to transform or they have to transform now more than ever, and they need some help, but traditional conferences is not an option at this moment. What else can we do? It’s a great moment to live actually. It’s difficult from a financial perspective for some of us, but it is exciting that some of this disruption is taking place and we have to figure out our own role in that.

Petri: Some six months ago or last year, you needed to let the team go. And you were like, okay, the company goes to hibernation and then corona hit. But that was a new opportunity for you as well. You started to actually double down on the things you were already building. You had a following. You had a business model going on for the last decade.

And I think now you’ve been starting to get traction as well. So how have you been adapting and pivoting to the new model? Can you explain a bit, how do you build a community and how do you see the future?

Jurgen: What I’m trying not to do is something that I have never done before because I don’t like it. And that’s coaching and consultancy. I am in awe of people who do coaching and consultancy because they have a very important job. But it never resonated with me. I have always said tongue in cheek way I’m more interested in my own problems and other people’s problems that are much more interesting to solve.

Petri: Much more personal!

Jurgen: Exactly. Yes. I have always tried to come up with other ways of generating revenue while working with coaches and consultants who are doing an amazing job and maybe helping them to get their jobs done.

So that’s why I have created workshops and workshop licensing successfully. And I still do that with my new Shiftup brand. I did that with Management 3.0 in the last 10 years. That company is still going strong. It’s amazing to see what the team is doing but I’m not directly involved anymore because I just wanted something else.

And so I started a new brand called Shiftup. Also doing licensing there, but also doing webinars, for example. Because I wanted to try something new. A new format, a new approach, at least new to me, of course, webinars already existed. Just this week, for example, I did a webinar with live streaming on Facebook and that was super cool.

I will definitely try more things there and part of my new business is that I’m trying to aim for membership because I believe that membership of the community with exclusive access to certain types of content, to my time, to each other’s time, are the benefits some people, a portion of users are willing to pay for. I am a member of several other communities because apparently, I find it beneficial to have that exclusive access. I pay for that because it adds something to what I already can find for free. There’s a ton of stuff available for free on the Internet, of course.

What is most precious now is people’s time. And that means that needs to be charged for at some point if you want access to somebody else’s time. You cannot just demand that for free that somehow someway that needs to come with payment. And that applies to coaches and consultants.

That also applies to me. I’m trying to do that with a different business model, which is membership and that is taking off. It’s not like my income from speaking a couple of years ago, but it looks good. I’m going to run many more experiments in that area.

Petri: For the book, Startup, Scaleup, Screwup, you were interviewing a lot of people. In the book, there’re a lot of stories as well. Can you describe some of the stories? Maybe they’re not even in the book or something, which is memorable after two years after writing the book and hearing the stories. What is really well done in the Nordics and Northern Europe considering other places and something to the mention and maybe give some tips for entrepreneurs building their company at the moment?

Jurgen: First of all, I suggested to the publisher that I wanted to do interviews with European startups and scaleups because there are plenty of books on the market for startups, and they usually come up with the examples of Silicon Valley. It would be a bit too expensive for me to travel up and down to Silicon Valley all the time, me living in Rotterdam, the Netherlands.

Then it was Brussels in Belgium. But also because I think there are lots of companies that we can be proud of here in Europe. So I said, let’s reach out to my friends. I have people that I know everywhere in Europe because of all my travels. My followers eagerly invited me when I asked them to come to their offices.

I ended up at Spotify in Stockholm. Booking.com in Amsterdam and plenty of other organizations. What’s cool is, maybe not that they are so fascinating in their own right but that everyone struggles with the same problems.

It doesn’t matter which company you come to. It’s like, Oh, they have exactly the same problems that I have only at a much bigger scale.

Petri: Somehow that’s comforting to know.

Jurgen: Yes, it is comforting, but still they do some things, a few things really well, and that then stands out. Like I was at N26 in Berlin. The company that does payments, a mobile bank. They had a super cool way of running experiments. They had virtualised the entire technical architecture, and it was for then much easier to run experiments with new software than it was for a traditional bank, which is exactly the reason why they were able to grow so fast. Because they were able to try things out without harming the existing infrastructure and platform that was already in place for a couple of decades. They had no legacy to protect that gave them an advantage over traditional banks. That was super cool to watch.

Petri: A quick question. Did that come for them out of the necessity of scarcity or some other constraints or was it something they were building on purpose from the beginning?

Jurgen: I think they were building it from the beginning. I’m not sure, but they are very smart people. Patrick, the CIO I spoke with, I’ve known him for a while, and he was already in the agile community before I was there. He knew the principles of what it means to be in an agile business.

They knew what they were doing. It was not like they stumbled on it by accident. I’m pretty sure. I was in Tallinn at Pipedrive and TransferWise. TransferWise is a tool that I use myself super convenient for people in need to do financial transactions across the world.

And the idea is very simple, but implementation is quite a challenge for them. The nightmarish part of their business is all the interactions that they have with local governments or local compliance because they deal with financial systems in many countries in the world.

And they need a local player who knows the local way of sending and receiving money and then virtualise their own system on top of that. Very fascinating to talk about the issues that they ran into.

Petri: Also how they started their business. They were studying in London and they needed to send money over and that’s how it started. There are some podcasts where their story has been told. I really can recommend it. It’s really fascinating. This is the typical way that the problem finds the founders and not the other way around.

Jurgen: Yeah, exactly. One that I should mention is one from Finland. I was at Rovio, of Angry Birds fame. What was the most interesting there in my opinion or from my perspective, at least, was this whole idea, a concept of having lots of ideas for games, but only a few ultimately make it to become a successful game.

And they have like the whole startup world that exists within the ecosystem of Rovio itself. Lots of employees and people come up with ideas and then they run experiments and then they go through a number of stages where more and more drop out until they have some that really work. And then they have trials and beta testers, et cetera. I don’t know the percentages of the top of my head, but maybe out of all the ideas that they have for games, maybe only 10% ultimately make it onto the app stores. And then only a small percentage of that actually is able to make money. Because it’s like with movies and music, there’s a small percentage that has a high return on investment and that pays for the entire business.

The other 95% or whatever is either losing money or just barely profitable. I saw that as a mini-ecosystem that reflects how the whole startup world is working. Only the interesting thing is much faster because they have these turn around times, these cycle times, that are just a couple of years that whole cycle of startups, scale-ups, screwups that I described in my book for products. At games company like Rovio they have that in just sometimes a few months or not more than a year or two. And then the game is done. It’s over. Nobody wants to play it anymore because people want the next game.

Petri: The same is happening also in Supercell that has been hugely successful. And, also with Rovio’s beginnings, I think Angry Birds was plus 50th game. So 50 trials before you’ll get something that really works and you obviously are in dire straits before that. We should somehow more emphasise that failure is the normal thing. That’s sort of the normal and it’s exceptional to succeed and it’s so difficult to remember with biases on all those successes which are really rare.

Jurgen: Exactly. And thank you for the encouraging words, Petri. That makes me feel, at least, not embarrassed. It’s part of the business and many entrepreneurs, as I said, have to be delusional thinking that they will be the ones who will beat the odds while there is a huge chance that they won’t. But we have to not feel embarrassed about not having made it, not having reached that pinnacle of success. Okay. I’ll try again with another idea. I don’t really feel embarrassed. I feel pity. I sometimes feel stupid for having made wrong decisions, maybe in hindsight.

But as I said, that’s always obvious in hindsight, but never when you’re in the middle of things. But you should never feel embarrassed for having tried and not having succeeded. As long as you learned what you did wrong, you can do better next time. And they did that with Rovio and took them 50 iterations, apparently, before they stumble upon on Angry Birds. I hope it doesn’t take me 50 iterations, to be honest, for my next success. At least it is okay to fail nine out of 10 times.

Petri: Actually, the statistics are on your side. It’s a myth or it’s that confirmation bias for who succeeded that when you were young, you hit gold. It’s when you’re in your thirties, forties, fifties, and you have a lot of experience it’s more likely that you will actually make it big.

Jurgen: That makes a lot of sense.

Petri: It makes sense because there’s pattern recognition, there is experience. You have the network. You already know what’s working, what’s not working and have a sense of these things, but obviously, it’s hard still. It’s a lot of timing, luck. Things which are not under your control. You try enough times and you will succeed. Just the regular VC model as well. Out of 10, there’s only maybe one which pays the whole fund. And, that’s accepted in the financial model already there, but still, I think is it’s never nice as an entrepreneur to understand your chances are not exactly on your side. Maybe you have to knock 20 doors and then you get the real hit.

 Startups, Scaleups, Screwups, it’s a really good book, so that’s why I’m talking so much about it as well. One thing you mentioned there which I haven’t seen too often described is that within your business, your products or your business lines, if you have a bit more of them, they can be in different cycles and you should treat them as sort of separate businesses.

That’s something that might be also hard to understand. Usually, we just think like in a startup you have just one line of business, one business, one product. But if you’re doing different things, their revenue models, the business models might be different and they may be actually in different stages.

And I think that’s quite important to understand as well. And that’s what’s really nicely put in the book.

Jurgen: That is one of the core ideas in the book that I believe distinguishes itself from other literature in most particularly in the agile world, where we often assume that a company is in a lifecycle stage or a company needs to be transformed in a certain way. While I say, well, actually you need to look at the level of the individual business units, individual types of products. Just take the famous example of Apple. Apple has a number of ways in which it earns money. It has the iPhone and other physical products, but it also has Apple Plus TV or whatever they call it. They have their App store. They have different ways of making money at different income streams.

And there are different business models that need to be treated in different ways with other architectures and technologies and maturity of the ideas behind them. When you look at them as a family of business units, then suddenly things start to make sense in the way you go about digital or agile transformation.

Because as I often use the metaphor, the analogy of a human family. We do not treat our children the same as we do our grandparents. I hope we do not treat babies the same as teenagers the same as adults. There need to be different rules and different kinds of behaviours for people depending on where they are in their life-cycle stages. And kids, we allow them to play and experiment because they will need all the experience for when they achieve adulthood. It’s the same with startups. They’re mostly in discovery mode and not in delivery mode. Hopefully, at some point in the future, they will be profitable then they will mature.

And then they have to be like the parents who raise new kids who create new products. Apple does that quite well. There was a time when the iPhone was 70% of Apple’s income and that worried investors. If your business is dependent on just one type of product then that could be dangerous, but that has gone down to below 50, maybe even lower by now because other income streams have become more important for Apple. That is crucial because there will be a time when the iPhone will have started up, scaled up and screwed up. It’s done. iPod is not being sold anymore. It had it lifecycle. It saved the company. It did its job. But it’s gone.

That family member has gone through its entire life-cycle. The same will happen to the iPhone. The company has to continuously reinvent itself as games companies do by always coming up with new games and they go through their own life-cycle stages and they need to be treated differently. That is a mistake that we sometimes make in the agile world where we see an entire company as one thing and then we go in with an agile transformation or whatever. But you need to go step deeper and look at individual business models and then have different approaches. Because the kids, the immature ones among the business models, they will probably need a different approach from the adults. And maybe the ones that we could call senior citizens among the business models maybe we should just leave them alone. They had most of their life behind them. They paid for the whole business. Maybe we should just be respectful and say, well, thank you so much for having led this family. You can just enjoy the last year that you still have. We’re not going to make you do new things. I think that is a healthy approach.

Petri: I was just thinking that in gaming companies, also in Hollywood productions, usually even these huge products they put out, they called projects, which sort of implies that there’s a beginning and end, but it’s like a project. But when we have a regular startup or company, they are products. They have a sense and feel like it’s permanent.

But if you treat them like projects and you understand that this is now what we do but it’s not us. It’s the company what we are having, the culture, the problems we’re solving for the customers. There are different approaches and it’s okay to start new projects and some projects will end.

And that’s a good thing as well. And in games and movies and TV-series, there’s an evident life-cycle. But pretty much, probably the same if you think about software products as well. They don’t last that long nowadays anymore, maybe three to five years. And then it’s obsolete for whatever reason.

Jurgen: Right. Exactly. And I think it’s different for different kinds of products, of course, because you can’t really compare a movie with a software product in terms of how we go about the management of their development and their release. Because obviously with the movie, there is an obvious endpoint that’s the end of the project.

The movie is done, then it’s released and nobody touches it anymore. It’s just being distributed. With software, it’s very different. That’s why agile is preferred to switch from project mode to product mode, keeping the company responsible for the product until the end of its lifetime. But indeed there is an end.

We just should just embrace that and say, well, nothing lives forever, not even our software. Let’s just prepare for that and just accept that the company has to keep reinventing itself.

Petri: You love lists or at least top hundred things. At one time, I think your website was really hitting the limits. Maybe 20 years back, you had the most traffic, at least in the Netherlands. Well, you can just briefly explain what was that about, just for the curious ones. And then I have another lead-on question, but let’s start by how did you actually make through the .com boom and what happened there?

Jurgen: It’s one of my favourite stories. So some people may have already heard it. In the nineties, I had this hobby project going and that was from 1994 until the end of the nineties. I had this top 100 list of the most popular PC-games in the world. I started that before there was the World Wide Web. That was on Usenet.

Some people may remember that, newsgroups on the internet. I was in university then, and I just collected votes from people in the newsgroups for their favuorite games. And then that turned that into a top 100 list. And that turned out to be super popular because people just wanted to know what games to play.

I sent that over email to people once per week, the news list. And then when the World Wide Web became a thing I turned that into a website. A fairly simple HTML and everything that I hand-coded. That became very popular as well. I was one of the first to get an account at the first internet provider in the Netherlands, the first commercial one, Access for all.

At one point, they reached out to me and said that my website was going through their bandwidth limit that they had at the time. And they said yours is the first one to do that is not about porn. And I thought it was a great compliment because my simple HTML page was competing with porn in terms of traffic.

That led to the obvious conclusion, I should turn this into a startup because I was making money with advertising and sponsorship. That was ’97/98. The conclusion was obvious. I need to make this a startup. I wrote a traditional business plan of 60-70 pages.

Petri: Your first novel!

Jurgen: Yeah. In hindsight, I call that my first work of fiction. It had all these diagrams of things going up like revenue would go up according to my plan and profits would go up, everything would go up. My ego would go up, everything would look wonderful.

Petri: So it’s a classic hockey-stick!

Jurgen: Yes. I was really good at drawing hockey-stick pictures. It looked fantastic and it was convincing apparently because I became the Entrepreneur of the Year in the Netherlands with that business plan and my existing business, that was making money as a side project, as a hobby, because I had a daytime job. So, I focused on just the startup.

I got investors interested, and that was December ’99. I hired people. And then two months later, the Internet bubble burst. Now, you should play some kind of sound in your podcast or something.

Petri: Yeah, drum rolls. Oops.

Jurgen: Two months later everything came tumbling down. I just had hired five people and we were there in our little office in Rotterdam. My income from advertising decimated literally in two, three months. It decimated. There was almost nothing left. I was quite frantic. What do I do now? We had other ideas, but none of that worked because nobody had money.

All the other internet startups. They ran out of money as well. I was quite a chaos.

Petri: The crazy thing was that you still had the traffic, people were still playing games.

Jurgen: Oh yeah.

Petri: There was just no advertisement to show.

Jurgen: Exactly. I had no way to monetise it. I was trying to sell patents and whatever, but none of that worked. I just had to close the business. I was really tired after two years. What was one-half year of frantic looking for other solutions and all the money running out that I had received from the investors.

They didn’t care because they had invested in another startup just before me and that one hit the jackpot. I don’t remember which one it was. They didn’t care at all what happened to me, fortunately. That was it. I just wrapped everything up. I asked my employees in a friendly way to please find another job because in a few months I won’t be able to pay you anymore. And, and that’s it. I vacuumed the floor, literally myself of the office, closed the door and found myself a decent job.

Petri: That’s almost 20 years back. Because you could have described the spring this year.

Jurgen: Yes. That was indeed 2001 that I closed that venture. I call it now a two-year entrepreneurial workshop that I did back then. I learned a lot. It was super exciting. But I had to lick my financial wounds and become employed as a normal person. I was then software developer, development manager, chief information officer. And then that led to my first book, my role as a manager in a software company and introducing agile practices. And the rest is, as they say, history.

Petri: And the pressing question. What was the game of the decade in the nineties in the top list? Do you still remember?

Jurgen: I remember. Civilization was unbeatable. It was in the number one slot for such a long time that I got tired of it. I thought, OMG, please stop voting for Civilization. We know it already. That is a good game. Give the others a chance, but people kept voting for Civilization. That was a big one.

And the others, Descent was at the time a popular one. Doom, obviously. That was my era of playing computer games.

Petri: You have been doing lists as well in books. And I think it was 150 books you were listing in the startup field. What’s your favourite at this point?

Jurgen: I make lists all the time because I love lists. My favourite, I don’t think I have a favourite startup book, to be honest. There’s not one that comes to mind right now. Maybe I would say the obvious one is The Lean Startup.

Petri: You lean into classics.

Jurgen: Yeah, the one by Steve Blank before that The Four Steps to the Epiphany.

Petri: I think there’s a new version of it out already.

Jurgen: Right. Okay. But those were obvious. They’re really good books, so everyone should read them. But it’s a bit, yeah. Okay. Been there, done that.

It’s more interesting to talk about briefly the latest one that inspired me. That is also really good for startups. I think it is The Context Marketing Revolution by Mathew Sweezey.

It came out earlier this year and it is about the idea that traditionally in the last 10-20 years we’ve been focusing on creating content, making content, blog, posts, podcasts, whatever, to try and get people’s attention and, and to get them hooked to our stuff.

And then hopefully there’s a business model behind it that will allow me to make money. And this book basically says, well, the world has changed without us realising. There’s more content produced by people than by us content producers who see it as their profession. It has become impossible to compete with all the stuff that people put out there on TikTok, YouTube and whatever.

And that gets worse and worse. We’re drowning in content. We’re drowning in the noise. So you need a different approach. Give up the idea of creating just exclusive content and hope that people will come. You have to have a different way of getting people to sign up to your business model or whatever that is. Content will play a role, but it could be the content that users themselves create. Maybe you can see a future for yourself where you do not create the best possible blog posts, but you are a curator of what is created by others. And that role will then somehow lead to people signing up for your product, whatever the product is. It’s a different way of thinking.

That was for me an eye opener because it talked about the experience. The experience for users and customers where often customers are creating more content than you as a company are doing. And we should just use that to our advantage instead of trying to compete with the content our own users are making.

Petri: As a funny tidbit, we are recording this before the next episode is coming out on Sunday in two days. And the title of that episode is Curators are the new creators where CEO of Slush, Miika Huttunen, talks about exactly this topic. So, Jurgen didn’t have any idea. We didn’t speak about that. So that just came out spontaneously.

What is your favourite word?

Jurgen: I think that would be complexity.

Petri: What is your least favourite word?

Jurgen: Broccoli. I hate broccoli.

Petri: Just the word or the actual thing?

Jurgen: The actual thing, but the word itself is already bad enough, I suppose. So. Yeah, I think, broccoli would do the job. That’s a really bad word.

Petri: What turns you on creatively, spiritually, or emotionally?

Jurgen: I think deep questions, deep conversations.

I tune out when people are just chatting about the weather or worse when people are talking about other people. That’s so uninteresting, but it seems to be what 90% of conversations are about is people talking about other people. I find that super uninteresting, but as soon as someone talks about philosophy or politics or whatever, then I’m interested, that’s going a bit deeper. That’s for some reason, then my ears pick up the conversation and I start paying attention. But otherwise, I just tune out.

Petri: What turns you off? Is that the same answer?

Jurgen: What turns me off might be shallow thinking. That’s the obvious counterpart as I said, people just talking about other people, or just complaining about things that actually are more complex problems than people make it out to be.

There’s right now going on conversation politically about the immigrants in the Mediterranean with the asylum seekers, et cetera. People have simplified things as such sad extent where they say no, we just don’t want more immigrants.

The problem is a bit more complex than that. That really turns me off, the shallow thinking that you particularly see on social media were it so easy to just post a really bad meme about something that shows that someone hasn’t really thought about what is going on. Yeah, that’s a turnoff.

Petri: What is your favourite curse word?

Jurgen: Jesus fucking Christ.

Petri: That’s almost like a musical title.

Jurgen: it’s something that I, and I have to admit my partner, use whenever something goes wrong. If you look at the words, it is bad twice because it is a curse word because of its sexual connotation and because of his religious connotation. So it’s doubly bad, but also the combination of the words makes it comical.

Jesus fucking Christ. So that’s yeah, that’s sort of stuck. And now it’s the one thing that I say when something goes wrong. Yeah. Sorry.

Petri: I’m imagining you last year in Canada really singing that tune.

Jurgen: Oh, yeah. I used it quite a lot in Canada.

Petri: What sound or noise do you love?

Jurgen: Disco beats. I love disco beats. I love dance music. I love particularly disco dance music from the eighties and nineties of the last century. That’s the main thing that I listen to. Whenever I hear a disco beat somewhere do do do do, then I think I’m interested in. Then I know, okay, which song is that? Which song is that I need to know!

Petri: I’m sure, you have a list for that one. What are the songs in your top two?

Jurgen: One of my favourites is New Order’s Blue Monday, for example. That’s such a classic.

Dead or Alive’s You Spin Me Round. That’s wow. That’s such an awesome disco song. I could go on and on, but those are among my favourites.

Petri: What sound or noise do you hate?

Jurgen: You know that sound that some people hate of crayon markers on a traditional blackboard that sends shivers down people’s spines. I don’t hate that, but I…

Petri: Good, because I’ve heard that at least twice in this show.

Jurgen: Exactly. No, that doesn’t trouble me, but I have exactly the same feeling and I have shivers down my spine right now, but just thinking of it. You know these tissue dispensers that you sometimes find at toilets in the airport? They are round and the tissue comes out at the bottom and then you have to pull it out and it’s like a string of tissue that comes out and then it has these metal grates at the bottom so you can tear off a part of the tissue.

I hate them! Just awful that tissue that scrapes along through that metal. The sound just sends shivers down. I never use them. I just keep my hands wet and let them dry. I refuse to use them.

Petri: What profession other than your own would you like to attempt?

Jurgen: I have sometimes thought when I am old, which I’m not, of course right now, still very young. When I’m old, I might be a teacher. That sounds like a difficult job that is actually fun to do if you do it well. And I have been somehow involved in education at the professional level for my entire life.

Ever since I finished my studies, the first thing I did was I went to a training company and started teaching people programming. I’ve always been somehow teaching, educating, but then for businesses. And I thought maybe at some point I should just go to either university or high school and just enjoy working with young people, teaching something.

I have no idea what but I think that will be fun. It will be difficult, for sure, but that’s something that has occurred to me a number of times.

Petri: What profession would you not like to do?

Jurgen: Acting. I hate acting. I don’t know why, but just pretending to be somebody else is just something that I have felt very uncomfortable with. I find it embarrassing, and no. I like being on stage, but as myself and doing silly things and making jokes or whatever, but then as myself. You see me. That’s the only role that I can play myself, but I cannot play somebody else. That’s just really weird.

Petri: If you could be a co-founder of any startup in any era, which one would you choose?

Jurgen: Well, from a financial perspective, I would choose Microsoft, I suppose. I think that would’ve been because that was, of course, also given the time span at the time that would have been an interesting company to join as a founder when I was still young. And I don’t know, maybe I would have done things a bit differently, but maybe not.

That is an interesting thought exercise, how I would have gone about things compared to Bill Gates and Paul Allen. That would be my choice. I would pick Microsoft.

Petri: Any final words for the audience?

Jurgen: Experiment. That’s usually what people ask me is do you have one tip, one suggestion, for managers or for anyone in any role? Don’t be afraid to try things. I try things and lots of things fail, but I have also been quite successful in ways that other people would never have been successful because they didn’t try.

I came up with a licensing program for Management 3.0 that has been very successful for me and for other people that was not done before, at least, in my part of the world. That was an experiment and it succeeded. And for that example, I have nine others that failed that I can be sad about. But as I said before, I don’t feel embarrassed for having tried. Because you need to try so many things to finally find something that works. It ties into the earlier stuff that we talked about. That’s a good word of advice for people: just try stuff. Don’t be afraid.

Home office video conference setup 101

September 24, 2020

Home office video conferences define your first impressions. How’s your virtual habitus and setup from the viewers perspective?

Before you start to browse through video conferencing equipment it is good to stop and think what you are really trying to accomplish. It’s always possible to upgrade and improve later and not everything needs to be perfect from the beginning.

Priorities

Audio

Without good audio everything else is for vain. It’s a good practice to separate the input and output audio sources so they don’t interfere with each other.

If you have a headset that is a good start. Even your phone’s headset might work. Maybe you can connect that to your computer via Bluetooth? If you don’t like the aesthetics of having a headset Apple iPod Pro‘s are relatively small but their audio quality is not good enough for high-quality presentations or productions.

A step-up is to have an external mic such as Blue Snowball (or Yeti), Rode NT-USB or similar.

If you’re using an external mic that is not omnidirectional (e.g. cardioid) from its pickup you could even use external loudspeakers to hear the output voice in videoconferences. This requires a bit more advanced understanding and testing to work properly.

A more advance option would be to use a lavalier mic such as Boya BY-M1 or even Rode Wireless Go (+Lav). You can find my current audio setup here.

Lights

Lighting is for video what audio is for the overall experience. Even if your camera is not exceptional most of them work good in well-lit environments.

This is the easiest way to improve your video quality. You could start with your existing lights and even crank up the backlight of your computer screen to illuminate your face better.

External lights range from small devices such as Aputure AL-M9 or YONGNUO YN300. Ring lights are another option too but just be aware that the ring reflection in the eyes is rather distinctive.

When you’re getting more serious with your setup it becomes evident that it’s good to have 2-4 external light sources that have the same colour temperature and are adjustable for your needs. This is where LED-studio lights become handy and there are relatively cheap options (such as Neewer’s kit) to accomplish the basic needs.

When you’re using a green screen (e.g. Elgato Green Screen) or other backdrops then shadows and uniform illumination become more important for a better overall outcome.

Camera

Almost all mobile phones have high-resolution cameras that are better than your computer’s built-in equipment. As you should not use the internal mic in your computer it’s a very good idea to get an external camera.

The cheapest option is to use your mobile phone as a stand-alone camera or as an external camera for your computer. For example, Kinoni offers software drivers and apps that turn your existing mobile phone into a webcam that your video conferencing software recognises.

If you add a small tripod (e.g. Manfrotto PIXI Mini) or other mechanisms to adjust your mobile phone angle that is a considerable improvement. Notice that usually the best recording angle is where the viewer perceives that you’re at their level.

Recording from a below angle projects authority and power but also may show up some qualities such as double chin that may not be your best angles. Setting the camera higher makes the presenter look smaller and diminutive. A neutral cam angle makes you more approachable and friendlier.

An external webcam is a step-up. Logitech C910 and its upgrades have been the popular choice for many years.

An external cam frees your mobile phone to other uses and it is definitely a better option than your built-in cam if not for anything else than the fact that you can adjust the angle more freely.

If you are wondering how to get an awesome blurred background (or bokeh effect) then you’re entering in the world of lenses. This is an endless topic itself but you can start small and upgrade later when your understanding and budget allows the improvements.

Screen capture from a video feed with an example of bokeh effect

Mirrorless cameras are inexpensive and with interchangeable lenses the options for improvement become almost limitless. You could start by getting a cheap mirrorless camera such as Sony A5100 or A6400. It’s a good idea to start with the basic lens kit (e.g. 16-50mm in Sony’s case) that allows you to experiment before committing serious money to other lenses.

For the desired bokeh effect you need to understand your studio setup, limitations and budget. A Sigma 30mm F1.4 lens is a good start but keep in mind that there is no zoom (but there is auto-focus) so your video framing needs to be considered carefully. Lenses cost easily even more than the camera so it’s better to tread slowly first. Not all lenses mount to other cameras but often you can find adapters. Make sure you are buying the right type of lens before hitting the purchase button.

How do you connect your mirrorless camera to your computer? Some of the camera manufacturers have USB-webcam drivers so it is as simple as plugging in the cable to your camera and you’re good to go. However, this is not evident and obvious so you need to double-check that.

Another factor to keep in mind is that if you have an older camera or you’re not sure whether your camera outputs clean HDMI video signal without any display information this can be a deal-breaker for your video feed. Especially, older cams do not have the option to turn-off display info options for HDMI output.

For older cameras with HDMI output and without a USB-webcam driver you can use a hardware converter such as Elgato HD 60 S or even more advanced options such as Atem Mini (Pro) (ISO).

Atem Minis take two audio inputs and four separate HDMI signals in. This allows you to do more advanced operations such as screen sharing, mix two video streams together either to show a screen sharing and camera or two cam sources at the same time (picture-in-picture). Also, audio level mixing, adjustment and advanced controls enable to use EQ, compressors, limiters and other tools that may become handy later when you become aware of other issues to improve (e.g. echo, audio levels, background noise, mixing or adjusting two separate audio sources).

Monitoring your video output is a good option when you’re presenting or recording something of high value. It allows you to check that you’re sending the right video feed, your audio sources are working among other things. I’m using a small 5,5″ video monitor that can be used for mobile setup as well.

Accessories

A green screen (or chromakey) enables you to control better the overall visual appeal and experience. This also allows you to standardise the environment and the look when the physical environment may change or go through adjustments.

Zoom allows to use your own green screen but you can also control the overall video feed with external devices (such as Atem Mini) or software such as OBS that is an open-source alternative. Alpha channels are used to add layers to the feed such as logos, lower thirds and other elements to the output video feed. There are so many ways to make your feed customised that it’s easy to get distracted with possibilities. If you want to find some inspiration I suggest you head to Twitch and visit some popular gaming or chatting channels for ideas.

The more experience you gain you start to pay attention to more refined issues such as the environment with background noises, echo and other artefacts that disturb and distract the overall experience. These may require physical changes to your environment such as acoustic paneling or soundproofing.

Also having the ability to move more freely, change camera angles and view the other participants in a videoconference in a larger screen(s) are something to consider as well. We are spending many hours talking to people who are not in the same room so why not make it as pleasant as possible? A single skipped business trip or conference can fund a long way towards your home office videoconferencing experience.

How much does it cost?

You can start for free with what you already have and make it to work first. From a few hundred to a few thousand euros can give you a setup that serves you well for years. Just keep in mind that the most important thing is not the looks but the content and the context. We are also entering the AR/VR era soon and then the whole setup will change again and become more immersive with new challenges and opportunities.

Open: The Story of Human Progress

September 22, 2020

Why have we progressed more in the last few hundred years than in the previous tens of thousands before?

Johan Norberg has written a magnificent book that gives insights into our current world, the state we are with all the polarisations and conflicts but also how fragile our success is, and why it is not guaranteed to last.

He discovered that the traditional way of studying history from the reverse-order, starting from the present and going backwards, also called as “a golden nugget theory of history”, does not give the proper explanations for our current state of civilisation.

There are periods in history where different cultures with different religions, ethnicities and locations had rule of law, rapid economic growth and scientific progress. These upturns were often sudden, unexpected and very expansive with population and income growth.

There are examples from the Phoenicians, Athens, the Hanseatic League, the Dutch Republic, the Muslim world before the Mongol invasion, India under Ashoka the Great, Singapore, Hong Kong, China in the Song dynasty era and after Mao’s death, among many others.

All of them have commonalities that are the basic message of the book: people were open to new and different ideas, innovations, cultures, habits, foreigners, technologies, business models and more importantly to the uncertainty that the opening up to something different and strange bring.

We have our current Western development because those things happened, and as Nordberg illustrates it was not because of lack of trying to prevent them from happening but because of failure to keep those elements away unsuccessfully. Europe was too fragmented for any single ruler to impose strict controls over the whole continent unlike what happened earlier with China after the Song dynasty.

The battle between open and closed does not happen between people or institutions. That is too easy an explanation. It happens within all of us, every day.

The flourishing eras were the result of open borders, open societies where people were free to experiment, argue and exchange without permissions from the top or controlling agendas that tried to shape the society or pick the winners.

Our societies are too complex for any human to comprehend. We cannot control complex systems and this makes us uncomfortable. We don’t tolerate well uncertainty and it is perceived as a risk. Therefore, the natural instinct is to close up and try to impose restrictions and controls to change. This bottling up does not remove the uncertainty but it can make us feel more comfortable that we are handling the situation.

Ruling classes, elites, and incumbent institutions have always tried to slow-down or prevent progress to happen. They have much to lose with the change, and the current status quo enables them to stay in power and enjoy their privileges.

In times of turmoil, societies tend to close up in order to seek stability and security. This vicious cycle feeds itself with populists and those that gain from the current stability. Often, those, who will lose the first and have the most at stake, are the very people who are enabling the closing up process en masse.

Protectionist measures will hit the hardest the low-income and unskilled people when their productivity cannot be sustained by the slowing down or even reversing of economic growth.

People have always cooperated. We have trucked, bartered and exchanged at least the last 300 000 years. Homo sapiens have unique traits that make us different from Neanderthals: intelligence, language and cooperation. The game theory experiments have shown that less time we have to make a decision the more we cooperate. Homo sapiens had an advanced division of labour from early on. Raw materials and goods were exchanged from great distances.

The more people trade between each other the less ruthless they are. Big cities are examples of this in practice. They are the wealthiest and the residents are more open to globalisation and new ideas. The interaction between different people and ideas is seen as mutually beneficial, and we extend our openness and cooperation to new, strange people.

Why are the earliest found written records transactions, prices of goods and ownership titles if they were not crucial to humans? First things first, and all the rest including philosophical and religious writings came afterwards. It may not be the most thrilling moments to realise that the first written historical records are written by some ancient accountants.

The paradox is that the only way forward is to tolerate uncertainty and hold back the controlling urges for the unpredictable and unforeseeable to happen. Progress happens when many people do individual decisions and experiments and someone gets through with new discoveries and solutions, often by lucky coincidence like Matt Ridley has described recently in his latest book.

The more people we have in this complex system interacting in unpredictable ways the greater the total outcome for the whole society. The benefits are distributed unevenly between the original innovator and the rest of the populace. On average, a new innovation benefits the founder only around 2,2 per cent and the rest of the social value goes to the society. Just think about the iPhone, the Internet or any other wonders we have now but that did not exist a few decades ago.

The reverse is also true. The less people we have that can gain insights and knowledge, be productive and creative the less opportunities there are for progress, well-being, and total advancement in society to happen and materialise.

Norberg argues that because we have so strong tendencies to tribalism by our very nature we need an open world to counter-balance those forces within.

The economist Bryan Caplan has concluded that trade and immigration are some the most polar opposite topics among the majority of people from the conclusions of economic scholars. They are perceived as zero-sum games instead of generators of vast mutual gains for parties involved.

Voluntary interaction and open economy are complex systems that we cannot perceive. It is impossible to keep track who has contributed what and how everyone is getting their share of the wealth created. Most of our human history the zero-sum has been the norm when we did not experience progress, innovations and economic growth.

False instincts come in many forms. The physical fallacy states that objects have constant and true values instead of subjective values based on people’s preferences. This feels wrong to our equality-matching brain that does not perceive things as fair when circumstances have changed, and valuations as well. What was valuable yesterday may not be in demand today. 2020 has provided many examples of this after coronavirus effects have totalled many industries that flourished before.

It is easy to repeat human history and close up after hardship and yield to the fight or flight response. It’s harder to acknowledge what Nobel laureate Friedrich Hayek once said:

“Humiliating to human pride as it may be, we must recognize that the advance and even the preservation of civilization are dependent upon a maximum of opportunity for accidents to happen”.

And it takes even more wisdom to appreciate the fact that we cannot stop the clock or stay still. There is no one who can come and rescue us from our current predicament but us, together. The less we cooperate the bigger the challenges in future, and more chances there are that we will lose what we have and even forget some of the knowledge and wisdom we have attained so far.

Progress is a messy process of continuous problem-solving that can be easily curtailed. The prevention of progress to happen has been so successful that there is only one experiment left, our current one. Will it last or end like all the previous ones is for us to decide: Open or closed?

Startup Community Way

September 18, 2020

The Startup Community Way builds on the previous book Startup Communities. It dives into the world of complex systems and their operations.

It explains why some communities thrive where information, talent and capital flow freely, and social capital or “networks of trust” are plenty. Social capital is based on virtuous and high-trust relationships where quality is more important than quantity, and the results are non-linear and highly impactful.

Do you want to seed a startup community? Richard Florida’s thesis is that the creative class attracts technological innovation and increases employment. Instead of building new incubators how about invest in 200 rock bands? Sounds counter-intuitive but you need to create the right environment in order for the other desired activities to happen. Welcome to complex systems that you can influence but cannot control.

Ideas, talent and funding are key inputs for a startup community. They are served by network and cultural capital that are supporting the entrepreneurial drive. These represent five of the different capital classes based on the Seven Capital framework (i.e. intellectual, human, financial, network, cultural, physical and institutional).

When you focus on improving one aspect in isolation you’re causing changes elsewhere. Often, these are becoming issues and trouble in other parts of the ecosystem. Good intentions can run havoc where a holistic approach is missing. This is especially problematic with feeders who can take decisive action only from their perspective.

Considering startup communities as complex systems instead of just complicated ones opens a new line of thinking. Complicated systems are still predictable, linear and knowable but complex are totally different. Realising this difference helps to be more humble and fine-tune the approach when dealing with an evolutionary and bottom-up type of development.

Adaptive systems are interactive and startup communities are in the ever-evolving state of change and transformation based on the interaction of the participants.

Like in Startup Communities there are several myths that are present. More of everything is a very persistent one. In complicated or simple linear systems inputs are correlated with outputs. More you put in more you can expect to come out. In complex systems, this is not the case.

A single unicorn exit can do more to a startup ecosystem than many years of other activities. Outlier not-very-likely events can have huge impacts that are not statistically predictable, and they can take a long time to show up. Entrepreneurial success reinforces and recycles more success. Often, the wealth from a successful exit ripple around the startup community in various ways from new investments, angels to inspiration and resources. This can supercharge the community to a totally new level.

Healthy startup ecosystems are anti-fragile by their nature. They are resilient, seek a degree of randomness and disruption that inflict crucial learning and evolution. In contrast, bureaucrats and communities that are against change are fragile.

When you let go of the notion that you can control the system (and that it’s just complicated) the interaction becomes more relaxed and meaningful. It’s futile to impose top-down measures to something that works differently.

For this reason, startup communities cannot be replicated either. They are unique. Nobody has managed to xerox Silicon Valley. It’s not possible. Even SV was over a hundred years in making, and the foundations were poured decades earlier than the actual silica started to become a hot item in tech.

The only way to succeed is to focus on becoming a better version of oneself. This empowers the community and puts it to look further ahead and helps to keep things in perspective. Learn from failures and do better. Rinse and repeat. Take risks and don’t get too comfortable or otherwise you’re not taking enough risks and exploring new avenues.

The Rainforest by Victor Hwang and Greg Horowitt gives some explanations and descriptions for successful startup communities. Among the key findings is the fact that the community should be very open to new ideas and people with high networks of implicit trust and social contracts with strong values and leadership combined with social feedback loops and face-to-face interactions. Social interaction needs to be cultivated and embraced. It does not happen by itself. There is a lot of natural friction for people to come together and open up with a supportive mindset.

In summary, the point is to help entrepreneurs succeed and this is at the core of any startup ecosystem. What’s your role and contribution it’s up to you but only by action you can have an impact.

Second-order business effects of adapting to changes in physical meetings

September 15, 2020

Second-order effects (or consequences) can impact your business and result in massive changes in your business model or operations. If people avoid physical proximity what are the implications that are harder to see at first?

In this video, I continue the theme of adapting to changes this year. The previous video questioned whether you still have a business model. This one tackles the issue of second-order consequences that are harder to pinpoint. I wrote about the topic more extensively in the spring (about second-order effects and about physicality).

Timestamps
00:00 Changes in your business environment
00:26 Physicality
00:39 Business implications
01:51 Second-order consequences
02:21 An example of second-order consequences
04:49 Reasons why you don’t have customers anymore
06:28 Adapting to the new situation
07:56 Bonus – why this topic?

Curators are the new creators

September 13, 2020

Miika Huttunen – TALKS WITH PETRI

Slush CEO Miika Huttunen talks about how to adapt to the new reality and change your business in 4 months, the relevance of esports & gaming and the future of business events. He also explores Second Reality and LAN-parties.

Curators are the new creators

Bio

Miika Huttunen is the CEO of Slush, a global movement with a mission to create and help founders. Formerly Miika acted as Chief Operating Officer at Slush. Huttunen is highly curious about everything related to gaming: computer graphics, esports, communities, and many others. Miika also has an extensive background in various volunteer communities like Slush, Assembly, Vaasa Entrepreneurship Society, and World Economic Forum’s Global Shapers.

 LinkedIn | Twitter | Website

Transcript

(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri:  Hey Miika, how are you doing today?

Miika: I’m doing good.

Petri: You started earlier this year as the CEO of Slush, and pretty soon you figured out that you have to let go two-thirds of your staff. How did that feel?

Miika: Well, that’s quite a starter. It obviously felt really bad. At Slush, we work extremely close together and are even friends outside the office and at the office and spend a lot of time together. And obviously, it wasn’t something that I was planning for the year. I must say it didn’t feel that good but obviously that made me realise or that experience made me realise that once I was in the middle of the situation that I knew that it has to be done. Simply that we’re not able to do our main product this year and mainly a big part of the team was formed around that.

My key learning from that was that you simply as a CEO or as a leader you have to move towards the pain. There were moments when I wanted to just forget what’s happening or step aside, but as a CEO or as a leader when you know that something evident is happening you just have to walk towards the pain and do the decision. Even though it would feel quite bad.

Petri: You were preparing for the event. I would guess January and February as business as usual and then the world started to change. And you were among the first, if not the first from the bigger event producers to cancel your show for this year. And that was a really brave move. 95% of your revenues were gone.

There were no insights into what’s going to happen in the future. I was really taken by that and can you walk us through a bit how did you come to that conclusion? You also mentioned in the press release that you say that because we don’t know what’s going to happen it’s irresponsible from your side for the sponsors, for the attendees and everyone involved if that would be the case that later on you need to cancel it. It’s better to cancel it totally than postpone it for a while.

Miika: Yeah, it’s a good question. And I think it comes down to the question of what is actually brave and what is not. So I think the timeline, and I will explain that soon. The timeline was something like this. As mentioned, we started the year at full speed with a team of roughly 35 people.

And one really funny thing about that was that when we planned for the main theme for this year’s event, it was actually uncertainty. At that point, we did not actually know at all what will happen with the COVID. I had a call in January with our Slush China CEO, Chen Wang.

And Chen mentioned to me that there’s something happening in Wuhan. There is this virus ongoing and people are encouraged to be at their homes. But that didn’t yet cause a major reaction on business operations or any decision that I made, but it was something that I left thinking. And then pretty quickly when the virus spread to Europe and to Italy for example, and later the US and other countries we started doing scenario work and calculations more in-depth. We had done something before that We knew that there was something worrying related to the virus, but only at that point, when the virus actually spread to Italy for the first time, we actually went super deep down on the calculation and sending on the scenarios and the options.

What we first thought about was what if we actually downscale the event? What if the virus causes that many of the international visitors and investors and startups are not interested in joining in Helsinki, but we are still able to pull the event with a smaller scale. And more and more time we used, we realised a couple of things. First of all, we realised that many of the financial projections in different scenarios we’re steering towards company-betting strategy, which meant that if we cancelled the event super late we’re doomed.

Then it comes back to the question of bravery and what is actually courageous. And we realised like why to bet against something that is not in our control by any means. We realised pretty fast that by cancelling this event we can still pull something off for this year, but also save time for our visitors and partners who are planning for the event but at the same time be responsible and ensure that Slush will continue in the future as well.

Petri: I think that’s a really good insight into what you were doing. I remember from the episode with Wolt co-founder, Elias Aalto, he said, don’t bet the farm on any single venture. This is basically the same thing. So it’s better to survive than risk everything. Venturing anything with startups or any business is basically de-risking so that you’re not always putting all the eggs in the same basket.

Miika: It’s a really important thing every now and then what is actually brave? Do you actually have to take this bet? What is the upside, but what is actually the downside? And in our case, it was, if you only talk about the financial perspective. Sure, we would possibly have been able to do some kind of decent financial year.

That’s obviously a question mark but on the other side, there was in case the event would be cancelled that would threaten the whole future of the whole organisation. From that perspective, and especially when I think about it now, it’s totally evident that that has to be done.

Petri: Was there a lot of discussion within the team or was everyone pretty quickly in the side of let’s cancel it and do something else. And let’s forget this thing and get over it and have a short grief period and then we start to build new stuff.

Miika: Obviously not everybody agreed. We start to talk about the option of not having the event at all before the lay-offs we had to do. And opinions around what we should do were pretty divided. There were talks about having it as a smaller event, having it actually in a different location and going even smaller. Options for cancelling it right away. And to answer your question, it was really divided because we were in a totally new situation. There were different opinions, like when actually the virus will be gone. Is it actually gone already by summer?

Is it gone by August or is it actually gone next year? And it took some time to be able to explain what I mentioned earlier about hedging these risks and ensuring the health of a good future for this organization among many other things. Definitely not all agreed.

Petri: Now you have already started to have new services and build something for the next years as well. It’s not just event for two days, but it’s helping startup founders year-round. What do you think of events? What is the future with business functions? A lot of the dynamics of a physical business event where you’re synchronously at the same time and the same place with people, oftentimes travelling from abroad…If you take that physical aspect away I think there’s not that much left of the old model if you just copy-paste it to the digital world. And you said you were doing scenario planning, did you come to the conclusion that it’s better to not just copy-paste, but start to do something from a blank page, and start to question everything and assume that something else needs to be done to fulfil your mission.

Miika: There are two sides for this. One is what we did and what we’re going to do this year in the online world. And then there’s the question about how the world of offline events will change and how they possibly would merge together to this so-called hybrid model. For the online events and what we thought about was… well, we did the layoffs. We started with this smaller team again, rebooted in the mid-April. And we actually started to think about what to do now. Once again, 95% of the revenue is gone and the main product is not happening, but we still have time to execute something and we know that founders need help.

The first and most evident thing was first to think about can we replace Slush with an online event. Maybe the same days going just online. But nobody of us actually got really excited of the idea because it’s most likely the best way to fail if you try to replicate how things are happening in the offline to how things are happening in the online or how they should happen in order to replicate what’s happening in the offline world. We realised that people don’t really want to sit in front of their computers for 12 hours to watch content. What you can basically watch whenever you want. People would like to have maybe other options instead of like sitting two days straight in Zoom and do matchmaking.

This was the starting point to where we started to think how would the online option work? What we also realised about the offline world that we want to replicate to the online is that a lot of people come to conferences and Slush and other events for the reason that they want to get access to some members in that event.

It’s a two-day window to get access to some people where you happen to bump to some random investor or some speaker or just somebody serendipitously. And how we can replicate that feeling to online was something. We also started to think about when we eventually started building Node. Some of the core aspects of that is creating a curated community where not everybody is able to join. But they have a common interest to do something. For investors, it’s mainly to find something to invest and help, and for startups, it’s to build and to discuss with these people. And when they have a vested interest, they have also vested interest to help each other.

These are some of the elements that we started to think about like how we can actually put these to the product. Finally, the last part was okay, so people don’t want to watch content for 12 hours straight. How are we going to do this in our product? We started to think about like, okay, there’re two ways to do this online.

One is that you should have a lot of content of which you can choose and it should be somehow special. Instead of doing it for two days, we’re going to do it for the whole fall. And you can pick and choose when it’s a good time for you.

The second thing is that we want to make it special in a way we want to ensure that it’s conversational. At Slush at the offline event or at big conferences, you usually just sit like maybe 20 meters away from the speaker.

And there is no contact. It’s really hard to grasp and even ask questions or be close to the speaker and that’s something we want to create in all our worlds. So you can actually discuss with people who are helping or giving advice.

Petri: You did some customer surveys. You asked around with startups and VCs earlier this year that what are your pain points? What’s happening? What do you think is going to happen? What do you need? What you just described was that your hypothesis, or was that coming out of the process you were doing in discovering the new model?

Miika: It was an emergent process. What I mentioned earlier, it wasn’t like the early hypothesis. It started from the fact that we were not excited of replicating Slush as a two-day online event.

Petri: So it felt wrong?

Miika: Yeah. It started from the fact that nobody of us has been into a two-day event or in online event before that was good.

That was the first thing. And the second thing was the like underlying energy of the team and excitement towards that idea. And from that moment, we started to unbundle different dynamics how we could do things and we started to build towards this. While we were like unbundling how we could do this we discussed with many investors and startups. What are their pain points? What they would like to maybe use? How they’re currently using online in the midst of Corona, where do they get help, how they’re raising funding and based on that eventually came up Node in its current form.

 We don’t know how it will work and will people like it. But there is something that we believe is the future of how these things should be done. I’m sure there are a lot of things to fix and fine-tune but it’s a good start.

Petri: Can you describe the sales pitch, because you’ve been doing cold sales earlier in your career? You were calling investors and selling things and the calls were 15 seconds to two minutes so you have to really get to the point. To me as a startup founder, why should I join Node or to me as an investor, what is the value for me?

Miika: It always starts from the fact that you have to know or I would have to ask you what is your current problem? If I know that as it is with most of the early-stage founders they have roughly six months of runway. When I know that I will most likely point out that first before, and then describing Node. Node is a curated community for founders and founders only where investors and ecosystem players also help you for the next stage.

It’s a place for you to meet different people to help you go from A to B. And after that, to the C. We want to ensure that you meet investors both by just simply sending messages to the investors and arranging meetings, but also us helping you with warm introductions to some of the biggest and most prestigious investors in Europe.

I think that’s the pitch. And it comes down to the fact that we believe that we must do a lot of things that don’t scale and a lot of handwork to ensure that people actually meet each other first before we actually understand the dynamics of how people work in this new online environment.

Petri: Sounds like you’re doing an MVP at this stage.

Miika: Exactly. My belief or how I see product development and creating new products is this mantra that everything is MVP always. Or everything is work in progress always type of mentality. I think just Jeff Bezos in Amazon says that it’s day one mentality, but for me, it’s always work in progress.

Petri: What are your thoughts on community? You’ve been doing community building earlier in Vaasa Entrepreneur Society. You also have been a part of the Assembly demoscene. And you are also an avid gamer. There’s a lot of learnings and a lot of good stuff already happening for many years, if not decades, online and partly offline as a hybrid model in different parts. And I think gaming is a pretty good example of how you can connect and communicate and entertain yourself and be part of a society in a way without actually physically meeting.

Miika: I agree. A hundred per cent. I think gaming is one of the most interesting communities where you feel a sense of belonging and you feel that you are part of this group and you feel that people are really similar to you, although you have never met them.

And it comes from the fact that it’s a passion for a lot of these people. They share same language. Something that you cannot discuss with just somebody that you bump on the road or on the street. But you have your own way of communicating. That’s one of the beauties of all of the gaming communities.

Petri: Is Slush Node now the new online business disco game, open-world?

Miika: I don’t hope that it’s called that way but I hope it’s an inclusive place for founders to find help and meet, also each other.

Petri: How long do you think it takes that you become friends? It’s the same thing. It’s about building trust. If you’re meeting a startup founder and you’re meeting partners or you’re meeting investors, you start talking to each other. You start to learn from each other and it’s not too far from dating. And then you’ll get married. If you got the investment, you’re using the metaphor till the end, hopefully not divorcing. Have you planned already a customer transformation or the user journey through Node?

Miika: Yes and no. I think there is a lot still to build and plan. What we try to create with Node is that when you join Node you have always somebody that you can ask for help. We start with that. If you’re a founder, you can always send a message to the Slush team and the extended team of Slush who can help you forward.

After that, we try to actually create and plan those social dynamics that you start to form connections inside of that community as well. But it’s really difficult because you cannot force that. The best way is based on my hypothesis is to gather founders or people with some same topic, for example, the same problem that they’re currently trying to solve. Let’s say you’re trying to scale your organization from a hiring perspective, or you are thinking about like when to hire your first chief people officer or something even more difficult problems than that and gather those people in a group. And let them discuss and help each other. That’s by far the best way to form connections and friendships and that’s something we are going to do a lot this fall.

Petri: Now I start to get what he was saying earlier before we went online that you have this new hypothesis that’s curators are the new creators. You’re building sub-communities or smaller groups with the same interests. It’s like when you go to Twitch and you’ll find that, okay, people are playing Fortnite or Call of Duty, the same thing.

These are from the edtech, these people are with fintech and they have this stage. So it’s pretty much the same thing that there’s more stuff you can learn from each other and you have more fun. You actually might be a bit competing as well, but you share so much in common.

Miika: Yes, a hundred per cent. I think Slush is mostly an organisation that curates information and people, and it’s something we’re pretty good at it in my opinion. It’s really interesting what you said. Curators are the new creators because it’s something that is also happening a lot currently in tech, especially, and then in video games and in live streaming because the real scarcity is not the content anymore.

It’s attention. It’s impossible to absorb everything from the massive flood of information. And the best of what we can do is try to pick and choose what matters to us most. Where should I use times? Should I watch this video? Should I actually read this article? Should I actually have a lunch meeting with this person? But actually, the best even beyond that is to find people who can do curating for us. And you have probably seen a lot of these new newsletters, like Substack coming up where people curate content for you. They find interesting things to read for you or, or they write something for you based on many different things. And at Slush we’re doing exactly the same. At offline event or in online world, we try to find the most interesting people during that year to help you forward with your company. They come to speak, they deliver information. They give advice, but they are also there to meet you. So in a way, we’re doing curation all time when building these online and offline products not just only an event. But also what we do with Soaked, for example, our own digital media we have built really MVP resource bank to our website where we aggregate the most interesting articles of different fields of building your company. You can save a lot of time when somebody has already read the article and they know that it’s good. And they’re recommending it to you. I’m much more willing to read it and use time.

Petri: I think there’re quite many interesting trends happening here. One of them is, just picking up what you just discussed, de-platformisation if that’s even a word, but seeing that instagrams, facebooks and whatnots they’re not showing the content anymore. The content creators cannot be guaranteed that they reach the audience anymore by their means. Last year there was this celebrity thing called The Community, where famous people give their phone numbers and you can text them directly. And that was sort of a reaction or at least a new way of trying to get to the audience directly without anyone else deciding who should get the message or not.

And I think that’s partly the thing as well with all the substacks and all these content creators, they start to ask the question, why should I pay to reach my audience? It doesn’t make any sense. Newsletter is pretty much one of the oldest technology means in the digital world where you are more or less guaranteed to reach everyone and the least is in your control. It’s just a text file with the addresses. You can take it with you.

Miika: Yeah, exactly. And there is like interesting ways of how these creators currently utilise their communities and how they actually even monetise them. Two ways I’m using or how I have purchased this new way of creators monetising their expertise is one I have subscribed to the newsletter, which is written by Lenny Rachitsky.

He talks about product management and different strategies, how to build your product and how to get users and how to manage growth. But when do you subscribe to the newsletter instead of getting it only once a month to your mailbox, you get it every week with a different topic, but also you get the invitation to his private Slack group.

There’re roughly currently 400 subscribers in that private Slack group. It’s actually pretty interesting and exciting when for example I read that article and I get a question, I’m thinking something, for example, related to Slush or related to something totally different. And I can actually ask that question from a person like Lenny, and usually, he replies pretty quickly.

And the second thing, how I’m using this is live streaming and gaming. In Twitch, you’re able to subscribe to a certain streamer or you’re able to help them. You’re able to donate them and something that I’m also doing with these people is that when they’re not streaming publicly like they’re there not online at Twitch, they might do these community games or streams, where the streamer spends time with the people who have supported them or are part of their community. And that’s really fun as well.

Petri: Many episodes back, I think might be the number six with Ville Tolvanen. I was talking about community building and obviously he’s big in Finland in digital transformation. And he was saying, and that’s the title of the episode as well, make your work visible. And he was also talking about really tiny niches that you don’t need to know everything. You can just be really good at something and people will find you and that’s your way of becoming an expert. And you just show and do the work. And I think this is really what’s happening, and it’s really fascinating that you can now connect with the people who are on top of their game. And it doesn’t really matter where you are in the world. That’s really amazing actually.

Miika: I agree. I agree. I think some of the most interesting articles around like this passion economy or these like curators are the new creators things has been written by Andrew Chen from Andreessen Horowitz in different blog posts. And I’d recommend reading those for anybody who’s interested.

Petri: You were also writing about esports and the future of esports. Could you just briefly explain what is esports and how big it is and what’s the significance? Why should it be spent any time in this podcast to talk about?

Miika: I strongly believe that the future generations and even the current generations like myself we’ll be using not in 20 years, but actually in five to ten years, a significant proportion of their time, watching other people play games, especially other people play games competitively.

Petri: Now, I get it. It’s called sports: spectator sports.

Miika: Exactly. That’s why I think we should talk about it. Esports, in brief, is people playing against each other video games competitively. It started roughly 20 years ago with games like Quake and Counter-Strike. Back then it was mostly something that these nerds like myself did in their homes or at LAN parties, at local-area networks.

A lot of things happened around 2013 and 2014 when a game called League of Legends from Riot Games start to grow and get even more popular. Currently, It’s still a small part of gaming if the gaming is worth over 160 billion. Esports or the market of these parties is only 1 billion at this point, but it’s growing really rapidly and it’s getting more and more attention from young people. People want to watch others play, people play themselves and everything related to the esports is growing heavily.

Petri: And that’s becoming the regular sports in a sense that the younger generations are not looking the old way, the physical sports. It’s basically the demographics of the old sports is getting older. New people are just converting to gaming. I think another fascinating thing about gaming is that it’s the same game as you can play. Obviously, it’s the same thing like with football. You can still play football locally and with your friends and you can relate easily. But I think it’s maybe it’s even more fascinating that you can do it electronically and it could be you if you’re just good enough or you can just relate. And when you are really into sharing the moments maybe it’s even more personal, more intimate than just watching some football in a huge stadium.

Miika: Yeah, I agree a hundred per cent. And one of the reasons, one of the really exciting parts of esports and even how big that industry can actually grow is that it’s insanely accessible. And also what you mentioned, you can share the experiences in a total different way than in traditional sports. First of all, accessibility due to the fact that esports is a digital-only game or way of doing that provides unprecedented accessibiity for that. You can be 150 centimeters tall or two meters. You are not judged by your physical ability how well you can play the game because only what you need is an in-depth understanding of the game. You need Internet access, a quite decent PC, and then just curiosity for doing that. And then of course, depending on the game interest to develop yourself in a similar fashion if you would be playing chess or some other similar games.

The accessibility for esports is amazing. You don’t have to use 500 euros or 1000 euros for ice hockey equipment or different things every year. You basically need like 500 euros for a PC, which you can use for four years and then get access to games that are mostly free-to-play.

Petri: Finland has been having, is it is actually from the eighties, Assembly, the demoscene. I think that could be probably attributed partly to the success of Finnish companies and individuals in the global gaming scene, a good share of per capita gaming companies coming from Finland.

You have been part of that scene. Can you explain a bit to the people who maybe don’t know Assembly, what’s behind that? How it’s been growing and maybe is that the roots for the success of Finland in gaming.

Miika: Yes. Assembly is a Finnish demoscene and gaming event. It started totally only as a demoscene event in 1992. Demoscene is in a short explanation, a form of art what you can do on your computer. it combines computer graphics, music, and different parts of creating these real-time audiovisual, art pieces. It’s an art of combining code, art and music. It started in 1992 as a small group of people who were really interested to do different things on your computers and learn from each other. It actually grew pretty quickly. Already in the nineties, it was in Helsinki Ice Hall for several thousand people, an ice hockey rink. Exactly. And then later, grew and grew it through to larger venues. And currently, it’s held in the Helsinki Exhibition Centre for roughly 8 000 people annually. It has shifted a bit from the demoscene to the gaming side and to the esports, what we discussed earlier. It attracts people from 12-years-old to 60-years-old, who share the common passion for games.

For example, what you can do at Assembly is to watch these demos in competitions, where people, for example, build new games and then they compete in game development competitions. There is a competition where you have to create a demo with Commodore 64, so this old school demo combo or with Amiga. So with these old computers. And then there’re esports tournaments.

And to your question about has Assembly been in the core and one of the key reasons why there are so many successful gaming companies and I think it has had a big impact. Finland and the Finnish programmers were way ahead of many other countries in the nineties in computer graphics and many of these things due to the fact that people enjoy doing these demos in their free time.

And for example, a lot of these people just did them for free and as a hobby. But when they realised that actually, wait a minute, can I get paid for this? For example, in the ’95, there were a lot of companies formed that are still existing in the Finnish gaming scene, like Remedy Entertainment or even earlier than that there were Terramarque and Bloodhouse, which later merge into Housemarque, which is still around after 25 years and currently creating a quite awesome looking game for PS5.

Petri: Can you name a few of their famous games? Maybe people don’t recognise the company names, but they may recognise the titles.

Miika: Absolutely. For example, Remedy has made…one of their breakthrough game was Max Payne and Max Payne II. And then later they have made games like Alan Wake and just recently a game called Control. That’s an example of Remedy.

Petri: There were also a few aspects. One of them was that early into computing there were scarce resources. You really didn’t have that much computing power. You didn’t really have that much memory. You really have to be inventive.

You have to be almost like a genius, Steve Woz type that gets something amazing out of these tiny things and then came mobiles. And it was the same thing in the beginning, you had a tiny black and white screen and there was no memory either. That was the perfect scene for some from the art and hobby to the business world and get your worm game to the world. And, then came obviously later on the PC…

There have been almost three decades of history and the scarcity is here one of the key things. You have to be creative when something is not in place.

Miika: It was all about like pushing your computer to the absolute limits at that point. How we can actually pull the absolute maximum of the computer for this demo. One of the most historic examples of that is a demo called Second Reality, which was published in 1993 by Future Crew. A lot of its members are really successful investors and entrepreneurs these days. And not just only entrepreneurs and investors, but also like musicians and many others.

Petri: Now we see the same thing happening in a different field but related: augmented reality and VR. And for example, Finnish Varjo is pushing the edge now with the same thing, once again, with limited resources. We don’t have enough computing power in affordable means to do things we would like to a get photorealistic video or augmented reality. It’s still going on and it’s pretty much the same people as well.

Miika: Yeah, exactly. There’s a lot of demo centres in these companies bringing that history and that experience to these companies. It’s really beneficial that the demoscene community was so strong in the eighties and nineties and even early 2000. Still, there are sub-communities in Finland, who are interested in the demoscene and I think Assembly is a really important event also for that purpose that these people actually meet each other. Even once a year old-school demo sceners come together and they discuss like how they’re doing and what they have been doing lately.

Talking about communities, Assembly’s an example of extremely important organisation and event and community for exactly this purpose. Because it brings people together who have been part of or are currently or want to be a part of this art of doing something great with your computer.

Petri: And with great passion. And that was the thing when you started to describe Assembly in the beginning, I was about to say that, Hey, are you actually talking about Slush? Just a few people starting and the same thing, passion to change the culture and do things.

This is pretty much how things get started. It’s when people get together, they start to do things and they’re really passionate about what they do. It’s not for the money. It’s not for the monetisation. They want to change something. They want to do something together and then they just find each other and more people are joining and that’s how many of the amazing things get started. A lot of work, a lot of passion and then it’s just in the right time amazing stuff happens.

Miika: Exactly

Petri: Why I’m so fascinated about games and this world is the thing that is also pushing the edge in technology wise.

If you think about gamers, gaming computers obviously are quite powerful. If you are live streaming the latency needs to be really short. If you’re pushing it to the thousands, tens of thousands, even hundreds of thousands of people at the same time it has to work. And in games, you see that if the video quality is not good enough you miss the action and you don’t really want to do that. Same thing with audio, same thing with chatting. If it’s crappy, it doesn’t work. There’re a lot of demand for high-quality services. How do you scale the community? Interaction, engagement. How do you keep the trolls away?

How do you deal with spam, how do you monetise it? The same thing also with the creators. The gamers themselves have become stars. It’s basically a low entry barrier to come to the field. How do you become successful there? It’s a really competitive and obviously B2C model.

There’s a lot of things regular B2B and B2C startups can learn from gaming and this world.

Miika: Hmm. Hmm.

Petri: Like Ville Tolvanen was saying that he was looking at the rock bands, e.g. Metallica. How they actually changed their business model after LPs, cassettes and CDs, when that model was basically killed and they needed to do some live events and touring and start to build communities around the fans. And monetise that even between the tours. What are all the means you can engage them with your community and build excitement and experiences together with people? And if that’s not a community what is? There’s a lot of exciting things happening in this decade and we may not even need to meet physically at all.

Miika: Yeah, gaming and game development, there’s a reason why it’s a forerunner in many things and why different industries seem to replicate some of the things that gaming has done or the gaming community has done before. I think there’re two reasons for that.

One is that the game development itself combines so many different expertise that you have to combine in order to create a great game. It combines like programming, from graphics to server-side, combines mathematics, it combines art, music, business, and marketing and all…

Petri: Storytelling as well…

Miika: and storytelling.

Petri: …and amazing storylines to get people hooked.

Miika: Exactly. And, these have to work together beautifully. That’s something that a lot of companies definitely get inspired from and I try to understand like how these organisations are built and how they work together and why actually they work together.

And the second thing why I think game development and gaming is a good testbed for many things we’re going to see in the future from other fields as well is that the gaming community and the fans and the players are usually really interested to try new things. You get a lot of testers and people early on to try your product.

These days happens for example, that if we’re building a new game, you already since the day one starts to build your community in Discord, where you can discuss with people, build the game together with them while they’re providing insights and different thoughts. These two things allow companies in gaming to try new things, push the limits, but also get pretty quick iterations and understanding are we actually doing the right thing currently?

Petri: You’ve been discovering and evaluating a lot of different platforms for building communities and communicating with people. It doesn’t need to be a community per se, but even just with your customers, can you recommend something? For example, how could I reach people? How can I connect with hundreds or thousands of people?

There is Slack, there’s Discord. There are different ways to do it. Even in the online platforms. There’s Hopin.to, Zoom. But somehow I feel that all of these are lacking the things we really desire. They have their downsides as well and it’s not so vibrant in the long-term. Getting back to those, always going to different places and you need to have a compelling reason.

You want to go there. You want to hang out. You want to do those things. It’s after the initial excitement goes away, that’s hard to achieve. What are your thoughts? What do you think is working now? I’ve seen there’s a lot of companies who are building things now. Asking you this question maybe one year later it’s going to be completely different answers, but what are the good things to look at now?

Miika: It depends on how you are describing what exactly you want to find and what kind of communities you want to find? I agree with you that there is no, maybe, if you don’t take into account Clubhouse that is currently…

Petri: Send me an invite!

Miika: Yeah, exactly. You have to get invited, and that there’s a lot of FOMO for getting the invite. But that’s part of the story. A lot of these communities and these platforms work because not everybody’s able to join there.

And that’s the tough part of answering your question that if it’s accessible for many, usually there are a lot of problems with that. Maybe a lot of cluttered messages and you’re not knowing everybody or you might share different thoughts on or passions in the group.

Maybe not answering straight to your question, but maybe from the sidelines. I have been always really interested in like hanging around on the edges of the Internet. What that means is exactly being part of some really specific communities.

And for me how I find them is usually subreddits and Reddit itself. There are amazing, amazing communities on different topics. For example, I’m recording this podcast in my own room and I see around myself there are plants and there is like a sewer machine and there is a television.

And for each of these things, there are subreddits where people who are extremely passionate about, let’s say plants, they discuss together. And usually, through those subreddits, you find forums that are not like easily browsable from Google, or you cannot find them, or you find these Discord channels or you find Slack channels or whatever they are.

But I think the first thing, what do you have to do is going to understand what you’re looking at and then just dig deep in the edges of the Internet. That’s a bit different way to answer your question.

Petri: And another thing about building a community. If you are about to release your product, for example, and you need to gather the audience there and then somehow raise the interest as well. I think one of the key learnings is as well, that if you just open the floodgates if you’re in that lucky position that there’s a lot of people queueing and waiting for that may not be the best approach in the long-term.

In order for the community to grow and have a culture and values, you need to have a limited amount of people there first to define that. And, that’s probably something I think is important if you want to do this in the long-term as well. And was that the reason you also have been limiting in Slush, now in your Node, the amount of people you want to get in?

Miika: Yeah, absolutely. There are maybe two reasons for that. The first one is that we want to ensure that the amount of people we let in is an amount that we can actually curate and help by ourselves. If it explodes right away to 10 000 or 15 000 or 30 000 it dilutes the community in a way that it’s really hard to understand who is here, what they’re wanting. There are a lot of people who are looking for different things. We want to start with a smaller number and then scale the community after we on different stages, when we realise that we can actually help these people.

And the second thing, what is different to the offline version of Slush is that in the offline event, you have been able to buy the ticket for it before the event without applying if you have been buying a pass as an attendee, which is a category for our tickets. And not just as a startup or investor or media.

But for Node, it’s a bit different now because we have only tickets that have to be applied for startups, investors, and an access type what we call an ecosystem. Which is for accelerators and people working with startups and helping startups, but who are not the investors.

So that pretty naturally also limits how many people we are getting and how many people are applying. But yes, we want to ensure that the commute size is manageable and it doesn’t feel like a huge mess right away. Because I see a lot of those, for example, at LinkedIn currently. Personally, I use LinkedIn daily.

It’s just basically the place to find people, who are not just only in this ecosystem. Kind of see really quickly what they’re doing. But other than that, I think LinkedIn is absolute garbage. One of the reasons for that is that I get maybe 10 to 15 messages from people who I don’t know, who want to sell and most of them are bots. And that’s something we absolutely want to avoid when building Node.

Petri: This reminds me of something I think which is just emerging. It was actually Preston Byrne in just a few episodes back where he was talking about how junior lawyers don’t have a career path anymore because AI, machine learning algorithms, are getting so good that the work they’ve been doing, is not needed anymore.

And I think that is happening pretty quickly with the content as well. If you can push out good content, decent content, whether it’s a blog post, whether it’s whatever LinkedIn invites even with personalised messages that say, Hey, I really like your comment on this or in your blog post you mentioned this and that. That’s all bot, and I think that’s coming quickly as well.

Maybe this is the last moment really to reach people directly because it’s the same thing what happens with regular telephone calls. Spammers calling, telemarketers and it’s like, I don’t want to pick up the phone.

There’s no one there I want to speak to and it’s basically impossible to get through to people. This is now happening to the last of the means and it’s coming quicker than probably expected.

Miika: Exactly. That’s what we’re trying to crack with the product we’re building. How to ensure real human connection and valuable people to meet. And ensure that if you join for a session or you consume content, it’s already consumed by somebody else instead of just tossing it in front of you and then hoping that it’s valuable.

Petri: What makes you happy?

Miika: What makes me happy is having high ambition, interesting things to do daily and being with my girlfriend.

Petri: How do you define success?

Miika: That’s a really good question. Success is something when you feel a sense of fulfilment inside of yourself.

Petri: What are the things you’re struggling with?

Miika: I struggle a lot with managing time.

Petri: Is it just peculiar to this year and sort of compressed post-corona syndrome: new world, new levels, open-world game. You don’t know the rules, controllers are a bit off, you don’t really know what’s going to happen?

Miika: I think it comes from the fact that I don’t know what’s going to happen and I try to find different sources, pieces of information, discuss with people to understand what’s happening. But as nobody of us knows what will happen in next month or in three months it’s a big adventure and you can use as much time as you ever want.

The struggle with time comes from the fact that at some point, you just have to put a stop. And stop thinking and do something else. And that makes managing the time currently difficult.

Petri: I read somewhere that one of the reasons computer games are so successful is that you feel some sense of fulfilment and control because you can learn the game. You can try again and then you can succeed. So it’s a world where you are in control. Versus the real world open-world game where as you described, we don’t really know what’s going to happen.

There’re no easy ways to read walkthroughs that do this and it’s going to work. Nobody knows the playbook. You have to figure it out yourself and you can write about it. Then it’s already changed. But I think it’s part of the fun, the experience we’re having.

What is your favourite word?

Miika: Demo.

Petri: What is your least favourite word?

Miika: I would say that’s mediocre.

Petri: What turns you on creatively, spiritually or emotionally?

Miika: Nights and trance music.

Petri: What turns you off?

Miika: Hunger.

Petri: What is your favourite curse word?

Miika: I think nothing in English. But in Finnish, sorry for my language, it’s maybe voi vittu, which is roughly translated to oh fuck.

Petri: What sound or noise do you love?

Miika: My girlfriend’s laughter.

Petri: What sound or noise do you hate?

Miika: My phone notification sounds.

Petri: You can take them off!

Miika: I know.

Petri: What profession other than your own would you like to attempt?

Miika: I would like to try to be an esports athlete.

Petri: What profession would you not like to do?

Miika: I’m not that good at crafts. Although, I would like to try many of those things. I don’t believe that I would enjoy specifically anything that requires really, really specific hand-eye coordination.

Petri: If you could be a co-founder of any startup in any era, which one would you choose?

Miika: Well, this is not maybe too surprising, but I would maybe choose either at the present moment or early 2000 and computer graphics.

Petri: Any particular company or just in the field?

Miika: Maybe just in the field or then Hybrid Graphics or early days of and Nvidia.

Petri: A related question to the alternative career, is there an actual upper limit? Is it the reaction time or something? Can you still in your fifties, sixties or seventies become an esports athlete?

Miika: Honestly, I don’t know. Nobody has tried before. It seems that there is a trend that after maybe 27 or 28 there’s a lot of esports athletes that are retiring. And they are not maybe performing at the level that they used to be. I think the optimal age, especially from the reaction time perspective seems to be like the early twenties.

But, I think that data might be a bit skewed in a way that many of these players also want to try something else in their life when they’re getting closer to their thirties or early thirties. But I do know I would love to try it out.

Petri: And I think there’re also different types of games. Not all of them require fast reactions in the sense that you need to shot someone to do something like that.

Miika: Yeah. In FPS games, it’s a lot of the reaction time. In these mobile games like League of Legends, it’s also reactions but it’s also the intelligence inside of the game and the tactics and then there are, of course, games like Hearthstone, which is this turn-based guard game where it’s most like chess.

You just have to think about like what the opponent is probably doing. What are my cards, what I can do. So obviously there are games that are also suitable for those that the best days of your reaction time might be already gone. So it’s time to maybe then turn to the card games.

Petri: Any final words for the audience?

Miika: If you are ever interested to learn about what the hell is esports and how it works, who is there, what companies are included, why people seems to be interested in it. Send me a message on Twitter or email or whatever. You will find me. Happy to provide insights.

Petri: There is also an excellent Medium article you wrote earlier this year.

Miika: Yeah, there is a Medium article about underlying drivers for why I believe esports will grow massively in the next 10 years written to the Maki.vc blog. That’s a good starter

Petri: Thank you, Miika!

Miika: Thank you, Petri. Thank you for inviting me. It was really fun.

Startup Communities

September 11, 2020
Startup Communities: building an entrepreneurial ecosystem in your city

Startup Communities is about the inspiring story and the message that you can build a vibrant startup ecosystem anywhere. If you can do it with a small 100 000 inhabitant city in Colorado it can be done elsewhere. Today, Boulder has one of the highest entrepreneurial densities in the world.

The author, Brad Feld, has been instrumental in the startup field globally for decades with Techstars, Startup Weekend, Startup Revolution book series, his blog Feld Thoughts and investment activities.

The book is based on the Boulder Thesis that are principles derived from practical experience and experimentation.

The first element is that the entrepreneurs must always lead the startup community. They are the role models and inspiration but also the driving force for community development. If entrepreneurs are not leading the community it will not be sustainable in the long-run.

The second key component is that the leaders must have a long-term commitment. A 20-year perspective is a long-enough time to think intra-generational and Feld updated this later to mean a rolling 20 years (20 years resets every day).

As a third component comes inclusivity, everybody needs to be welcome and new people should be included openly and actively to the ecosystem.

The final part of the thesis is the reminder to keep the full entrepreneurial stack engage continuously with activities.

There are factors that help startup ecosystems to grow. One of them is “external economies of scale” where the higher the density of startups the better the specialised services become and their average cost per startup goes down. Startup specialisation brings scale economies and more refined ecosystem that speeds up and helps to build new companies. Network effects bring similar advantages where a higher density of startups and successful entrepreneurs support the further growth and success of the ecosystem.

The startup ecosystem does not work only with entrepreneurs. There are other participants that are as valuable as entrepreneurs. They are called feeders, and influential community leaders that are not entrepreneurs are called instigators. As a network there is no hierarchy between the actors, they just have different roles.

For example, the government and public organisations are feeders that can help the ecosystem but they have different priorities, time perspectives and ways of operating. They tend to run with budgets (and easily measurable short-term results), political cycles and operate with a top-down approach.

Large companies can help the ecosystem at least in three ways. They can provide resources and infrastructure for the startup ecosystem, create startup programs, and naturally be customers of local startups.

The book is filled with practical advice and tips for all the participants ranging from give-first approach to experiment & fail fast, be mentorship-driven, play a positive-sum game among others.

One important aspect is the classical problems that tend to happen in ecosystems.

The patriarch problem describes the issue where the most powerful people in the top of the hierarchy try to control and be gatekeepers in the community. Feld gives two pieces of advice for tackling it. They are very simple and powerful: just ignore them and wait for them to leave the scene. No approval required, just start doing things.

Not enough capital is a favourite excuse for not doing enough. There are multiple ways to overcome this such as finding the capital where it is available or start local and then go big.

Another related issue is a reliance on government either with support or money. Often, the outcomes can fall short in both accounts, and in addition, public bodies are notoriously slow to take action if the results are not immediate they may soon move their focus elsewhere.

Other common issues are a culture of risk-aversion, avoiding people because of past failures, playing a zero-sum game, creation of artificial geographic boundaries or having a bias against newcomers.

It is no accident that some startup ecosystems thrive as the above demonstrates. It takes continuous effort by many people for extended periods of time. The impact that happens in a networked system is non-linear and it can be hard to time. Patience is required as well as the notion that you cannot control a startup community. It is a rapidly evolving and ever-changing organism that has the entrepreneurs in the middle and the rest of the participants supporting them. That’s why it’s called a startup community.

How to get funding and raise capital for a startup

September 10, 2020

I put together some points about fundraising and things that really matter. It’s probably not fun to hear but often the easy things are not the ones you should focus and spend your time on.

The content:

00:00 Getting funding is easy!
00:22 Why and what are you doing?
01:17 Customer pain points
03:09 Target market
03:14 Revenues
03:27 Cap table
04:15 The hard part
04:51 Relevance
05:08 Show don’t tell
06:21 Excuses
07:10 Practise makes perfect
08:41 Summary
09:10 Bonus

Earlier this year, I wrote a similar post that was the basis for this video.

Welcome to the new season

September 6, 2020

The new business season has started. I have been Hopin to many short matchmaking meetings already (Uppstart being the latest). IRL events feel so last season already (too soon?)

New Youtube-channel

This is the official opening post of my Youtube-channel. It starts modestly with little content but I have big plans! If you want to show a little love to the channel check it out and click the subscribe button. It will help me to unlock certain Youtube-features that are tied to the subscription numbers.

Talks with Petri -podcasting frequency

The release frequency is now biweekly. I have released over 20 episodes since starting a few months back. Thank you for listening and sending me feedback as well as sharing the episodes with others. The show is getting more listeners every week and I’m so happy to see that you find the content valuable.

Send me your feedback and questions

Keep me in the loop and send me feedback (even anonymously). You can ask business questions that you would like me to cover either in a blog post, video or in some other format. These can be comments, your thoughts, pressing questions or tips.

(Here’s a practise question I would like to hear your thoughts: video/audio transcripts – are they useful? I have been publishing them for every podcast episode. I even have them for the below video (only as captions for now). Would you find video transcript as a blog post useful and if so, how much would you pay to get that feature?)

Business disruption in 2020 (do you still have a business model?)

Early 2020 kick-started business disruption. If you were not digital-first business already do you still have a business model?

I will talk about the digital disruption and adapting to change in this decade. Many of the consequences take longer to become evident but you should be aware of them now, and act immediately.

Topics (timestamp links go to Youtube).
00:00 Do you still have a business?
00:07 Disruption example
00:45 The current situation
01:53 Customer behaviour
02:25 The new reality
03:37 How to adapt to changes
05:25 Question everything
06:46 Disruption example, part two
08:50 Future of business conferences*

*The podcast episode mentioned in this video will be released on the 13th of September, 2020.

Personalised learning with service design thinking

August 30, 2020
Personalised learning with service design thinking by Kadri Tuisk - Talks with Petri podcast

Kadri Tuisk – TALKS WITH PETRI

Entrepreneur Kadri Tuisk explores the future of education with personalised learning, why she loves design thinking and being outside of her comfort zone. She also talks about startup pivoting and hitchhiking to her first career.

Personalised learning with service design thinking

Bio

Entrepreneur Kadri Tuisk is the CEO of Clanbeat Education, an ed-tech Saas software that supports accelerating human growth by helping to build human agency through individual growth and community support. Kadri has accelerated her startup with 500 Startups in San Francisco, pivoted a few times, and found market traction in the challenging times of the 2020s. Previously, she has worked in service design and account management positions, and as a professional model.

 LinkedIn | Clanbeat

Transcript

(NOTE: The text may contain errors, misconceptions and even comical unintended contexts. Please use it only as a reference to the actual audio conversation from where it has been transcribed.)

Petri: Hey Kadri!

Kadri: Hey Petri!

Petri: So great to have you in the show!

Kadri: It is, I’m so excited for our talk!

Petri: Where have your failed today?

Kadri: Today, let me see, let me count. My first failure today was not having my breakfast because I really had to make a really quick change into my schedules because of one family thing happening in the beginning of next week, which takes me super off hours. So I had to cram all those things I have to do at the beginning of next week and try to do it all at once today. And breakfast is something I had to sacrifice and it doesn’t make me feel good.

Petri: It’s a big sacrifice. Is it still the most important meal of the day?

Kadri: Yes exactly! I’m usually super religious about my mornings. it’s very important to me.

Petri: What’s the story behind the failure thing because I don’t know again anyone really loves failure but you have taken that into your heart?

Kadri: There comes this feeling of being content with failures over time. And I think right now the people the younger they are the more they’re getting more used to it because earlier it was wrong to fail. But right now we have found out that very many learnings come from failings. I embrace it and I always try to find out what is this thing I can actually learn from it. And how can I improve? I love if something is fucked up. A little bit sadistic, but this is the way it is.

Petri: Did you learn that by the hard way or was that always how you have been?

Kadri: By the hard way. Because when you’re growing up in the Soviet times, then you’re having this kind of social patterns where you have to fit and then failure was not one of them. For example, overseas or even to America in startups fail fast is something which is highly appreciated. In this kind of region where I live, I come from Estonia, here you didn’t see that too much. This has been very refreshing to find out that this is also the way how to look at things.

Petri: How was it in the Soviet times, you were not supposed to fail or everybody’s failing or something between?

Kadri: It depends on the people. People had very steady jobs and had the goals for the five years, which they had to fulfil. This was actually something which didn’t make people go out of their comfort zones in that sense. Although being in Soviet times is a really big uncomfortable situation. But it didn’t encourage people taking risks and usually taking risks is something which failure is written into.

Otherwise, you don’t learn or you don’t find out what works and what not. So being grown up in Soviet times, I think this is something we had to learn when we got our freedom. How to embrace that and how to deal with that. But I’m happy to see that this has come to our hearts and, and people are finding their peace with that. Finally.

Petri: Do you remember when was the first time you were thinking that maybe I will build a company of my own someday and really adventure the world?

Kadri: I don’t have an exact date but I remember that I haven’t been thinking that they do need to have my own company. I wasn’t this kind of entrepreneurial type, but in the school in the Soviet times you were made to do a test. What are you becoming? And, for me the tests showed that you’re going to be an entrepreneur. But I don’t know if that’s this defined this journey or not, but I really didn’t think that making a company is something I should do, but I did it because I really wanted to make an impact on the world.

And this seemed the easiest way to do it because I couldn’t be able to fulfil my dreams and bring the impact I wanted in my paid job back at the time when I made the decisions. This seemed the way to go for me at that time.

Petri: You raised one million round just a few months ago and pretty much killing it with your new concept in these exceptional times. Can you tell a bit about what your company does?

Kadri: Just a little specification. The round was raised almost a year ago already. And we have almost spent some of it already and made a really big impact already.

I’m the founder of Clanbeat and we are building a growth and wellbeing solution for schools. We are supporting students and teachers for self-directed learning and how to set goals, how to act on them and how to also reflect.

So you wouldn’t get stuck and you would be able to design your life in a way that is fulfilling to you. And so in the longer run schools would be able to offer personalised learning based on all this data which we are able to provide based on what people are good at, what are the strengths or weaknesses, what is their internal motivation and how will the education suppose to morph around the human needs. This is what we are doing with our team.

Petri: You mentioned to me before we went online that when the Covid-19 hit you couldn’t sleep too much because there was so much to do, so much onboarding. Everybody wants to get into the platform. Can you describe the feeling and what was happening and where are you now?

Kadri: One day before Estonian schools went into lockdown, we were sitting in a round table in the Ministry of Education. We were discussing what is needed for Estonia to be successful in the Covid period. They mentioned that the teacher communication and keeping the teachers humanly connected in the time where we are apart seemed very important. And one of our products which we have in our offering is a teacher platform for their personal growth. And we had inside this possibility for very smooth communication and sharing the insights and asking for help and having very human insights also not only work-related and really understanding how people are feeling and reaching out in the need.

On Friday, we had this round table in the Ministry and already on Saturday morning, we had the offer out to schools to use it for free. And, we renamed the value proposition to Virtual teacher’s lounge and the interest towards the product in the first upcoming days was something we have never seen.

For example, if we’ve got like five interests during the week previously, then during the Covid period it was 500. It made us really redesign our onboarding processes and how to make it self-serve and self-explanatory super fast and boosted many of our processes. And, I had to make those explanatory walkthrough videos.

I was doing them in my bathrooom. You know yourself doing these podcasts that if you have a bathroom, which is echoing a lot, this is not the best idea. So pretty soon I moved into a closet to do that. It was really, fast and sleepless times for the past first few weeks to really being there for the schools and helping them to onboard and really understand how this could help them right now.

This was a very heavy growth period for Clanbeat in learning how to learn very fast. I think we did like one year worth of learning in one month.

Petri: Schools are opening again all around the world. What do you think of the situation? What’s going to happen in the next few months and also a bit more longer-term question, what do you think of the future of education and learning?

Kadri: I think that the period gave a really big boost to all of those innovations that were about to happen anyway in the education field. It was just speeding up the process. I have been in contact with many school leaders around the world and the situation is a little bit different because the lockdown rules are different in each country.

And some of the countries, for example, our Australian partners are going into the second term of lockdown and having to come out of that again. This is really tiring for the school staff and for students also. Going in and out is some new normal, which needs to be taken into mind which could happen in the past year.

In a few years time that digital literacy and being able to get rid of some processes, which are inefficient, these changes are happening right now. Although, I see a lot of digital fatigue around schools. Nobody wants to stare at the screen anymore and they are looking for ways of how to get away from them.

But also I see a lot of efficiency happening and trying to make the school system more efficient. Most of the changes won’t happen in two to five years. But I think in 10 years time, we are able to see already a pretty drastic change in personalised learning, which is effective and humane. And I think this COVID period gave a really good push for this.

For education, I think, although right now it’s hard, but I haven’t seen many good things in life which come out of not hardships but being in your comfort zone. This is totally out of the comfort zone and this brings heavy growth and I’m excited to see what the future brings.

Petri: Do you have a vision of the future? How kids are going to school in ten years? How does it differ from today and then maybe from the times we were at school?

Kadri: