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Tuesday, June 28, 2022

The Third Stage of Grief & Nokita: A Plan to Raise Billions and buy out Nokia before Microsoft

In the beginning of September, a loved one to near every Finn died: Nokia was acquired by Microsoft. In truth the company represented a lot to Finns. In the early ‘90s an asset bubble burst around the same time that trade with the Soviet Union collapsed. From that recession Nokia suddenly became the sign of recovery, and Finnish self-confidence grew as Nokia grew on the world stage.

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It’s been an experience watching the Nokia acquisition in Finland without the same hangups as the rest of the population – I moved here four years ago, and my coming-to-age in the business scene was long after Nokia’s talent started jumping ship. To me, Nokia’s glory days are just legends passed around in the sauna, told by old timers in the Helsinki startup scene. After the acquisition, I wrote an article, Microsoft gives Finland a Chance to Move On, because that’s what Finland should do. It’s not healthy, mentally or economically, to be a one-company town.

Despite that, we should give Finland time to come to terms with the news. The five stages of grief are said to go through this progression: denial, anger, bargaining, depression, and finally, acceptance. With the news of a new plan to buy out Nokia before Micosoft gets their hands on it, I think we’re solidly in the third stage.

1. Denial

I would argue Finland has been in the denial stage for some time, starting with Elop’s infamous 2011 “Burning Platform” memo, where he described in unforgiving terms how he saw Nokia’s business – like a oil rig on fire, where clutching to it can only mean certain death. If Finns weren’t in denial then, then they were after reading news article after news article that the Windows Phone platform wasn’t a godsend to mobile telephony.

2. Anger

Nokia’s Devices & Services gets acquired by Microsoft. Finns call Stephen Elop an inside man, due to his background in Microsoft. Finns that have been calling Stephen Elop an inside man for a long time are simultaneously excited about being right and the most vocally devastated. No one is excited about this news.

3. Bargaining

Enter Nokita – a new project designed to outbid Microsoft’s bid price of €5.44 billion, which is, to their credit, fairly low when compared to their €8.5 billion acquisition of Skype, or Supercell’s €3 billion valuation. Behind this movement is a man named J. Parda, who has been a deep background in Nokia with his career.

A motif in Helsinki barroom conversations about Nokia was that they should have switched to Android rather than Windows Phone, or should switch to it now as a last-ditch effort. Nokita takes this philosophy, and determines that they should provide a best of all worlds solution, with an Android system, Microsoft’s operating system, and either iOS or a new linux variant also operating in its own sandbox.

Here are the top actions they suggest:

  • Android and Linux products
  • Corporate Culture Reboot to 2002
  • Cleaning up the organization
  • Streamlining decision making
  • Leverage logistics and distribution power
  • Make the brand cool again.

On this last point, they talk about leveraging a non-corporate image, like the Dudesons or Madventures, and throw “the largest events, gigs, and parties of human kind”.

To achieve this dream, they’ll need to raise roughly €8 billion before November 19th, when Nokia’s board will finalize the purchase. This factors in a bid price of €5.5-6 billion, a reserve of €2 billion for transition costs, and a valuation of €23 billion.

Raising €8 billion in a month is ridiculous, but hell, he’s out there hustling and making noise about his vision, which you have to respect. Finns have good reason to look at the Nokia brand and say, “no, we can do this better.”

But it’s still desperate bargaining, especially given the timeframe. Perhaps they can justify their reasoning due to a low perceived valuation, but by playing psychologist, I’m seeing more emotions involved than pure business potential.

I’ll be cheering for Nokita, because it will make my life much more interesting, but I think I’ll also be saying “well that was weird” when November 19 rolls around. As sure as November rain in Helsinki, depression will follow, and then perhaps we can finally get to acceptance as our fifth stage of grief. Instead of the conversation being, “What can we do to get mobile phones back in Finland” with projects like Nokita and Jolla, I think the conversation should be on how we can find and ride the next upcoming trend, like where mobile phones were in the 90’s. Finland will figure it out, we just need time.

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