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Friday, May 20, 2022

Finnish Lunchgate Scandal: Nobody will steal your startup idea, or will they?

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Editor’s note: This article was co-written by Tarmo Virki, Maija Kopola, Dmitri Sarle & inspired by Jan Ameri.

Very often startups are being told they have to tell of their idea to everyone to get consumer feedback before they ever focus on building the product. Usually this works, but even in Finland – known for its high ethics – we have cases of borrowed ideas or stolen business secrets in the startup space.

On Thursday, soon after we published a story about ResQ launching an app for restaurant leftovers things started to happen. Niko Vähäkuopus from ByteBuffet called us and accused his former employee, ResQ CEO Tuure Parkkinen, of copying a project he was working on under Vähäkuopus’ management in late 2015. At the same time, Parkkinen does not list his stint at a project called ‘Lunchie’ on his LinkedIn profile.

“Parkkinen has stolen the idea he was working on, wireframes and even copy of the text they use now at the ResQ website,” states Vähäkuopus, the chairman of the board at ByteBuffet. He accuses Parkkinen for using their business secret.

What makes the starting point of the discussions controversial is the fact that Lunchie is still due to be launched in coming weeks. It’s not in public, but Vähäkuopus says Parkkinen was part of the developing team under verbal employment contract while showing us their product presentation from July 2015 that frames their idea on creating a marketplace for lunch buffet leftovers.

“What an idea!” was hyped in the Finnish media and on social media throughout the whole day when ResQ was launched. It certainly is – but we want to open a discussion on whether a product that has not been launched can be copied or used as a source of inspiration?

There’s nothing wrong with competition?

We wrote a piece on ResQ yesterday after receiving a press release from Parkkinen. We reached him late on Thursday night, and he said that he has received an ultimatum to close the service immediately.

Parkkinen tells that he has been working for two months in a startup developing a solution for reducing food waste, and he got fired after a negative funding decision from Tekes and due to ‘micromanaging’. He describes that he was fully committed to the project, but then he received a motion of no confidence from the investors who didn’t appreciate his eagerness to develop different business models with the customer restaurants. “Instead I should’ve had concentrated on developing an app,” Parkkinen describes.

That’s why he decided to do ‘a better service without investors’, as Parkkinen states he did this with his team during the past two months. For him ResQ is exactly what a startup CEO should do – develop working solutions with the customers. He compares himself to Nokia engineers, who have spin off projects after being laid off (like Jolla without referring to the success of the project) – and who are implementing their vision in new companies.

“If Finnish startups will sabotage each other in the home market – before their own product has been launched – it is sure that they won’t succeed in the competition with startups from Silicon Valley or generated by Rocket Internet which can create quickly scalable international services,” says Parkkinen to ArcticStartup late on Thursday night.

Parkkinen also says the parties didn’t have a signed contract or non-compete term – but the terms had been spoken. In Finland the verbal agreement is valid as well, though demonstrating the facts can be more difficult. But his work had been actually agreed to be a consulting project.

There’s nothing wrong with competition – but how about when we’re talking about a concept that the previous CEO has been selling to customers while working for Lunchie. “We had the concept ready already when he joined, so we have now lost the momentum,” says obviously disappointed Vähäkuopus.

In an interview with ArcticStartup, Parkkinen quite openly stated: “Right before New Years, I went there (Kallion Sävel) to tell them about the new named concept and show our new user interface, which does not require an installation.” (Editor’s note: Just so there is no confusion, the Finnish text from the interview: Kävin vasta ennen vuoden vaihdetta siellä kertomassa uudennimisestä konseptistamme ja näyttämässä uutta käyttöliittymäämme, joka ei vaadi asennusta.)

What makes the story even more interesting, is that the restaurant scene in Helsinki isn’t that wide – but ByteBuffet team got to hear about the competing concept this week and contacted Parkkinen immediately. While starting the discussions about how to proceed, he launched their product, as anyone would probably do while recognizing competition.

But did the development work continue with customers that were already involved in the other project?

We contacted two customers of ResQ. The restaurant manager of Kallion Sävel, Jyrki Määttänen, says he hadn’t recognised that the company he was working with had changed in between since he had been originally in contact with Parkkinen when he was working at Lunchie.

“I’m shocked, that a company can promote having a highly moral product and work immorally,” says Määttänen. Their restaurant has been one of the piloting restaurants and the promotional video of ResQ was also recorded in their premises. Now they’re terminating their partnership with the company.

Editors note: Underlining the smallness of the Helsinki scene we found out after publishing this article that some of the shareholders of Kallion Sävel are also investors in Bytebuffet.

Another customer reveals that the product launch had been scheduled to happen in two weeks – but instead, Parkkinen contacted them to have a launching press event on Thursday half an hour before he brought in media to get to know the product. This restaurant has put the use of the system on hold for now.

This still doesn’t take the credit out of the service. The users and the restaurants have liked it, but continuing the cooperation is becoming a moral question instead. While one partner company says he hasn’t recognised the difference between products – Parkkinen says that the brands are different, but he has been inspired by his time at Lunchie.

Obviously Lunchie team says the opposite.

“I want to believe in market economy where customers decide which services will be developed and kept in use, and who can start a business. Not relationships to Tekes or inheritor-capitalists (as he refers to the investors of the company),” says Parkkinen.

And market economy is also where Vähäkuopus says he trusts. “Competition is always welcome – but how about when a competitor is a person who has filled your funding applications,” he ponders.

On the one hand, in the startup world the mantra is to always share your idea and if someone manages to take it, implement it and go-to-market better and faster than you – usually that’s just bad implementation on your behalf.

On the other hand, if someone who is directly working with you takes your customers and sells them an identical idea with a different name – that could definitely be viewed as a morally questionable action, whether legally problematic or not.

We will let you be the judges, and we are sure that both parties have a story to tell. Smart business or an immoral use of a business secret? The jury is out.

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