Risto Siilasmaa: Fostering innovation may mean being ‘un-Finnish’

Risto Siilasmaa: understated.

Risto Siilasmaa, the understated founder and chairman of the board of Internet and mobile network security company F-Secure of Helsinki, has succeeded at balancing being an entrepreneur and a Finn. He won’t talk about the special traits have made him successful. That’s for others to comment about, he says. The facts speak for themselves: he’s built a 19-year-old Internet security company with 540 employees and €23.3 million in revenues in the second quarter ended 31 July, up 18 per cent over the same quarter last year, with €5.6 million in cash flow.

Siilasmaa has ideas about how Finland can foster innovation and entrepreneurship that involve changes within education, government and individuals. The key ingredient for entrepreneurship is people who don’t give up and who are optimistic. “That attitude is deeply ingrained into the way people in the United States think,” he says.

The students who apply for teacher training at Finland’s universities are very bright, he notes, but they also tend to be the most risk-averse people in the country. Teachers enjoy employment security for life. “How do you get very bright but risk-averse people to train young people to be more innovative?” he says. “People change slowly. Teachers need to take every single opportunity to pound in the message. It will be at least a generation before we see change.” Students need to be encouraged to present new ideas in front of others, he says, and they need role models.

Get government involved

The government also needs to get involved. “One of my pet projects now is to convince politicians in Finland of the need for the nation to act in its selfish interests,” Siilasmaa says. With Finland facing an ageing population in which pensioners will outnumber working people, there is a need for new growth companies. “The government needs to help new growth companies to be created. It needs to think outside the box.” Siilasmaa says that many of the actions needed to promote entrepreneurship and support the creation of growth companies are politically incorrect. “This leads to the current policies being misaligned with true long-term national interests,” he says. “Our leading politicians should have the courage to put national interests first.”

One proposal Siilasmaa has made is to get more angel investors, especially retirees who have international business experience and who have accumulated meaningful wealth, involved in new growth companies. “Every single government-funded investment into companies should only be possible if there already is one angel investor,” he says. “If an entrepreneur can’t convince one angel to invest €20,000 in his or her idea, the idea is bad or the entrepreneur cannot sell. In neither case should the government put money into the company.”

The pool of potential new angels should include retirees from large Finnish companies who have business expertise. “There should be a line of entrepreneurs at their doors to get a bit of their time and money,” says Siilasmaa. Certain areas of the United States, including Boston and California’s Silicon Valley, already enjoy such clusters of entrepreneurship, where those with money and those with ideas can get together more easily.

The Finnish government can play a role in rallying angels: it can tell potential angels that such investment is patriotic. Because Finland is such a small country, there tends to be more cooperation between different departments of government and the private and public sectors.

Siilasmaa also advocates mandatory overseas study by university students. Finnish students generally have been reluctant to do this: education is free and life is easy in Finland, he says.  “We need to get students out of Finland. They need to get an international education,” he says.

But the bottom line is that to become an entrepreneur in today’s globalized world, “you really need to want to do it,” he says.

Siilasmaa knows about the school of hard knocks. In the spring of 2001 F-Secure reduced personnel by about 20 per cent in response to weak demand for certain products. “I could have thought of stepping down at that time, which would have been the easy way out,” he says. “It was difficult, but I’m happy I went through those years and learned. Every company will go through difficult times. An entrepreneur can never give up.” Last November, with the company in a strong business position, Siilasmaa did resign as CEO to become chairman of the board.

Upon resigning, he said he had two goals remaining in his career: to establish a new international growth company and to work in one of the largest global corporations.

Keeping busy

Since then, he’s kept busy. He’s involved in 10 smaller companies, most of which he’s a major shareholder in. He’s chairman of three of them, a board member in another three and an advisor in the rest. He also is involved with several large companies, but since he isn’t officially employed by them he won’t reveal their names. “What’s been highly educational is to see how different industries work,” he says.

Siilasmaa is involved in companies in a venture capital role. He hasn’t calculated the exact amount he is pumping into the various companies in which he’s involved. He still owns 40 per cent of F-Secure, and has been selling shares over the years and investing the money in smaller companies. He becomes a shareholder as an individual or through an investment vehicle such as Nexit Ventures, a venture capital company he helped found that has offices in California, Finland and Sweden.

Reportedly worth several hundred million euros, Siilasmaa says he doesn’t need to focus on short-term returns. “I don’t have the exit pressures of typical venture capitalists,” he says. “All companies I’ve invested in have big ideas that change the way people live or how an industry functions. I want one of them to grow larger than F-Secure.”

One of Nexit’s investments, Ekahau Inc of Helsinki, particularly excites Siilasmaa. The company makes a matchbox-sized, real-time location system tag that fits onto a human or an object and tracks it to within a few meters. A wireless LAN infrastructure is needed for the devices to operate, but Siilasmaa sees broad applications for the technology. Among them: tracking workers in chemical companies to see if they might be unconscious from exposure, improving production efficiencies and locating critical health equipment such as IV pumps in hospitals. Such mobile technologies are an area in which Finland excels, says Siilasmaa, citing Nokia and some newer companies like Ekahau. Others also will point to F-Secure.