Ulla Engeström

What makes Helsinki a hot startup hub - 8 observations

In 2006 when Jaiku started, the Finnish web startup scene was practically nonexistent. There was no Aalto University, no accelerators, no encouragement, and no money. Still, there was a growing enthusiasm to do something, and there was Aula that brought interesting people to Helsinki.  Only 5 years later, everything has changed. Helsinki has transformed into a vibrant startup hub with bursting creativity, self confidence, and humor.  Here are some observations on what is happening:

1. Rovio boosts collective optimism
A startup entrepreneur has to be an optimist, because thinking about all the things that can possibly go wrong would paralyze anyone to death.  The standard optimism however elevates into new heights when there is one crazily successful example nearby. Thanks to Rovio, Finnish startup founders have started thinking we can. 

2. New networks and communities encourage initiatives and action
As a busy entrepreneur, you rarely get to hang out with likeminded people, and that's a pity because you miss a lot:  serendipitous connections, randon exchange of wild ideas, as well as concrete tips  about good events,  people, partnerships,  and funding. The pioneers and new pillars of the new active Helsinki startup culture inlcude collectives such Finnish Mobile Association,  Aalto Entrepreneur Society, Aalto Venture Garage, Startup Sauna, Future Female, and TEDx Helsinki.  All these are loose enough so the barrier of entry is low, but active enough so that things start to happen.

3. Entrepreneur-led accelerators bring focus and hands-on mentoring to government funding
Two years ago the Finnish Funding Agency for Technology and Innovation TEKES launched Vigo, a new kind of accelerator programme for young Finnish growth companies. The accelerators are led by experienced entrepreneurs that participate in the activities of the selected companies. Vigo companies can get up to 1M eur (non-diluting) grant for building their international business. In less than 24 months the 40 portfolio companies have raised more than €70 million from investors such as Accell Partners, Index Capital, Sunstone Capital, and Inventure.

4. New VCs with good networks
One of the Vigo accelerators, Lifeline Ventures, just announced a new 20 MM eur venture fund.  For Finland, 20 MM eur new money for statups is not trivial: it is as much as total foreign investments in 2011 (let's hope this number will grow in 2012). The founders of Lifeline Ventures, Petteri Koponen, Ilkka Paananen, and Timo Ahopelto, are all serial entrepreneurs with great connections to London and Silicon Valley investors.

5. New tax incentives for angels
Despite the good news on the VC side, the early stage entrepreneurs are not exactly rolling in angel money. Luckily, the government has figured out that since  half of all the new jobs seem to emerge in small growth companies,  so perhaps it would be good to hammer through some tax benefits for business angels. The so far unconfirmed plan is that half of the total angel investment would be deductible from one's capital gains. Not bad, eh?

6. There are plenty of great engineers

Finnish engineers are reliable, skillful, organized, and cost effective. Ok, perhaps a bit blunt sometimes and not so well combed as the Swedish ones, or as unexpensive as the Russian ones, but still, absolutely lovable. And there are plenty of them in Helsinki --and Oulu. I'm not saying recruiting is ever easy, it is damn slow and frustrating, but at least we're lucky for not having to compete with Etsy and FourSquare in NY or SoundCloud in Berlin.

7. Biz & tech press is slowly waking up -> more talk =  more action
Finnish business and tech press (except for ActicStartup) is well-known for whether completely ignoring the emerging startup scene or alternatively only taking pleasure for its failures. As the spring comes,  there are signs of waking up. Those who have  ventured to write about other companies than Nokia, Metso and Kone, have noticed that their readers quite like to learn about people who risk their lives and reputation by stubbornly believing in weird ideas, sometimes succeeding, sometimes failing.  (Heck, this is prime time entertainment!) Read Wired and learn. Btw, for any news you want to cover in Finnish, I'd recommend pinging directly Elina Lappalainen at Talouselämä.

8. Minister at your service

The Finnish Minister of European Affairs and Foreign Trade Alex Stubb is unconventional. He is young, direct,  has a good sense of situation, opportunity, style, and humor. Lots of people hate him, but startup entrepreneurs love him.  Stubb likewise gets a kick out of the new startup generation and has given a new kind of spin to US oriented business delegations. The trips are well organized, interesting and fun. "I'm at your service, use me", says Stubb. In the best case Stubb's attitude is contagious and other goverment officials start asking themselves if they are really doing everything they can to support Finnish growth companies -- who are and will be,  after all, paying an increasing amount of their secured monthly salaries and pensions.

Below is the Finnvasion2012 delegation at Nasdaq. Touch the image to see the links and let me know which ideas you would bet your money on. Happy to make direct introductions too!

 

 If you want to post this interactive image to your blog, click the embed icon on the top right and copy paste the code.

 

 

Dress you up with my links: a new way to consume fashion

My friend Liisa runs a popular fashion blog Hel-Looks.com, that features personal styles from the streets of Helsinki.  I love the site, it's fun and inspirational, and more than once I remember hoping that there was a link or email address that help track a particular shop or designer. But would I like to see hot fashion deals popping up on each item when I view the image? Believe it or not, my anwser is 'no thanks'. I'd rather see something fun. Something social and special.

Adding commercial links to images is a hot topic, and the first category we think about is fashion. Still,  it has proved hard for many to get fashion bloggers to a) use readily tagged images or b) populate images with commercial links by hand.   The reason is that fashion bloggers understand  something that others don't.

First, fashion blogging is a a form of creative, social everyday art. It is about participating in a visual discussion, and as an artist, you don't do things that are not cool. You don't do fake, fast, or cheap. This is why fashion bloggers do not use readily tagged images -- unless they are really cool.

Second, an image is not a neutral platform.   In fashion, especially, an image represents the context for the content,  the fundamental element of the browsing experience. Links can enhance the experience of the visual, but it is not the existence of the link that makes people click. It is the context. This is why random images with autopopulated random links feel  spammy and cheap.

Fashion blogging relies on handpicked curation and self expression. If the content is creative and honest, transparent commercial linking feels like a service.

A four-field matrix on image-tagging services

Image tagging is becoming widely popular. It was listed as one of the hottest startup spaces in 2011, and with a good reason. Alongside video, images are the most engaging media online through which news, music, travel, fashion, interiors, etc. is consumed. So far, millions of views have not directly converted into new customers, increased traffic or better engagement. With in-image tags, this is about to change. Interactive tags are the same for images as hyperlinks are for text.

Image tagging is not a new phenomenon, and probably most of us have tried adding notes to their photo albums on Flickr or Facebook. One of the early innovators in this space was Creg Elin, who created an open-source standard for image annotation called Fotonotes. The best-known derivation of FotoNotes is Flickr's note feature.

Services that offer image tagging differ in at least two aspects: whether tagging is offered as an additional feature within an image hosting service or if it is offered as an independent tagging service. Another differentiator is the purpose / function of the tags: whether they are mostly explanatory, (revealing details of the image) or they are commercial (showing advertisement). In the matrix below I have compared companies along these two dimensions.

IMAGE NOTES WITHIN A SERVICE

In the upper right corner we have explanatory tagging as within a service.  A user can designate an area of the image and add a note to it. These notes may or may not contain hyperlinks. Facebook transformed image annotation into a social game: if you associate a tag with another person within the service, they receive a message. A recently published patent description anticipates Facebook is moving from purely social tagging towards exploring its commercial variations. A quote from FB’s patent application:

”The method includes selecting a digital media and selecting region within the digital media. The method may further include associating a person or entity with the selected region and sending a notification of the association the person or entity or a different person or entity. The method may further include sending advertising with the notification.”

User story: share details of photos with the people who follow you in order to make image viewing more fun

COMMERCIAL TAGS WITHIN A SERVICE

In the lower left corner we have users or service providers who can add commercial notes and links in images for the purpose of generating traffic to points of sale or improving brand interaction time. Facebook recently made another bold move in this space by making it possible to tag images with Facebook Pages. Commercial tagging is most likely to work best within services where people are already in the mood of finding inspiration and great offers, and where for this reason showing advertisement feels more like a service and less like an irritation, example of this being a Google-backed fashion portal called ShopStyle.

User story: find new products in hopefully more fun than irritating ways to build brand visibility and online sales

 EXPLANATORY TAGGING ANYWHERE ON THE WEB

In the upper right corner people can add notes to their images, identify objects and link entities and publish them anywhere on the web. Tags can be ”plain” or ”smart”, containing functional elements such as a music or video player, follow option or a shop. The nature of the tags can be explanatory and their primary purpose is to entertain and engage the viewer. Companies in this space: ThingLink and Stipple.

User story:  transform images into a media platform and offer a rich image viewing experience.

COMMERCIAL TAGGING ANYWHERE ON THE WEB

Companies in this category aim to monetize images by offering (more or less relevant or correct) advertisement on them. Pixazza/Google, GumGum, and ImageSpaceMedia serve banner-ads that pop up on the image. The business potential of this category is huge, but the risk is low performance that people get increasingly intolerant towards disruptive banner advertisement that spoils the image viewing experience.  Users who simply hate these services use blowser extensions like AdBlock Plus that guarantee “annoyance free browsing”.

User story: Find latest offers and get ideas what to buy when browsing images.

East London in April

The Sound of Image

Last October, I was driving towards Sebastopol to attend Foo Camp with my old friend, Eric Wahlforss. We were chatting about life and various miscellaneous ideas, when I happened to ask whether SoundCloud had unique permanent URLs for its tracks.

It seemed a little outside our focus at first, perhaps, but still something that would be fun to explore. I mean, images being the platform for serving all kinds of content, why not serve sound on images?

Images and sounds make a natural and powerful combination. Both online and offline, they create inspiration and context for consumption. We make decisions about what to buy, where to go and who to see, based on images. Music inspires fashion designers to create collections, and visual stories inspire those who make music.

Every image has a story. With ThingLink and SoundCloud, you can tell it.

Read more: ThingLink fills images with sound To copy the image with tags, choose 'embed image' and copy-paste the code snippet into the HTML field of your blog post.

Images as platforms and objects as channels

For the past five years, I've been exploring social and business models around objects. Objects - the people, places and things in our lives - each have stories. Things around us can tell us many things from informational and historical standpoints.  And the hundreds of billions of online images offer an exciting new platform for discovery.

In 2006, I got fascinated about the idea of being able to "right-click" everyday objects, which would reveal their true nature -- how old are they, who made them, and who takes care of them. I sat down with Adam Greenfield, formerly Nokia's head of design direction for user interface and services, to explore the provenance of objects.

In 2008 I founded a company, Thinglink, to develop tools for social connection around objects and long-tail markets. By that point it was clear that objects are, in fact, becoming points of navigation.

Now in 2011, objects are clickable. The first stage of this "object navigation" is interactive images. In-image tagging technology is being used to link objects in your images to anywhere on the Internet.  The second stage of object navigation focuses on physical objects as channels for information. With the emergence of object navigation, the ways we use the Internet will radically change for the better.

 

Talking about images, here is my five cents:

1. An image can directly serve the objects it shows

Every image tells more than a thousand words. The most common question asked is, "What's in Your Photo?"  What is this object? Where can I get it? Who else knows about or likes this?  Images can answer these questions and more.  They can become a new navigational surface for search.

 2. An image can serve advertising, commerce, information sharing, social connection, and shopping

According to Forrester, by 2014, 53% of total retail sales (online and offline) will be affected by the Web, as consumers increasingly use the Internet to research products before purchasing. Consumer purchasing decisions are being made based on images and user preference and ratings: Should I read this article? Should I reserve a room at this hotel? Should I meet this guy?

We make decisions based  on images. Search is becoming image-based. And in-image interaction tools developed by Thinglink are enabling image-based advertising, commerce, information sharing, social connection and shopping.

3. Images entertain and drive traffic

Advertising is, at its best, art photography or photographic art. Image ads constitute half of the content of major fashion magazines with the best photographers shooting the best models wearing clothes and accessories from major brands. What if all these image advertisement became interactive with links to retailers? Images would become the new point-of-sale.

4. A good image is the least irritating advertisement.

Online banners ads are quickly losing their effectiveness. There is way too much inventory, ads looks the same and prices are falling.  Thinglink aims to recreate banner ads with interactive links, better call to action links and user preference data that provides increasing value to marketers.

5.  New vocabulary: Image Inventory and Image Interest Factor

Publishers need to start asking: Do your images serve your business goals? How much of your image inventory drives traffic to points of sale? Does your image inventory enable robust user interaction? How much of your image inventory drives reader retention?

In sum, images are being transformed by in-image links to relevant information for advertising, commerce, entertainment, and social connection. With photos constituting perhaps 20 per cent of web real estate, the hundreds of billion of photos online offer rich opportunities for in-image links to engaging user experiences that will revolutionize and transform image interaction. That's an incredible opportunity that we are very excited about sharing.

 

Greetings from WEF Summer Davos: investing in the long tail builds sustainable growth

It’s 10 am in the morning and Ed Chan, the CEO of Walmart China, is straightening his tie on the stage of the newly built Congress centre in Tianjin. There are 95 men in black and five women in the room, waiting for Mr Zein Mahmoud Abdalla, the CEO of Pepsi Europe, to kick off a World Economic Forum panel discussion on the “emerging new consumer”. Mr Chan looks slightly uncomfortable in his chair. Beside him sits Mr Feng Dongming, the CEO of Markor Investment Group from China, and Mr Chander Prakash Gurnani, the CEO of Mahindra Satyam, from India. The overall theme of the conference is – sustainability.

Big multinational companies are on their toes, and for good reason. Up until now they have been able to control the supply of goods and services on the global market. Customer behaviour and the structure of the global market is, however, changing at a fast rate.  One sign of this is the steady growth in annual online sales. Furthermore, an increasing number of customers both on the developed and the emerging markets wants to know exactly what they are buying.

“We have noticed this, and so we need to pay more attention to the transparency of our supplier networks”, says Mr Ed Chan from Walmart.

There is, however, more to this. People want to be good. Let’s imagine a small market survey that asks people “who would you like to give your money to?” Options: “A: a handful of big multinational companies” or “B: a number of smaller local companies”.  A wild guess is that 40 per cent of us have never thought about it and could not tell, 25 per cent could not care less, 5 per cent would say A because of their stock portfolio, but perhaps 30 per cent would rather choose option B.

Also, let’s imagine that this Christmas, those 30 per cent would shift from buying their presents from big brands to buying from smaller local brands. From a macro-economical point of view, the consequences would be considerable. Thirty per cent of the total Christmas sales is lots of money. It means lots of losses for brands like GAP, NIKE and Pepsi, and lots of gains for individual crafters and designers on places like Etsy.

From the sustainability point of view in particular, we should be interested in who gets to offer products to the emerging consumer. This has to do with how we distribute wealth from the growth.

Setting up a presence on the global market has become ridiculously easy. Starting your online store takes five minutes. Signing up for a long tail search engine takes one email. Buying keywords, three minutes. Advertising to your friends requires one click on Facebook. Of course, if you are a one-person entrepreneur, scaling is still a problem – or is it?

On Etsy alone there are currently 6.5 million users and there seems to be no end to its growth. New search engines and shopping places for small brands and fair trade are popping up like mushrooms after rain. Can the small really beat the big? Difficult to say, but at least the long tail can put up a fight against the fat tail.

Or perhaps they don’t have to fight. Perhaps, under the pressure from consumers, multinationals are willing to consider complementing their centralized models of production and marketing with more distributed models. Would they really? I must ask.

 Mr Abdalla coughs, Mr Ed Chan straightens his tie again, and Mr Dongming stares into the emptiness. “You are right”, said Mr. Gurnani finally, “the internet is coming”.

Habitare 2010

Bright colors, big prints and reproductions keep coming. Here are some shots form Habitare 2010, Helsinki Design Week. Feel free to complete the tagging!

 

Notes from DLDwomen 2010: no woman wants to waste time

Since serveral technology and social media conferences suffer from the lack of female speakers, organizers, and participants, it has become common to put together an obligatory panel on the ”female perspective in technology”.

When I first heard there is a whole conference on the subject, the DLD women by Hubert Burda Media, I was a bit sceptical. How could it work?

I signed in the last minute, and I’m extremely glad that I did, because DLD women was a superb gathering both in terms of content, spirit and networking opportunities. Here are my notes:

Doris Dörrie: Turn of the control button and relax

The first presentation I saw was by a German film director Doris Dörrie, who lit the whole room with her positive and relaxed carisma and reminded us that women’s continuous tendency to manage and control everything leaves too little time for creativity. ”The most difficult thing is to have the body and the mind in the same place. Typically the body is in one place, but the mind is (managing) somewhere else. You really need to excersise to keep them in one place. I’ve tried zen cooking.”

Paulo Coelho: don’t use drugs to be creative

Few moments later the man in black, Paulo Coelho, stepped on stage and told about his creative process: ”I live my life and one day I feel I’m pregnanat and I need to give birth to something. Then I go and write a book.” He also recommended not to use drugs to enhance creativity: ” Drugs kills the most important thing in you: the power of decision.”

Sonali de Rycker: show your desire to win

The lack of female managers or web entrepreneurs is alarming. Sara Öhrvall, the head of R&D at Bonnier reminded that in Europe and Northern America the number of female computer engineers has dropped from 37 to 18 percent during the past two years and that at MacWorld conferences you only see women in Apple’s commercials, where a tech-savy future mom uses an iPhone to send an ultra sound image to the dad who cannot attend the ultrasound.

Still, what is at least equally alarming is the lack of female investors and venture capitalists. With more women investors, more female-led startups would get funded. Sonali De Ryckel gave advice for women who are to pitch their start-ups: don’t hide your feminity, but show your desire to win.

Andrew Robertson: For men the web is about fantasy, for women about reality

Andrew Robertson from BBDO loaded some statistics:  ”for men, the Internet is about scoring (84% of all virtual players are men), for women, it is about relationships. As much as 69 % of young mothers frequent on one or more social media sites. Both men and women on average have 130 Facebook friends. For men the web is about fantasy whereas for women, it is about the reality. 40% of men feel more attractive online than offline.”

What all women really want? Kate Sayre knows: ”No one wants to waste time”. (And every woman in the room nodded in accordance). Everyone is trying to do the household related duties faster, and earn more time for ourselves. According to Kate Sayre the Internet serves women perfectly, since it helps save time and explore the world around us without having to leave home.

Women are adapting interenet at a fast speed, and there is already 8% more female internet users in the world. Women dominate the use (but not the development) of social web. More men than women use smart phones.

There was one point when I felt quite uneasy, and that was when shopping mass fashion was framed as a wonderful way  for women to be online and to express their female aesthetic creativity. I think I was not the only one in the room thinking that there should be a better use for that  creative energy. I regretted missing the ”Women with mission” panel in the end of the second day.

One female super star on stage to entertain us was the queen Zaha Hadid, and his husband and colleague Patric who carried her handbag and gave us beautiful descriptions of their marvellous work.

Female managers are few, startup entrepreneurs even fewer

During one of the breaks I met with Imi Eiron from Saloona online magazine, with whom we had a good chat about the conference. In general, we thought it is useful to distinguish between women who work for others (managers) and women who work for themselves (startup founders, entrepreneurs). In many European counties, at least, being a female startup entrepreneur with small children is almost mission impossible. This is because:

1. New ideas typically emerge and develop ourside your daily job, in the evenings and weekends.  If you have kids, you don’t have this extra time.
2. Few men are willing to take the main responsibility of the household and the kids during the first intensive years of the startup.
3. Few woman are willing to give the responsibility of the kids and the household for anybody else.
4. Few have an alternative support structure such as grand parents
5. Few can afford to to hire a household person or a nanny before their funding is resolved
6. Few can afford being without pay for 2-3 years

As a woman with kids your best chances to become an entrepreneur is when

• your kids are old enough to go to daycare or school
• you are wealthy enough to hire help with household and childcare
• you have good connections with important people in your field
• your husband does not mess around with other woman, drugs, or anything that disturbes your ability to focus

 

Fantasy fills fashion

This week has been great in terms of lunch meetings. Yesterday I met with the CEO of Zipipop Helene Auramo, who introduced me to a fantastic new brand Gilles et Dada (check out their amazing photo blog!). Today I bumbed into the queen of coctail dress Tiia Vanhatapio, whose Druidress SS11 will show at the New Your Fashion Week in September.