A very good idea: build and innovate in Finland, it’s easy (and less expensive)

Every change within an industry is a nexus for challenges and opportunities, and every reaction to industry wide change turns on the concept of place — the location in which it happens.

Which brings me to Finland, and a remarkable example of how where you work and innovate influences how you create cutting edge solutions, especially in tech.

Back at the beginning of the decade, R&D engineers across Finland were grappling with a wave of change that came to Nokia. The company — one of the country’s finest ever — brought together internal and external resources to help its technology experts deal with how the market was transforming and how it was impacting the demand for those engineers’ skills. Into that momentary maelstrom were born nearly 1,000 new Finnish startups, and also Kaato, an organization built to help bring international technology companies to Finland.

These days things are different for Finland than circa 2010, but location and the nature of place are still making a difference. I believe in Finland as an incubator and a place for innovative technology to thrive. Here are four reasons why.

Perfect size for market testing and growth. Five and a half million people. It’s a small enough population for startups looking to test at and early-stage and controllable scale, but it’s also large enough a community for tech innovators to do relevant market testing. This is absolutely the place for teams to experiment in terms of marketing and test pilot projects and test products.

Strategic location for market testing and development. From Finland, it’s a natural progression to expand into the Nordic and into the Baltic and then into the rest of Europe — a step-by-step geographical advantage that allows for very controlled growth and an opportunity to learn the market as products develop. By the way, Finland is an entirely manageable distance from Asia as well: it’s just a seven-to eight-hour air flight from Helsinki to Shanghai.

Innovation-friendly systems. Ideas and iterations are capital, and it’s essential to protect them, but non-disclosures can be difficult, and they can even chill the process of bringing critical talent to the table. Finland’s legal system, however, in terms of the way contracts are done, is fundamentally simple. I’ve hardly ever seen a two-page NDA, for example. A robust NDA in Finland is a half-page, maybe one. Apples to apples, the level of written documentation, contractually speaking, is simplified and much easier to work with than the system with which I work in the United States.

On the right side of corporate taxation. There is potentially a misperception out there that Finland represents a high cost of living and higher tax burdens on companies in terms of social taxes. Now, I live and work much of the time in Califonia, where there’s no shortage of taxes for individuals and companies to pay, but the bottom line is that I still find that’s it’s less expensive overall to keep very talented people on the payroll in Finland than it is in the US. Finland has had much lower corporate tax than the US for many, many years — in the range of 20% corporate tax. Even with the recent changes in the United States, from 35% corporate tax to 21%, Finland still offers an edge … and it’s been that way historically, and it’s not likely to change any time soon.

Finland has the Slush conference. Slush is something like a rock festival of entrepreneurs and ideas. I’ve met more venture capitalists from the United States at Slush than I have in the US. I’ve met more Silicon Valley founders and co-founders — I’m talking billion-dollar startups — at Slush than I have in the United States. Slush is where the deep thinkers go to look at new ideas and share new thoughts around how technology can actually impact both themselves and businesses but also how to impact governments, how to influence the ecosystem, how it can change society.

So, the differentiator, when it comes to Finland’s embrace of innovation-forward technology sectors, is that it removes obstacles and paves inroads to working faster, smarter, and for less cost. If I sound like an evangelist, it’s because I am.

Dr. Mark Ollila