Supporting entrepreneurs to realise their dreams.
THERE are few people in Finland with broader experience in start-up companies than American Will Cardwell. Since 1998, he has invested in them either independently or as a venture capitalist with Eqvitec Partners and Conor Venture Partners. He has advised them from the board of directors, and also led one, Valimo Wireless, as CEO. He has helped them begin their business life from his position as head of Technopolis Ventures, Finland’s largest technology incubator. He has researched and lectured about them in the Aalto School of Economics and Aalto University of Technology.
Now Cardwell is the head of the Aalto Center for Entrepreneurship, which offers growth entrepreneurship education, research, innovation services and start-up services to people associated with Aalto University. As he is intimately involved with the vanguard of Finland’s economic growth strategy, he has a great deal of influence on the nation’s long-term economic success.
Why did you originally come to Finland?
I married my wife Jaana in Winston-Salem, North Carolina in 1987. I was working for AIG and decided to get my MBA in 1990. I made a last-minute decision to go to the Helsinki School of Economics. I was in Finland for a year and a half, and then we went back to North Carolina, University of North Carolina Chapel Hill, to work on my PhD in finance. I did almost four years of work, and then got a call from Veikko Jääskeläinen, the former dean of the Helsinki School of Economics. We came back in July 1996 for good.
Why did you go to the Aalto Center for Entrepreneurship?
It was a good place to consolidate the work I have done on the various sides of start-up and venture capital. I wanted to start at the beginning, by which I mean that I wanted to help young entrepreneurs build companies for the first time, as well as act as a driver for the entrepreneurial side of the economy.
Why is this important?
Stanford’s Steve Blank says that there are six types of entrepreneurs: lifestyle, small business, buyable, large company, social and growth. A growth entrepreneur, like in Google or Facebook, has from day one the vision to change the world.
Studies have shown that we will need 250,000 new jobs in Finland within the next several years. Growth companies alone are not going to create 250,000 jobs. But we have to think on a global scale.
An owner of a pizza joint would be a small business entrepreneur. But pizza joints don’t happen without growth entrepreneurs. All of the types depend upon growth companies, because they generate the wealth. They are the locomotives.
Like “trickle-down” economics?
Well, partially. When people say ‘trickle-down’ they think of wealth in one segment of society trickling down through the entirety. Yes, growth companies provide wealth that is redeployed, but they also provide the financial infrastructure and the supply chain that is used by all entrepreneurs. Jobs and revenue accrue across all segments of society.
This is why there is such a political discussion about incentives for growth companies. But this has gotten mired down in definitions. What is an ‘angel investor’? What is a ‘growth company’?
What should be done to support entrepreneurship?
A great entrepreneurial economy has three things: unfair advantages, extreme work and agility. We have an oversupply of unfair advantages. Our infrastructure and primary education are among the best in the world, and this has led to fantastic know-how in many sectors. Everyone knows about our strengths in mobile technology and gaming, but we have advantages in other industries, like water management, for instance.
There are challenges with the other two issues. Extreme work means enabling and supporting the 24/7 work that the best entrepreneurs do. People have to work efficiently, and they have to work very long hours. We must allow them to benefit from that work. This idea that we should penalise financial success annoys me, because we are shooting ourselves in the foot if there are no benefits from hard work.
Agility means that when the window opens for innovation, whether it is earlier or later than planned, the entrepreneur must be able to move fast. Sometimes a company has to wait until they have sufficient conditions.
The way external funders behave has a tremendous impact on agility. They must allow the entrepreneur to move quickly in a previously unplanned direction, and not be stuck on a longer-term plan. Entrepreneurs should not spend too much time on their business plan, by the way, because the future will be different from what they foresee.
Do we have any challenges specific to Finland?
There has been no initial public offering in the second half of the decade. Many of the Finnish companies that have listed have struggled to keep a reasonable market value and liquidity. It is certain that there will be no serious and sustainable venture capital market in Finland until either a local tech IPO market emerges, or we find good channels to Sweden, the UK or the US.
Trade sales are fine, but the pricing of the deals cannot reach their potential unless there is a credible threat for companies to go public. Unfortunately there is a negative perception about selling to foreign companies.
What is your philosophy on teaching entrepreneurship?
To start, yes, I believe that you can teach entrepreneurship. I disagree with the statement that “entrepreneurs are born, not made.”
Historically, entrepreneurship has been in the domain of the business school. Entrepreneurship is gaining visibility and importance as a discipline of its own. Engineering and Business Schools both want to claim it, and both are organising courses around it. We believe it is a multidisciplinary activity, with engineering, industrial design, with all the different schools and departments.
Also, we believe that teaching entrepreneurship should include a mix of academics and practitioners. Stanford has done a great job in getting Silicon Valley entrepreneurs to be adjunct professors. We hope to enable this approach in Finland as well.
It seems that you take a lot of inspiration from abroad.
Certainly. For example, Israel is an important model for Finland. Their high-tech firms go international very early, and they are very good at raising private money. Here in Finland much of the early-stage funding is public money. Interestingly, what kicked me into this business was the study I did comparing Finland and Israel in 1997, which was published by SITRA, the Finnish Innovation Fund.
What is your biggest professional accomplishment?
I will say being involved in all phases of the development of Valimo Wireless. I started with them as a board member and investor through Eqvitec Partners. I became chairman in 2003, leading several rounds of financing. In 2006 I became CEO, buying a portion of the shares from the founders and having an equal share with them. I led the company through three interesting and complex years, and then when I saw that there were better CEOs out there than me, I stepped aside and moved back to the board. Finally, we were able to sell the company to Gemalto.
I cannot express how much I learned from that sojourn, other than to see I will forever be affected by the roller coaster ride. I see so many things that could have been done differently, but overall I am a better person due to the experiences and the many friends and colleagues I worked with during those days.
I’m proud that although I’ve had to do some really difficult, and sometimes harsh, things in my career, I think that in general I have not created many enemies or acted unethically, although there certainly have been many opportunities. Being involved in start-ups is by definition a huge number of tradeoffs that you have to balance constantly, and the right decision is rarely obvious.
What does the future look like?
Helsinki will compete to act as the start-up hub of the Baltic Rim region. In my opinion, this is the only way that we can achieve economic prosperity in the future. Immigration policy needs to anticipate this, so we encourage highly skilled people to come here. We are working hard on this concept at Aalto, largely following the model being led by our students at the Aalto Entrepreneurship Society who have set a big and bold vision. Our Startup Sauna start-up development program is becoming well known throughout the region, and the Aalto Venture Garage is a world-class co-working space for entrepreneurs.
We need to ingrain entrepreneurship in education, not only in university, but in all schools. One fun thing at the Venture Garage is the growing number of high school students that are joining our events.
There is the challenge of turning innovative ideas into marketable products and reaping the value created. This is a Europe-wide problem. Many of the entrenched global problems that keep us awake at night already have solutions in the lab and in pilot cases. This is both encouraging and frightening to me – on the one hand, the solutions are out there, but on the other hand, we are terrible at implementing them.
I think the problem is that in most universities technology transfer is still regarded as an arcane legal process rather than a streamlined commercial one. There is a growing group of top scientists who realise that being smart about intellectual property will allow financial upside and more research money. These guys are potentially the heroes who will contribute to solving problems like global warming, clean water scarcity or malnutrition.
We need to encourage risk-taking and tolerate failure. My argument is that due to different public instruments and relatively low ambition levels, our typical failure rate in Finland is far too low. We had a great National Fail Day celebration on 13 October. What a great idea – only in a funny way. Again we failed because Fail Day was so successful!
David J. Cord