Exclusive: how publishing giant Sanoma is fostering intrapreneurship with its in house startup accelerator
So print is dying – or already dead, or at least critically ill. As we wrote here earlier, the important question is not who called it first but rather: what will we DO about it? Helsinki based publisher Sanoma is trying to do something about it and started an in house startup accelerator where it encourages its own intrapreneurs to come up with disruptive business ideas.
Sanoma describes itself as a medium sized European media and learning company, medium sized is still pretty huge. Sanoma has a market cap of 1,1 billion euro, and it has a very long tradition in print – more than 120 years. It’s quite a leap from there to running a startup accelerator, let alone starting your own, in house accelerator. We talked to Sanoma director of innovation and development Lassi Kurkijärvi about disrupting your own business from within.
Kurkijärvi: When faced with disruptions in the industry, there’s two options. You can hope that what happens to other players in big print will simply not happen to us – and I don’t think we have that luxury. Or you can embrace the disruption and look for disruptive ideas within your own company. We decided that we’d try the second option.
It’s a pretty wild idea for a publicly listed company.
Kurkijärvi: Well, we have had different innovation programs before, and they served us well. We have a “Planet of the Apps” program that develops mobile applications for Sanoma. We have a technical team in Budapest, and a design and business development team here in Amsterdam. I think we have launched 60 apps over the last year for 8 different Sanoma territories, which brings the total tally for apps at well over a 100. So we’re quite good at improving our existing properties to move into new territories.
But John Martin, our chief digital officer, had the ambition to start fostering innovation even more radically. And I agreed that we should try to go beyond existing corporate innovation programs.
From there the idea grew that we needed to create something where we could invent radically new, mobile first business models. Because the transition from print to digital was hard, but I think going from digital to mobile will be at least as difficult.
Most corporations would gather a few managers in a boring meeting room and lock them up until they solve the problem.
Kurkijärvi: Well, it was pretty clear to me that those old models just don’t work so well anymore.
You know, doing a lot of market research for half a year, and then writing a financial plan – fiction on Excel sheets (laughs)- and then after a year and a half launching something that you hope will meet a customer need.
These days, the successful models come from making things. I thought we should have a model where we can create concepts and validate them fast, make prototypes, test them in the market, see which ones fly. It dawned on us that we were actually describing an in house accelerator: if we really wanted to do grassroots innovation, we needed to foster the entrepreneurial spirit, and take pages out of startup handbooks.
How did the headquarters in Helsinki react to this craziness?
Kurkijärvi: Eh, surprisingly positive – a lot of people are curious to see what comes out of this. Everybody has accepted that we need to be more agile, more adventurous in how we develop products. I don’t know where we’ll end up, but so far this project really exceeded my own expectations.
You’re ahead of the curve, according to Mikko Jarvenpaa, author of the recently published “Speed up your startup”. He thinks in house accelerators might be the next big wave in innovation. The question is: is your workforce ready for this?
Kurkijärvi: Based on our experiences: it is. There’s a lot more entrepreneurial people in the world than we give credit for.
Ten years ago I did a publishing startup with friends. We had a great time, it was very exciting, and the company actually did quite well. But during those five years, we had some rough times too – times when we didnt get our paychecks because of cash flow challenges, and times when we had to let go friends we had hired. Those risks really put off some people from becoming entrepreneurs. In house accelerators offer the best of both worlds: you get the benefits of working company, but you’re launching something exciting.
How is it organised? Do you have a demo day?
Kurkijärvi: We structured the accelerator program in three phases: first, a kickoff phase in Amsterdam, Helsinki and Budapest, our three digital hubs. Then, an active learning and idea validation stage. This is where we learn new methods, like business model generation, design, validation, new skills that people can take back to their day jobs. And out of those ideas, we select 5 or 6 that will go to a bootcamp, in order to make a product.
The rise of vertical startup accelerators
In his book, Jarvenpaa stresses the importance of industry fit for accelerators – he says: it’s probably the vertical accelerators, specialised in one industry that will thrive.
Kurkijärvi: I think you definitely need a good fit, in a sense that you have to make use of the strengths that you have as a large publisher. Our key question when starting this was: what is it that will give us an edge against other – sometimes well funded – startups out there? What kind of internal mechanisms to we have to accelerate our ideas? For Sanoma, it was clear that our unfair advantage is our media power, our existing relationships with clients and top class content creators.
But that doesn’t mean that our Sanoma startups need to be in publishing. It might be that you can offer some totally unexpected advantage because of a huge set of analytics data that we gathered from unrelated activities.
In some ways, that would even be more interesting for us. Our biggest challengers are probably not other media players, but rather tech startups – real digital natives, or even mobile natives.
Can you give a hint at what kind of startups you’re trying to create? I guess Sanoma won’t reinvent itself as a game company overnight?
Kurkijärvi: Well, we do have an interesting experiment with the license holder of Nijntje to create games for kids. But content will probably stay at the core of our digital strategy. We focus on three things: figure out how to package our content so that it’s relevant.
We want to enable commerce: advertising in all forms, price comparisons, which are very interesting on mobile, classifieds, etcetera.
And we’re also a very large learning company, since we have school book publishers like Van In and Malmberg in our portfolio. It’s an industry that hasn’t been disrupted yet, but we’re not going to sit around and wait for that to happen (laughs).
Let’s talk about money: how does Sanoma tackle the funding and equity part? Startups are very energetic places, in part because people are creating equity value for themselves.
Kurkijärvi: I hope you will understand that this is one area where I cannot go into detail. It’s an important part, which we’ll be looking at case by case, when we have built prototypes and decide how to take ideas forward. But our clearest promise is: if you get to bootcamp, and build a prototype that will get made into a product, you will still be involved in building a successful business out of it.
Can you say what the average amount is that you will invest in these startups? It seems like the ballpark for accelerators is seeding money from 15 000 to 85 000 €.
Kurkijärvi: Again, I can’t go into details, I’m sorry (laughs). We might invest very heavily if an idea warrants it. On the other hand, there might be ideas that just need time and internal support. We are a very large company with a very strong reach in our territories. That gives us opportunities to create new brands and give them time to grow.
Something that accelerators sometimes overlook, according to a survey Jarvenpaa did among startups who actually went through accelerator programs: some accelerators underestimate the need for in house support by design teams, legal, accounting, etcetera. They think a two day training session will suffice to learn you all you need.
Kurkijärvi: Yes, and that’s one area where we can offer a strong advantage. Sanoma has great people inside working on all those disciplines, and we can make them available when needed in every stage of the accelerator program.
Although we will also offer the kind of active learning that comes with the lean startup movement. We have some top names involved like Ian Collingwood, who’s an ace at design thinking, Rob Fitzpatrick and Joris Van Heukelom, who brought the Founder Institute to Amsterdam. We will inject some startup DNA very deep into Sanoma.
All this begs the question: once you have acquired all this experience, are you going to open this program up to startups from outside?
Kurkijärvi: We looked at it, but it’s a tricky road, mainly because the selection process becomes so hard. This mobile accelerator and other accelerators that we will run, will mostly be aimed at internal people.
For the outside, our new investment and venturing arm Sanoma Ventures is probably the best vehicle. For example: we announced an investment in a mobile couponing startup – but that’s not the kind of early early stage seed funding that an accelerator does.
There is a possibility that we’ll open the program up to key partners – hypothetically, we could run an accelerator about advertising and involve some key partners like media agencies or advertisers into the program. But our first focus is internal innovation.
One billion pageviews
Sanoma is of course not not the only one looking at mobile as the next big revenue stream. Why will you succeed better than, say, the telecoms, who are already complaining that they’re not seeing any revenue from delivering things like digital video as we wrote yesterday?
Kurkijärvi: Our advantage is that people are really eager to consume great content. In the Netherlands we see that people read more articles read every month on mobile than in traditional browsers. We see that clearly in our NU.nl stats: there’s a very rapid growth in mobile. And what’s great about it: it doesn’t cause a drop on desktop browsers, so there’s a new usage on top of our traditional online news consumption. We see a more than 100 % growth in mobile advertising. We’re quite confident that mobile advertising will grow to a significant part of our revenue.
In Finland, full page tablet advertising with rich media is now fetching rates very close to print rates. And the feedback from readers is that they actually enjoy this type of advertising.
Sounds like you’re getting the first tastes of mobile success?
Kurkijärvi: Oh, yeah, definitely.
Three years ago, when we launched Planet of the Apps, we were talking about reaching 100k users. Now we’re talking millions of users. We’re close to serving a billion of pageviews per month in the Netherlands alone. The revenues are more than doubling every year. I’m actually very, very bullish on mobile (laughs).
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