What Kind of Business Will Drive Society After 2020? ~ Insights Gained at SLUSH, Northern Europe's Largest Startup Event

In November 2019, I visited Finland with five Japanese companies exploring new business development. This series examines insights and perspectives gained there for application in Japan. This installment focuses on observations from SLUSH, one of Northern Europe's largest startup events.

An educational philosophy that values failure fosters entrepreneurial spirit

First, let me briefly introduce what SLUSH is, including its origins.

In the 2000s, as Finland began facing the threat of Nokia's acquisition, a wave of entrepreneurial enthusiasm was rising among students. Amidst this, students who went on a study tour to the US West Coast were deeply impressed by the local startup culture. The demo day they organized upon returning home marked the beginning of SLUSH. The full-scale event started in Helsinki in 2008 and celebrated its 12th year in 2019. It has now grown into a major event gathering 4,000 startups, 2,000 investors, and numerous corporations, attracting 25,000 general attendees from around the world.

Scene from "SLUSH 2019," one of the largest startup events in the Nordic region. Student volunteers spearheaded the effort to achieve this scale. (Left) PHOTO by Pekka Mattila (Right) PHOTO by Julius Konttinen

What sets it apart from other startup events held around the world? It's the fact that students launched this massive event, that over 2,000 student volunteers support it, and that many exhibitors are young startups. Furthermore, the speakers at seminars and presentations are also young, with a notably high proportion of women. While "entrepreneurial spirit" is now widespread among many young people in Finland, what encouraged these students' challenges was Finland's educational philosophy of actively encouraging them to experience "failure."

"Failing twice or three times is normal. You start to see results around the fourth or fifth attempt. But that's okay. You learn from failure and see it as a process leading to success."

Mayumi Shimizu of Espoo Marketing, who has lived in Finland for 19 years and supported numerous startup communities as a senior business advisor primarily in Espoo and Helsinki, describes the characteristics of Finnish entrepreneurs this way. In environments where failure is seen as a penalty, taking risks is nothing but a gamble. But Finland is different. Because failure is part of the process toward success, it actually becomes "valuable."

SLUSH: A Platform for Social Proof Through Diverse Perspectives

What makes SLUSH unique compared to other startup events and business conferences? Here are a few startups and seminars that showcase some of its distinct features.

●ŌURA RING
A healthcare startup with the message "Goodbye smartwatches, goodbye smartphones." They commercialize a ring-shaped, stylish activity tracker (measuring steps, calories burned, sleep duration, etc.). Its selling point is being even easier to wear than a wristband, allowing it to be worn like an accessory. Characterized by the fusion of design and technology, it comes in a wide range of colors and sizes.

●SomeBuddy
A legal tech startup providing legal and psychological support against cyberbullying and online disputes. Originating in Finland and now operating in Sweden, its service leverages AI to offer advice during incidents. While Japan primarily relies on government and NGOs/NPOs for such responses, the emergence of private sector solutions here feels distinctly Nordic.

●THE GENDER GAP in EQUITY COMPENSATION
A seminar by April Underwood, one of the founders of the investment fund "#ANGELS," which aims to increase the proportion of women in startup equity stakes, nurture female investors, and support female executives. While the gender pay gap is often discussed, a survey of 6,000 companies by CARTA (a software platform for founders and investors) and #ANGELS revealed that the gender ratio of founders holding company stock is 87% male to 13% female. Furthermore, when valuing their capital stakes, the ratio becomes 93% to 7%. She explained that this overwhelmingly low proportion of women stems from the bias that "women don't negotiate about money." While board diversity is increasingly scrutinized in Europe, the novelty here lies in the specific proposals made regarding capital ownership diversity. (Figures from this seminar)

A scene from the seminar by April Underwood, who founded #ANGELS after serving as Product Director at Twitter and Chief Product Officer at Slack.

●Sensible4
As a bonus feature, we also introduce a Finnish autonomous driving startup that offered test rides during this year's SLUSH event. Their autonomous bus "GACHA," completed in March 2019, uses proprietary sensing technology to operate in all weather conditions. The vehicle design was handled by Ryohin Keikaku, the company behind the MUJI brand. Public road testing is already underway with cooperation from Espoo City and Nokia headquarters. Its ability to operate on public roads despite various regulations is a key strength. Just recently, SoftBank subsidiary SB Drive announced a collaboration, making future developments worth watching.

Copyright: Sensible 4

While the above represents only a small part of "SLUSH 2019," looking back reveals how startups and speakers approached social transformation from diverse perspectives. Where exactly did this "for society" mindset, common among Finnish businesses and entrepreneurs, originate?

Why "For the Sake of Society" Isn't Just Lip Service

The egalitarian belief that "no company or university is inherently superior," an education system that values process over outcomes and even views failure as valuable, and the "for the greater good" mindset. As mentioned in our previous article, the idea that "embracing diversity drives innovation" is deeply ingrained in Finland. But where does this "for the greater good" mindset originate? We spoke with Hiroki Fujino of Unipos, a company selected for the J-Startup program (a startup support initiative) hosted by Japan's Ministry of Economy, Trade and Industry (METI) and backed by JETRO (Japan External Trade Organization), which exhibited at "SLUSH 2019."

Unipos offers services aimed at boosting employee motivation, strengthening cross-departmental collaboration, and embedding company values. Its system allows employees to send each other points along with words of gratitude or praise, with these points redeemable as incentives like salary bonuses, lunch subsidies, or gift certificates. This approach is said to be effective at making hidden contributions visible within siloed organizations where departments operate separately.

While Unipos is currently considering expanding its service to Germany, Fujino expressed surprise at the significant difference in mindset between Europe and Japan. In Europe, the appeal of "points turning into money" was not perceived as attractive. So, how could it be made acceptable? For example, making it possible to "donate those points to developing countries" was found to be a way to gain acceptance.

"The business mindset in Europe prioritizes 'how can we contribute to society' over 'making money.' Products need a story about what they offer society—being eco-friendly, ethical—or people won't accept them."

Europe consists of small, contiguous countries, so when starting a business, people often look beyond their own nation to the whole of Europe. Given the size of the countries, cooperation and collaboration between neighbors is essential to survive in the global society. Furthermore, social issues like poverty and labor problems are close at hand, instilling a mindset of "facing challenges head-on" in people. Therefore, Fujino stated, it's a natural progression to think, "I want to contribute by making an impact on society through business."

Challenges strengthen society. Where is Japan headed post-2020?

Now, let's shift our focus back to Finland. While Finland is now perceived as a wonderful tourist destination, it faces harsh weather conditions, with temperatures dropping to -20°C in the depths of winter, limited daylight hours, and high rates of depression. Its land area is roughly comparable to Japan's, but with a population of just 5.5 million, cooperation is essential for survival. In this environment, they have consistently faced challenges head-on, proactively seeking solutions – like anticipating food shortages and finding a lifeline in insect-based foods. In other words, their current position isn't due to initial advantages.

What about Japan today? Declining birthrates and aging populations, deep-rooted gender disparities and poverty among single mothers, bullying and abuse, labor issues. Japan faces its own unique challenges, but within them lie hints that could connect to solving global problems. What exactly are we developing businesses "for"? Businesses that confront Japan's unique challenges, look beyond them toward the world, and open themselves to society – these are the ventures that will shape the post-2020 society.

Next time, we'll report on the "Nordic Open Innovation" conference held at Dentsu Inc. on January 27, 2020.