Road to the North – part 3: Three formative failures - and a resounding victory
This is the third part of a blog series following the journey of Witted Megacorp Oy as it explores the possibility of listing on NASDAQ's First North market. The story is told from CEO Harri Sieppi's point of view. Other parts of the series can be found on the Witted blog.
Category:Road to IPO
I've been working in sales for a long time, practically my whole career. I started at the top sales school that is JCDecaux, an outdoor advertising company, where I was introduced to the secrets of solution selling. Suddenly I was faced with a sales budget of a million euros, flabbergasted with a sense of relentless fear and worry: was I up to it? Have I bitten off more than I can chew and somehow fooled others into thinking I can meet that sales budget?
Now, years later, I thought I had a pretty good idea of how to sell. Budgets ended up being met, and step by step the size of my boots increased. I was able to mentor people in sales and help new young people to develop in the job. I got into IT through that background and by getting to know the right people.
Sales plays a big role in various business management roles, so it was good to start from that background. Still, when it came to selling the IPO project to my closest colleagues, I ran into problems. I hesitated and failed, even before the journey could begin. Let's rewind to what happened at that time.
In the spring of 2021, we had taken a couple of steps forward, one back and two to the side in the IPO dance. The choreography started to emerge.
Our owners had championed the idea and encouraged us to run with it. The board members and I were all on the same page, the idea seemed to fit the company's strategy, and people were excited.
Getting the team together
The next stage of the journey was to build a workable and listable entity of the parent company and subsidiaries, and to involve the different business leaders in thinking about the project. Juha, the chairman of the board, was inspired to build a model that combined the stories of our subsidiaries into a larger whole, and it was up to me to carry the torch - running through the idea with each of the leaders.
My task was to assemble the troops for the Road to the North.
At the time, software development consultancy New Things Co and its leader Sami had a good thing going. The earlier bumps in the road were well smoothed out, the company was making good profitable growth at its own pace. The business was very predictable and moving forward. Jouni had his hands on a staggering software consulting growth rocket called Mavericks, which was batting new records every month.
Growth consulting and recruiting company Talented was on a winning streak in Finland, and the new leaders were just getting started in their new roles. Talented's Norwegian division had also just overcome their teething troubles that are part and parcel of any new start-up. As an extra bonus, the company had overcome the initial shock of Covid.
What better time to flip the table than right now?
I had separate face-to-face discussions with each of the facilitators on the topic, and prepared the discussions in advance. Now we really should succeed. We need a winning team.
And that team was still scattered in different companies. Everyone had a little bit of their own thing going on, demanding their focus.
I was ready for the challenge.
In the case of New Things Co, I knew that its starting position was promising. The company had just built an updated strategy, and implementing it would require growth and resources. The company was thinking about what it wanted to be in the future, and I knew I could help it grow. The company would play a major role in the new entity, and now I just needed to be able to chart the path.
This is where I failed.
I swallowed my pride. The project is still on, even if one company fails. Next up was Mavericks.
With Mavericks, we have a shared history and a close relationship. I knew they would help in the conversation. We worked in the same office, so we discussed business development on a daily basis. The company had started its journey under Talented's wing but had of course been building its own path for some time now.
Mavericks also wanted to continue its rapid growth and the leap from a small company over a difficult mid-stage to a large company would now be achieved together quickly, as long as I could describe the benefits of the IPO journey.I failed at this too.
Two bumps made me doubt myself. Have I overestimated the attractiveness of this project? For me, this was a clear-cut case. Why don't others see it the same way? It was clear that I would not give up so easily. Next, we take our associate company Software Sauna to task.
In the case of the Software Sauna, the discussion was a bit more difficult to organise, as the discussions had to be held completely remotely. The company is based in Croatia, and Covid prevented travel. I really thought a lot about how to go through such a thing on video.
I was thinking about the company's strategic objectives, and how we could enable faster international growth for the company: setting up new Saunas in new countries. A network where work is truly independent of location. There would be small offices all over Europe and the Mediterranean, and employees would be able to choose where they wanted to work at any given time.
Sales and marketing cooperation would be at the heart of the message. Together and with a well-known brand, our chances of success in this would be greater!
This is where I failed the most.
Three failures in a row! A great start?
I was devastated and annoyed. It took me a long time to realise that Sauna's absence at this point was absolutely the right decision, both for the project and for Sauna.
Having a Croatian company in an IPO would have taken the challenge (legal due diligence, securities issues, regulation...) to a whole new level. It would also make more sense for the company to grow to a slightly larger size, thus strengthening Sauna's own culture. Sauna said they might follow on the next train.
Damn, it still got to me. It was like being back at a new job for the first day, mouth agape and wondering at my own ineptitude. I thought I should probably start thinking of something else to do soon: starting an IPO project no longer felt like a 100% sure thing.
Getting back up
I didn't want to give up yet. I thought I'd go on to the end of the lap and try again.
In Norway, we had the same business, the same services and the same idea - although there were differences in ownership. The company's acting management owned a minority of the company and had got it off to a good start.
Originally, we planned to actively fly around to ensure the early success of the company, but Covid blocked the airways. Welcome to the video conference jungle!
However, Svein, the company's CEO, is a hard-nosed businessman and has built companies before. With him, we thought we needed to create a model for joint Nordic growth and expansion. An IPO would give us support through marketing and brand awareness, as well as capital to take on new countries.
Svein agreed with me and was ready to go. I did it!
It was the first success. The idea felt good on both sides. YES! Finally a win.
For Finland, I had just handed over the keys to the new leaders. Business was booming and growing, but each member of the Finnish troika had new responsibilities they had just stepped into. There was already a lot of learning and momentum.
I thought a lot about how the idea of such a big project would feel. Jani, who runs Witted Partners and the freelancer network, also had to be involved. I knew that with Jani, the idea should be approached analytically with pros and cons. I prepared the Excels, and linked them to the company's growth objectives.
The challenge for Alina's project, who leads Talented's growth consulting and recruitment business, would be that all other businesses are software development, but growth consulting and recruitment is different in its offering. The risk would be that Talented would create a feeling of being an outsider.
I decided to approach the issue through Talented's original mission and vision. The idea is simple: how to build the best jobs in the world and make developers happy in their jobs.
Talented would be a growth engine not only for existing customers but also for the new company. In our peer group, many of the listed groups have management consulting businesses, and Talented would now have the opportunity to help build Witted and all its customers into more mature digital companies, and at the same time the best jobs for developers.
I succeeded in this one too! Awesome! Maybe my approach is right after all, and the project is viable.
After this round, I was in a situation where the first reactions of Mavericks, New Things Co and Sauna were reserved. Talented's Finnish and Norwegian companies would be involved. This would still not be enough - we could not do this alone as Talented, we needed others.
The tour was educational, though. The gang has a hell of a lot of prejudices against listed companies, and people's experiences of working there are not very flattering. These companies are seen as rigid, poorly run companies with a culture of secrecy.
The rules of public companies are designed to increase transparency, but sometimes they work in the opposite direction, creating a division between insiders and outsiders: things are no longer discussed openly. Moreover, the love for one's own children, these companies that people have been building, is very strong and cannot be undermined by a hard sell.
If we were just one and the same, other companies would never come along. It was time for a change of strategy.
As different together
All companies had the same key to success. Each has to be the best place to work for its own employees, or they’d go somewhere else.In a market like this, the companies that succeed in recruiting will also win contracts with customers. Then you have to focus and specialise. It is typical in this market to integrate firms closely during acquisitions. In our case, a more effective solution is to invest in and strengthen employer brands. If companies are put into a meat grinder that merges everything into one, the result is just grey mass.
We all agreed on this. New Things Co, Mavericks and Talented offer a range of jobs, and together they are a strong market force.But I still had to overcome many prejudices that were deeply rooted. Why couldn't we be rebels even as a listed company? Of course, we are serious when we need to be, but otherwise we can go off-the-wall, as it were. If we did this ourselves, couldn't we shape the company into what we want it to be?
This approach, which emphasises the originality and independence of companies, worked. An understanding with Mavericks emerged during the spring, and Jouni helped take the idea forward internally. Together, we went through the project with the whole staff.
With New Things Co, we continued along the same lines. We involved the whole staff in the reflection process early on.
New Things Co was thinking about getting involved right up until the end of June. Finally, a decision had to be made. In the face of necessity, the right solution seemed clear and a strong consensus emerged: let's do this!
While IPO projects are typically prepared in a boardroom, in our case the project was prepared and decided together with the entire staff of all our companies. This created a very strong basis and mandate to launch the project. A further staffing exercise was carried out in the companies to ensure that everyone who wanted to become an owner was able to do so.
Some of our IPO advisors wondered why we were not nervous about communicating internally and seeking approval. Of course not, because it was a joint project!
Summer projects: new brand, new ownership
The team was assembled. The project was ready to start in earnest. We had two challenges. The first was that the group's name at the time, Talented, was strongly associated with the recruitment and growth consultancy business we started in 2016, which represented around 5% of the new company's business. It was clear that the name of the new company should reflect the software development business. A new brand had to be created.
Another big challenge was that the four companies had to be turned into one ownership or else the preparatory project would be significantly delayed. There were only three months, including the summer holidays, to exchange shares between the four companies.
This was bad news for CFO Teemu Tiilikainen, whose summer vacation plans took a sharp turn in a new direction with the project.
The story continues in a couple of weeks. Follow Witted on LinkedIn, Facebook or Twitter, and we'll tip you when a new part comes in. This story is also told as a (Finnish language only, sorry!) podcast, which you can find on podcast services such as Spotify and Apple Podcasts.