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.