Indexing happiness in real-time. Our thesis on investing in HappyOrNot.

Great products are intuitively easy to adopt. Sometimes it is difficult to put into words exactly what makes the very best of products great. When we back companies aiming to disrupt archaic industries, we place great focus on product and customer behaviour that suggests that the product delivers genuine value and delight. Today we’re excited to explain our thinking behind our investment in HappyOrNot, the leader in dynamic CX intelligence.

Happiness starts with Communication

Happiness starts with communicating experience. Further, the more actionable communication is, the more likely we can reinforce a virtuous cycle, and thereby thrive. In today’s day in age we have more means to communicate than ever before, but with an ever-faster pace of life, connecting efficiently to deliver actionable feedback has become a challenge. The race for big data has omitted the need for actionable data. This is where HappyOrNot steps in.

My interest in HappyOrNot began at Stockholm Arlanda Airport security a couple of years ago. I had just gone through the security check within an unbelievable 2 minutes, which was really all I had to make it to my break-of-dawn flight. Briefly noticing how unappreciated the security staff looked, I wanted to thank them for the service, beyond just blurting out the words as I ran off to my gate. It was then that in the corner of my eye I spotted a HappyOrNot terminal asking me about my experience of going through security. I was thrilled — someone cared, and I wanted them to know that the staff was doing a great job. I quickly clicked the dark green button as hard as I could, before running to catch my flight.

The following week I had a less than positive experience at the very same security check point, albeit at a busier time, and equally determined to let somebody know that having a single security check open during rush hour was not ok. This time I clicked the red button, as hard as I could, three times in a row, hoping that someone would notice and do something about it.

Within the space of a few months I started noticing the iconic smiley terminals everywhere. Airports, hotels, clinics, stores, random little libraries in remote parts of Copenhagen (see image), and even office spaces.

One of HappyOrNot’s 25,000 terminals (this time in a small public library in Copenhagen)

I started researching why and how these companies were using the terminals, only to find out that it serving as a “temperature check”, used to ask that one, crucial question and thereby dynamically measure NPS. Beyond serving as marketing/NPS collection, the data that the smiley terminals were collecting had entrenched itself into middle and senior management operations, as well as Board reporting materials in some cases, right next to other key performance indicators such as sales figures. This is when I realised that HappyOrNot is changing behaviour, both amongst customers and the end users.

Just like Trustpilot (another Northzone portfolio company), Tripadvisor, Twitter, and other brands that were giving consumers the power to publicly communicate directly with companies, HappyOrNot seemed to be gamifying the notoriously unengaging customer experience (CX) surveys. More significantly, I later learned from the Founders that it wasn’t just about micro CX analytics as an end means: HappyOrNot’s simple data is becoming a communication tool between customers and staff, and in turn staff and Management.

Made in Finland: a year of learning about HappyOrNot’s humble beginnings

We first reached out to Heikki and Ville, the Founders of HappyOrNot in the fall of 2016, after finding out that the terminals were designed and sold by an EY Fast 50 Finnish company out of Tampere, a town in central Finland. My email contained the words “avid button presser” and “investor interest” in the same paragraph, and I was hoping to be able to meet them at Slush, where Northzone was hosting a Growth Summit. To my surprise, Heikki — the CEO, was interested in meeting, but not necessarily interested in raising external financing, since the company was organically financed and profitable.

On day one of Slush 2016, my colleague and Co-founder of Northzone, Bjorn Stray, and I met Heikki at a busy cafeteria. We quickly learned that, like with many great product Founders, Heikki came up with the idea as a result of his own frustration, this time at a busy store a few years earlier. To this day, the Northzone team still debates as to whether HappyOrNot could have been created anywhere other than a somewhat introvert yet effective nation like Finland. Heikki explained that HappyOrNot was his and Ville Levaniemi’s third company, and that their background was in designing games. Therefore, the product design had to be simple to engage with, clean, and fast.

HappyOrNot succeeded with designing a product that discretely gives customers a voice, within 2 seconds or less. On a device that you should be able to plug and play in 2 minutes or less.

Between originally coming up with the idea in 2009 and bringing it to market in 2011, HappyOrNot had the opportunity to raise seed funding, but eventually opted to finance the business organically, and thus focused on sales. The first terminals were sold to Tampere based hospitality and retail brands, who wanted to try something new, and were willing to commit commercially to a product that was not even produced at the time. Not knowing much about hardware at the time, Heikki and Ville were fortunate to be surrounded by Nokia software and hardware engineers and product talent, who they eventually went on to hire a number of. As the product was completely new to the market and the company had no means to invest in building a sales team beyond a few key people, HappyOrNot quickly set up a distribution network of resellers in Finland and the rest of the Nordics in 2012, and aggressively expanded into Europe by 2013–14. Seeing demand (and competition) starting to emerge around Europe, HappyOrNot quickly replicated its reseller network model across Europe and eventually in 2015 entered the US. This efficient sales model proved to be key to moving faster than competition, and now having the biggest global footprint, with over 25,000 devices collecting over 700 million feedbacks to date, across 116 countries.

The Bezos Effect

Part of the decision to invest in HappyOrNot was driven by Northzone’s commitment to digital retailers, whose focus on data and business analytics is second to none. Over the past decade we have seen ecommerce significantly impact how traditional retail operates and its means of staying relevant. With the increasing blur between online and offline, more advanced retailers are redefining the purpose behind physical stores, with some even referring to these as “labs” and “concept testing studios”.

As traditional retail battles to keep up with its more lean/efficient digital-first counterparts, its need for actionable data is increasingly top of the agenda. We call this the “Bezos effect”.

Retailers are increasingly realising they have is that they can engage with the consumer in ways that ecommerce simply doesn’t have the capability to. Understanding the customers’ experience as they encounter staff or leave the store is one very valuable insight as it correlates with how likely a customer is to come back. During our diligence process, we interviewed some of HappyOrNot’s biggest global customers, and learned that Fredricksson and Kahneman’s peak-end rule (which observes a psychological heuristic in which people judge an experience largely based on how they felt at its peak) plays a pivotal role in retail business analytics. Unlike anything we’ve seen in online business analytics, we were astounded to learn that HappyOrNot’s terminals are collecting feedback from over 15% of foot traffic across some of its largest retail clients. Retailers, as a result, have started implementing the “Happiness Index” as a measure of customer satisfaction and its subsequent correlation to sales.

With over 3,000 customers in 116 countries, HappyOrNot is paving the way for realtime happiness measurement and actionable analytics, with 1 million customer opinions collected each day.

Indexing Happiness

Subset of HappyOrNot’s 60+ strong team

Backing HappyOrNot strengthens our commitment to backing visionary founders with global ambition. HappyOrNot is innovating at the intersection of industries, bringing CX and HRtech closer together, and thereby serving as a dialogue catalyst for performance improvement. We’re excited to, together with our friends at Airtree, work with HappyOrNot’s Founders, Heikki and Ville, and their team, to continue building on a long-standing vision of creating a global happiness index, measuring user experience satisfaction in real time, wherever and whenever relevant.

HappyOrNot is hiring — join us in making the world a happier place!