Microtask has been putting in a lot of effort in the recent year or so to expand their operations beyond the Finnish borders. They’ve been restructuring their business this fall by moving all Finnish operations to Tampere and focusing on setting up their US business on the other side of the Atlantic. We thought it might be a good time to talk to the CEO, Ville “Wili” Miettinen, about why they decided to move overseas and how it has gone for them so far.
Microtask is both a service and technology company trying to harness the human cloud online. They take huge manual tasks and split them into, well, micro-sized tasks and then send these out to hundreds of people to work on. The tasks are usually related to digitizing content, think of all the library archives that have been hand written that are impossible to be understood through OCR.
Here’s the interview.
ArcticStartup (AS): What led you to build operations into the US, and more specifically the Valley?
Ville Miettinen (VM): One word: sales. In our case US is by far the most important market (huge, still relying a lot on paper documents, and generally more willing to adopt new technologies). It would be at least equally tedious to enter any single European country (such as Germany). As we are a start-up bringing a novel tech to the market, it’s critical that we have a strict focus.
Obviously fundraising is another aspect: the valuations in SV are much higher than in Europe, and there’s way more funding available.
AS: What’s the track record on those, how are you doing?
VM: So far so good. We’ve now got a sales team of seven people, spread out across four cities: Atlanta, Chicago, Rochester and Los Angeles. We run our PR & marketing from San Francisco. We’ve signed up a number of customers & distribution partners here – expecting to have some 15 or so by the end of the year.
AS: What are some of the more fundamental differences one has to account for when taking operations abroad, and perhaps more importantly in this case, to the Valley?
VM: First one is presence: you need to have some of the founders or management team present – you can’t just expect a remote operation to run on its own. This of course applies to all places in the world.
In the US the pace of doing business is much more hectic than in most places in Europe – so you need to be able to follow aggressively all leads.
The Valley is also all about serendipity: because EVERYONE is in the industry, you end up having chance encounters all the time: people you’ve met only five minutes earlier end up introducing you to their friends who can somehow help you etc.
Also, it’s been interesting to note that it’s become damn hard to hire any good engineers in SV: the tech industry (unlike pretty much everything else) is still going strong, the salaries in the Valley are outrageous and competition for talent is brutal. Having a split operation (in our case all the R&D is in Tampere, Finland) helps a lot. The rest of the US is in a recession, so finding for example really good salespeople outside of SV is quite easy.
Another cool thing to note is how much the scene in New York has evolved: there’s quite a lot of VC financing and tons of great start-ups. For many Nordic start-ups (especially those dealing in media or finances) this may be a much better US entry point than SV.
AS: So you’ve split your operation between Finland and the US. How important is it for a startup to seriously think about this instead of blindly moving the “whole” young company to the US, even if it is just 3-5 people?
VM: Even though modern communications technology is getting better every year (Skype, video conferencing, tools like FlowDock), running a distributed team is a challenge. In general I would recommend for most startups to keep the team in one physical location for maximal efficiency. We have a slightly different situation as three of the founders have worked together for a very long time (myself and Harri for over 17 years!), and are used to working from all over the globe (I’ve been on the road for 200+ days per year since 2004). However, even we decided to keep all the techies under the same roof and are building the engineering team in Tampere.
AS:Can you give us a quick run through of the steps you took to establish yourselves to the US? I’m sure there are others out there looking for advice.
VM: This is still very much work in progress. So far we’ve set up the sales team in the US (all local experts), and have two of the founders spending most of their time in the US (myself mostly in SF and NYC, Panu all over the place). We are in the process of incorporating in the US as well, but the exact steps are still to be determined. The two main reasons for US incorporation are maintaining the local payroll (and being able to offer them relevant benefits) as well as fundraising. Most (but not all) SV funds have rules that they are allowed to invest only into US entities. Those that regularly invest into, say, Asia, have no such limitations. The actual incorporation process is fairly straightforward and lightweight – the complexities lie in the relationship between (the potentially remaining) EU corporation, and related IP/taxation/etc. issues. We’ll keep you posted on our progress, and can later on give some practical insight on what went well and what didn’t.
One thing I’d like to see change in Europe (and Finland in particular) is doing priced seed-stage rounds. In the Valley seed rounds are usually done with instruments such as convertible notes – basically this is an admission from everyone’s part that it is extremely difficult to valuate an early-stage venture properly, and it’s best to post-pone the valuation to a later stage. Having a “priced” company will make it more difficult to raise capital from US angels. Also, having a valuation is likely to make the “flip” from an EU entity into a US one trickier due to the related tax implications.
Image by Patty Vicknair