Serial Entrepreneur From Finland: Verto CEO Hannu Verkasalo (Part 3)

Sramana Mitra: How many investors did you have and how much money did you raise?

Hannu Verkasalo: We raised $2 million.

Sramana Mitra: From investors in Finland?

Hannu Verkasalo: Yes, we had two investors from Finland and a couple of angels. I put in quite a bit of money. Knowing what I know now and through the experience of building Verto, I think we could have built it into a much bigger business.

Sramana Mitra: How much did you sell for?

Hannu Verkasalo: It was $24 million.

Sramana Mitra: That’s a very good return on investment.

Hannu Verkasalo: It was okay. I feel that it was a good experience.

Sramana Mitra: It gave you capital for another one.

Hannu Verkasalo: That’s it.

Sramana Mitra: That’s the most important thing.

Hannu Verkasalo: Yes, that’s the most important thing.

Sramana Mitra: Arbitron is also a Finnish company.

Hannu Verkasalo: No, it was a US-based company. It was later bought by Nielsen for $1.3 billion a few years ago.

Sramana Mitra: How did Arbitron find you?

Hannu Verkasalo: You have to be in the crowd. You can’t just do conference calls. I gave them a call and they started paying attention. They felt that we had something interesting to offer.

Sramana Mitra: You were trying to sell them a product. That’s how they found out about you? They were a potential customer and you were trying to close the deal and then they turned that that into an acquisition.

Hannu Verkasalo: In many cases, it doesn’t matter if you want to have a new investor or do an exit, or if you want to find revenue channels. Those things are interrelated.

Sramana Mitra: They are interrelated. I will tell you one thing from a methodology point of view that we emphasize focusing on customers. Customers don’t always turn into acquirers. Customers can be very different businesses.

As long as you stay focused on your customers, you’re building a business as opposed to knocking on the doors of investors all the time. It’s a colossal wastage of time often, especially if you’re not ready for funding. Because of the large population of entrepreneurs that we work with, we constantly see people who are not fundable.

Hannu Verkasalo: Yes.

Sramana Mitra: They are chasing investors and are basically bouncing around the whole time. It just doesn’t work.

Hannu Verkasalo: This is why I left the US ecosystem. In all ecosystems, you have negatives and positives. Let me take this example that I always like to share. You can be a Finn and you can fly to Frankfurt and talk to Deutsche Telecom. You can drink coffee for two years. They’re always interested in meeting you. However, it never leads to anything. You get to New York and you’re getting snubbed like, “Get out of here.” I think in the US, the business culture is more straightforward and you can learn quicker.

Sramana Mitra: Americans are less good hypocrites than the rest of the world. For business, I like that. Don’t waste my time.

Hannu Verkasalo: That’s exactly the thing. That leads to our structure today. We built the product out of Finland but almost all of the business people are here in the US. The straightforward nature of the feedback was really able to help us fine tune the product. You don’t get that in other markets. That other challenge in Europe is fragmentation. It doesn’t matter if you’re German or Finn, but you have to address the borders. In the US, you have one big market.

This segment is part 3 in the series : Serial Entrepreneur From Finland: Verto CEO Hannu Verkasalo
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