September 30, 2011 / 1:40 PM / 7 years ago

Start-ups aim to reboot Finland after Nokia crash

HELSINKI, Sept 30 (Reuters) - The creators of Angry Birds and other young entrepreneurs are leading Finland’s effort to reboot its economy after Nokia Oyj admitted defeat in the smartphone race and shed thousands of jobs.

The initial shock of the February decision by Nokia Chief Executive Stephen Elop to dump the company’s own software ambitions and use Microsoft Corp’s Windows instead cast a long shadow over Finland’s hopes for technology-led growth.

A cross made of Nokia cellphones on a black front page of a tabloid highlighted the crisis a day after the announcement by the first foreigner to run the company in its 146 year history. The headline “Beginning of the End” underscored the point.

Yet Nokia’s own origins in a company making rubber boots perhaps shows the nation’s capacity for innovation.

Even as Nokia cuts jobs, companies such as Rovio, creator of Angry Birds, are hiring as fast as they can.

“Startups are doing better than ever in this country. I have done this for 18 years and the action has not been ever before as wild as now,” says serial entrepreneur Ville Miettinen, who co-founded mobile graphics software maker Hybrid Graphics.

Hybrid was sold to Nvidia Corp in 2006 and Miettinen now leads Microtask — one of the frontrunners in the “crowdsourcing” boom — turning physical documents like recipes or archives into digital, with the help of large audience on the Internet.

Ilkka Paananen, chief executive of Internet gaming firm Supercell, also sees strong activity among tech startups. His latest venture Supercell has in less than a year gathered a community of 1 million players, and raised funding from Accel Partners and others.


Supercell has a staff of 40, which Paananen sees growing to at least 200 relatively fast.

“Its not bad that a relatively experienced and talented workforce is freed from Nokia,” he said. “Especially on the gaming side, Helsinki has become the Silicon Valley of Europe.”

Angry Birds, a puzzle video game, has emerged as the symbol of this new Finland. The game — in which players have to help the birds destroy pigs who stole their eggs — has broken ground in mobile gaming by staying at the top of the charts for years and Rovio is building a big business around it.

It raised $42 million in venture capital funding from Accel Partners and Skype-founder Niklas Zennstrom’s investment firm earlier this year and media reports have suggested its value as more than $1 billion.

“Rovio has shown what can be achieved. It’s a completely different story today than it was in 2004 or even in 2010,” says Paananen. “I am sure there is at least one more coming like Rovio — it could be Supercell or it could be someone else, there is just so much happening here right now.”

Paananen sold his mobile gaming firm Sumea to Digital Chocolate in 2004.

For the export-dependent Finnish economy, which shrank 8.2 percent in 2009 after a collapse in global demand for paper, Nokia’s mobile phones and machinery, the success of new tech ventures has significance beyond the entrepreneurs directly involved.

At the peak of the technology bubble, Nokia accounted for 4 percent of the country’s GDP and only a few years ago its revenue was larger than the state budget.

Its shrinkage therefore leaves a big gap to fill.


Fewer jobs and the greying of the baby boomers mean the country will be relying on a smaller workforce. McKinsey & Co estimates the nation of 5.4 million needs between 150,000 and 200,000 new private sector jobs by 2020 to finance welfare services.

Some are already campaigning with this in mind.

“Finland does not need a new Nokia to secure its welfare. Finland needs many angry birds,” young entrepreneurs Taneli Tikka and Lasse Mannisto said in their programme to save the country’s welfare system.

The chase for new ideas is also the aim of Reboot Finland movement, which was born on the Internet after the February announcement.

Fortunately Nokia’s own redundancy programmes have since 2009 helped free up skilled workers to lead the new tech industries. Ex services portfolio director Heikki Aura, 37, and online games sales chief, Veli-Pekka Marin, 36, were among the first to quit and open their own businesses.

Their venture Uplause has built a crowd games platform for sports events, played by some 3 million people so far. Last week Uplause teamed up with Rovio for an Angry Birds crowd game last week at the Singapore Grand Prix.

“Many of us old Nokians are at startups now,” says Laura Avonius, 37, who left in January after 10 years at Nokia and is now running operations at Bublaa, a social network startup, aiming to combine the best aspects of Wikipedia with Twitter — enabling communities to share trusted information, while keeping and sorting it.

“Nokia is a good university to run any company,” she said.

Bublaa aims to first find a following in the United States, the key market for social networking, then build up its mobile platform.

“Mobile is the strength of Finland and Finns,” Avonius said. “Even if Nokia has its challenges.” (Additional reporting by Jussi Rosendahl; Editing by David Holmes)

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