This is the first "old war story" on a series of stories I plan to write about past startups I have "done".
Taika Technologies was the first startup I co-founded in 1999 with couple of other people: Atte Lahtiranta (now at Nokia), Sami Sunila (private investor), Jouni Mannonen (Mahtava Development, Anyfun Games), and Niko Punin (Designer).
Other members of the Taika Team were (and still are) some of the most highly competent technical people I have ever seen. As a sort-of proof of the team's excellency the real interesting war story about Taika is this one thing:
Taika was a company with no product, no revenue. It closed a financing deal in late June 2000, months after the Dot-Com bubble had already burst (it went in the beginning of the year, March at the latest), and yet still the company managed to get financing with over 19 million EUR (fully diluted) post-money valuation.
How did we manage that?
Before answering to that, let's explore what Taika actually did. There's not a whole lot on the web that has survived about Taika. Only few odds and ends and random pieces of news. Since the company is buried a long time ago (August of 2002, and that's another war story), all of the IPR and software is now owned by the Taika Team who have a registered organization set up for that as Taika.org.
Taika worked on what would nowdays be know as social media, social software, instant messaging and micro blogging. All of them, plus a bunch of other things that complement the same "social Internet" vision. As a blast form the past here's an untouched old PDF of Taika's "communication suite" product from February of 2002. Reading the leaflet reveals that almost all of the products and ideas it talks about are being implemented out there by other companies. In essence Taika tried to create a Facebook, and a LinkedIN, and a Twitter, and a Second Life.. years before its time. I have tons of Taika's old designs and documents sitting in my hard drive, and its rather amazing to see that still the level of implementation and design on social networks has not reached the level we envisioned already in 2001/2002. Progress is always slower than one might expect?
Early funding of Taika was committed from the founder's pockets directly. Four of the founders together put in some 424 thousand EUR or so of financing to piece the team together, rent an office, and all that. At that time I was 21 years old and full of motivation, so I threw 106 thousand EUR of my own money into the company (partially debt-leveraged). That's about what it costs to get a top-notch MBA from one of the world's leading business schools. Considering the fact that the company was eventually shut down; do I feel bad about spending that in retrospect? Not one bit. The "education" I got out of that experience was better than any MBA and I would not be here today without it - besides you can always do your MBA later, like I did a few years after Taika was done with.
So, the company had seed funding but no product, no revenue and no proper written business plan either. Writing the plan was what came next. Taika had rented a gorgeous 100 year old Villa in a posh district of Helsinki (Kulosaari) to be our HQ (anecdotes about that: the building was a former Iranian embassy, which we noticed when one day political protesters showed up in our doorstep. The building also had a garage originally constructed for the purpose of hosting Adolf Hitler's car on his state visit to Finland). The office was 600 square meters and totally empty. I took up a room on the 3rd floor of the building and started working on the business plan by sleeping on the floor and writing for about a week. It was agreed among the founders that it would be faster just to let one of us write it quick and the rest would edit if needed. So I ended up soloing almost the entire plan, 51 pages plus another 50 pages of enclosures, analysis, excels and such. My memories of that week are bit hazy: I basically don't remember anything else except sleeping on the floor, eating unhealthy food and writing, writing, writing. But finally it was done. Jouni (from the other founders) contributed with a few enclosures about technology, and Professor Reijo Luostarinen (our new Chairman of the board) acted as the editor/consultant on structure and content. Sami worked on the excels.
I'm skipping ahead and sharing an interesting picture with you from the past. This is from the time when Taika had closed the big financing deal and had its first proper board+advisory board meeting. In the picture are: (from left to right, back row): Prof. Erkko Autio, Mikko Heikki Kosonen (Nokia's CIO at the time), Prof. Frank Biocca, Jouni Mannonen, Chris Donahue, Tuomo Airaksinen, (middle row): EU Commissioner Olli Rehn, Sami Sunila (CFO), (front row): Atte Lahtiranta (CTO), Taneli Tikka (CEO), Prof. Reijo Luostarinen (Chairman), Antero Norkio (VP Product Marketing). Me in that picture with a big fat black beard an all is a good example on how I have moved from "corporate stiffness" towards much more laid back style and touch.
Back to the story: so we had a plan and it was time to approach some investors. Actually we had done that already and had started talking with investors even without a proper plan, using some plain presentations and materials. After all Taika was something we had envisioned for many years in with our dealings with online games and communities, the Legendary BatMUD in particular.
An important factor in getting the investors to meet us was our new chairman of the broad: professor Luostarinen. We managed to get in touch with him through knowing his son, Antti, and we presented our vision to him: "one day the Internet will be social, people will share, talk, and network online in a massive global scale". Much to our amazement he grasped the idea pretty quick and actually agreed that it was a great vision. Amazing us even further he offered his multiple decades of growth company wisdom and agreed to join us as our chairman.
.. the story continues in Part II