«Belarusian mentality is very similar to Finnish». Simo Pahkamaa told us about startups, Nokia and prospects.
The Russian version of this interview was originally published at Onliner.by.
Belarus will eventually become a real IT-oriented country, but this still requires us to overcome many hurdles along the way, perhaps even change the way we look at life.
That’s the impression we have after talking to Simo Pahkamaa, who has dedicated 9 years of his life to Nokia, then tried to leave the tech world, but got back to this sphere in a different role.
It is Simo’s first time visiting Belarus. He hadn’t spent much time here, so his impression of the country is not yet complete.
«It’s been an interesting couple of days. If I’m honest, in Finland there are certain stereotypes about Belarus. This might be due to the fact, that its name in Finnish sounds like „White Russia“.
I’ve already worked with Belarusian developers a lot, so I don’t really believe in these prejudices», — noted our guest.
In our interview with Simo, we tried to avoid usual cliches like clean streets of Minsk, gloomy passers-by, or “most beautiful Belarusian women”…
And Simo himself started off by mentioning a problem of Belarusian capital city, which many people would acknowledge: “You need to do something to the user experience”.
When the guest from Finland went out of the President Hotel doors, he immediately got lost. “Seems like it’s the center of the city, the main avenue nearby… But it’s still tough to get to places, to find your location without Google maps. And the 5-star hotel doesn’t even provide any tips or guides for tourists”.
The life story of our interlocutor looks very remarkable indeed. A career starts in Nokia, a bright future ahead, then stagnation, then an unexpected turn – the downfall of the Finnish company, finding himself in other spheres, a couple of steps back. As it turned out, those were the steps to gain pace for a takeoff.
Based on his own experience, Simo can tell a lot of interesting things about the IT industry. We were particularly interested in how things with startups are in Finland, whether there’s a similar hype level around this topic there.
After all, just in the hometown of our guest – Oulu (“Nokia city” in the past), a town with around 200 thousand inhabitants, – more than 500 startups were launched. For Belarus, this is something unheard of.
«The state invests huge money into startups, but a single “success story” is enough to get most of the money back – in the form of taxes, employment, etc.»
«10-15 years ago many people were employed at Nokia, I was among them. When the business started going down, it became a real disaster for Oulu: the unemployment rates skyrocketed, especially in IT.
I have to give credit to our government: they made the right decisions at the right time, and today even more people work in IT than it was in Nokia’s better times.
We even experience a lack of IT professionals now, that’s why we’re looking to outsource some of the processes.», — Simo explains.
Today, according to his words, there’s a truly efficient startup support system in Finland. Why would the government support startups so much?
The reason is, companies like Nokia occupy too big of a national GDP chunk (it was around 6% for Nokia). When the company started going down, it had an effect on all the country’s citizens.
So avoiding the situation to repeat by diversifying the risks is the main reason for supporting a variety of IT projects.
The volume of state investments in startups is estimated at $400 Million each year. There’s a fund that distributes money throughout all projects, as well as local organizations that make sure each region gets equal funding for its startups.
It means, that it’s often easier for entrepreneurs to launch projects in the regions they come from, rather than competitive and expensive Helsinki. The money is invested not to necessarily gain profit from each project, but to help a small part of projects to really skyrocket.
— The state invests huge money into startups, but a single “success story” is enough to get most of the money back – in the form of taxes, employment, etc.
— Do you think the same scheme is possible in Belarus?
— Why not? Of course, it is. I don’t know all the details of local taxation or government influence on entrepreneurship. But at the same time – why wouldn’t it work? Belarusian mentality is very similar to Finnish.
According to Simo, it is relatively easy for Finnish startups to obtain financing. Well, at least much easier than it is for Belarusian ones. For instance, a start-up with an MVP can receive 15 to 50 thousand euros in the first round.
You have to get through the bureaucratic difficulties at first, though. “A lot of paperwork. Always. Where is it any different? “- laughs our Finnish visitor.
The volume of investment is affected by those “success stories” we mentioned above: the more of them, the higher the chance to get financing for everyone else.
The allocated resources then allow creating several more “success stories”. And the system of re-investments keeps going at increasing speed.
By the way, a couple of years ago the government representatives of South Korea were interested in the approach to startup support in Finland. They invited a friend of Simo, who is in charge of one of the state funds, as a consultant.
The fact is that earlier on the share of Samsung accounted for about a quarter of South Korean GDP, so the authorities were worried: what happens if this company goes down? And again, support for startups was chosen as one of the ways of development and averting risks.
“They want to create the prerequisites for even more “success stories “”, Simo said.
Not everyone is ready to take risks, though – for many investors, well-established startups look more attractive.
“But, as practice shows, the risk sometimes pays off in large numbers,” says Simo, who doesn’t hide his inspiration by the success of Rovio and Supercell.
– I know a businessman invested a million euros in Rovio, but the company did not live up to expectations. Then he invested another million, and a few more… After the company’s IPO, he received thousands of percents in profit.”
Simo also has his own business, which no longer qualifies as a startup – this is a profitable project with without reliance on investors.
The Neurosonic company headed by him is engaged in the development of a system based on a simple interaction (at first glance, since the development is worth years of research): a set of micromotors built into the mattress creates vibrations that have a positive effect on human nerves and blood flow.
“We position the platform as a tool for relaxation, quality sleep and recovery. Our devices help people to cheer up, relax and even gradually get rid of the pain in the case of many diseases.
But before we get medical approval papers, we won’t promote our invention as a medical device,” says the Finnish businessman.
The company believes that the most effective way to advertise the product is customer feedback – this is what they bet on in their marketing strategy. And subsequent clinical studies will show the “official effectiveness” of the platform.
The intensity of treatment can be set by the through a mobile application either by users or doctors.
At present, this is a technological innovation, but with the prospect of evolving into the medical treatment device and with plans for product sales throughout Europe.
Many of the company’s operations are outsourced – the Belarusian developers are engaged in software development aspects. The production is still located in Finland.
Before you start comparing Neurosonic devices with massage chairs or beds found all around Belarusian shopping malls, we should note that they are not associated with the Neurosonic project.
Simo worked at Nokia for a long time – from 2001 to 2010, so we were very interested in his opinion about what happened to the once-legendary manufacturer of mobile phones.
– Why was Nokia blown away?
– I think the blame is on the company’s confidence in its invulnerability, its arrogance to a certain degree. Nokia considered themselves too big, too successful to be afraid of any cataclysms.
I remember when the first iPhone came out, I heard among some Nokia employees: “It will not be a hit. They are not competitors to us – you can’t even send an MMS from this phone.”
This, of course, is not the only reason, but it was an important one. Efficient or advanced technologies are not the only thing that goes into future success and guarantees an “eternal” existence.
Do you have a cool product and nothing can be compared with it in terms of technology?
Once, Simo believes, this was enough. Now, however, the rules are written by user experience – if it is a nightmare, the chances of surviving are rapidly disappearing.
“But if the UX of your products is close to perfect, you can even hide mediocre technology behind it,” laughs the Finn.