According to a Finnish business periodical, Talouselämä, Fruugo has secured more financing from its current shareholders, Jorma Ollila, Risto Siilasmaa and others. We previously wrote about Fruugo laying off 40% of its staff to cut its burn rate. At the moment, 25-30 people work at Fruugo.
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fruugo
Fruugo Secures More Financing From Current Shareholders
Fruugo Lays Off 40% Of Its Employees
On Monday Fruugo, a Finnish startup that in 2008 burned through € 14.5 million, laid off roughly 20 of their 50 employees, which equals to 40% of their whole work force. Fruugo CEO, Juha Usva, confirmed the news to me yesterday evening.
When I asked how much money Fruugo still has in the bank and how long will it last, Usva emphasized that ‘the situation is tight’. According to some this means that Fruugo won’t have enough money to pay their employees’ monthly salary due on the 15th. Whether that’s true or not, the financial situation of the company is clearly critical.
Fruugo Burned Through 14,5M€ In 2008
Fruugo has burned through 14,5 million euros in 2008, according to an article in Kauppalehti. Last year’s books show (in Finland these are public for all limited liability corporations) that Fruugo’s net loss for the year is 14,5 million euros and with no income, this is the investment Fruugo used in 2008.
Fruugo is the much debated startup from Finland that has gathered a lot of media attention in the recent year. One of the reasons they have done so is their attractive and well known board members that include Risto Siilasmaa (Founder, F-Secure), Jorma Ollila (former CEO and Chairman of Nokia) and many others. Fruugo’s main product is a webshop that would aggregate all the different webshops into one.
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Fruugo Opens Public Beta, Hits Problems
Fruugo, the hyped major Finnish e-commerce startup, opened up a public Beta yesterday morning in Finland, Sweden and the Netherlands (release notes).
Fruugo’s launch has been eagerly anticipated since the first rumors last year (our previous coverage). In Finnish and Nordic scale the firm is a huge endevor backed with millions of euros in finance.
All did not go very well, though. Quite soon after opening the service many who tried the service noticed severe problems, and eventually the site was brought down with a note “under maintenance” (screenshot). It seemed the site went online and offline multiple times during the first day. Janne Waltonen, Fruugo’s VP Marketing and Communication, commented on Twitter that they were in fact expecting problems and did not want to make a big fuss of the launch exactly because of that.
Sfeed Is Twitter For Everything You Want To Have
Sfeed, an Estonian startup, is capitalizing on the popularity and dynamics of Twitter by introducing a service that let’s you follow a stream of updates that center around physical objects that people like be it a sofa, a designer watch or a Blade Runner movie (Yes, I ‘Sfeeded’ all of the above). Accordingly, the service is called a shopping microblog.
In a similar fashion to Twitter, in Sfeed you can follow people and instead of status updates you then see the objects they have ’sfeeded’ in your home stream. When you find a person with a similar taste to yours you can follow them and start receiving all their ’sfeeded’ objects which in effect are likely to be stuff you like as well. Once you have chosen to like (sfeed) a few objects, the service starts to understand to recommend more objects to you based on what you have liked in the past. Simple, but quite powerful and addictive as I have come to find out.
sfeed.com introduction from sfeed on Vimeo.
To add products you need to add an easy-to-use bookmarlet to your bookmark toolbar. Once you see an interesting item while visiting an online store just click the bookmarklet and it highlights the item, add it’s name and the service automatically adds it to your Sfeed feed. The bookmarklet can be added to most common browsers, namely Firefox, Internet Explorer, Safari and Opera. I added an item from a tiny Finnish t-shirt store, Puoti.fi. It worked nicely without any problems, so either Sfeed guys have already an agreement with the small store, or they add everybody and get a commission only from the bigger ones like Amazon before they get to the small ones.
You can also create sets (see my set below) and build your set on top of say a photo of your living room. This way you can immediately see whether the objects you have chosen to the set fit in your living room interior. Nifty! Similarly you can post a link of your own sets to Twitter, Facebook, all the other usual suspects or embed an html snippet to your website.
Since the service is build around physical things that are sold in stores, it’s not such a stretch to figure out possible business models for the service, which can go from commission to advertising and everything in between as long as there is enought traffic. As hinted above, currently Sfeed’s chosen method of monetization is referral sales commission (there is a link to a store that carries the item in question right next to it). That said, a sfeed like service isn’t very hard for a service like Fruugo to copy and direct the traffic to their partner merchants, which is a natural consequency of Sfeed being such a simple, clever and easy to implement service. Sfeed was build on Amazon Web Services and financed by a round of seed funding in 2008. Then again, there’s always ton of quirky little sites and products that Fruugo or might not be able to get or want to get in their selection, and it actually seems that the two work together quite nicely. Although, I doubt it whether Sfeed will ever get a commission from Fruugo, as Fruugo itself is asking a commission from its merchants.
All said, I very much enjoyed using the service and will make sure to visit again to find more aspirational things I would like to see in my living room.
Interview With Fruugo’s VP Marketing And Comms, Janne Waltonen
I did an interview this week with Janne Waltonen, VP Marketing and Communications at Fruugo. It has previously been unclear what to call Fruugo. It is not a webstore since they don’t own any products, legally you cannot call the company a webstore aggregator either, and it is not a not a search engine. During the interview we solved the dilemma and coined a name for this new player in e-commerce.
Waltonen demoed the actual beta service and walked me through where Fruugo is currently regarding the number of products and number of merchants, but did not give me an exact date when the service is to launch to the public. I also asked whether Fruugo will have an open API for developers to tap into. This might sound like a trivial question, but could have big effect for the local developer scene and give an indication of the policy the company takes in embracing the entrepreneurial culture. Creating a platform to innovate on the back of what is potentially a very large e-commerce player can lift many boats. This is something we have not yet seen in Finland: If Nokia has not been completely stone walling the local startups, it certainly could do more for them (although there are a few positive individuals who have been supportive), instead of threatening to move out of the country, which is the latest row regarding the mobile giant. After meeting the high spirited people at Fruugo I am very hopeful.
Whatever people make of Fruugo’s and Boo.com’s similarities and the rumors circulating around the company, this week I saw a healthy service (albeit still very much in its infancy) that has a good shot to become a major player in the e-commerce landscape. There are still a lot of unanswered questions. We don’t know how the deal will eventually go down with the large number of merchants, customers or whether all the logistical and regulatory bottle necks can be solved when pulling the patchwork of EU 27 together into a solid buying experience. But there’s always unanswered questions and challenges when doing something new and as Waltonen told me a few weeks ago about the rumors: “dogs bark, but the caravan goes on”. And so it seems to do.
Fruugo from Teppo Hudson on Vimeo.
Fruugo Launches Closed Beta, First Screenshots
Fruugo invited a few bloggers to the company’s premises this week and demonstrated their service, also handing out beta accounts. (We’ll try to get a few shortly also for our readers – let’s see.)
Fruugo’s Janne Waltonen, VP Marketing & Communication, mentioned that they have not really figured out yet what to call Fruugo; it is not a webstore since they don’t own any products, legally you cannot call the company a webstore aggregator either, and it is not a not a search engine. We could settle for virtual marketplace for now. What Fruugo wants to do is to make it simple and safe to sell and buy things online across the Europe regardless of the country borders. The transaction participants should be able to complete the transaction just if they were in the same country, using their local currency and language.
Fruugo is developing the live beta service constantly (with around 60 own employees and 40 consults), so the UI and layout will likely be totally different after a short while . But the first screenshots give some indication of how the service is turning out (more shots in Fruugo’s Flickr stream). The priority order for UI is 1) products, 2) consumers, 3) merchants. Fruugo is trying to find the most interesting and successful consumer segments first with a broad, steady approach, and then go after the selected ones with bigger international marketing power. The company does not plan to provide mobile offering anytime soon, as the mobile market isn’t yet mature enough, Waltonen commented.
The company depends on the logistics of the merchants, and hence requires all merchants to guarantee certain levels of shipping speed and reliability, with four shipping options at the moment. Non-confirming merchants will be removed from the service. Fruugo’s including only 30k-40k products in the early phase of the beta in order to better evalute the usage patterns. Once they have figured out a working layout, gathered enough data, and fixed biggest bugs they will start adding multiple merchants offering the same products. Having none overlapping merchants is also why currently some of the products in the service are considerably pricier compared to some other stores.
Despite any rumors, Fruugo does not introduce any billing methods of its own, they will rather use existing ones. In the beginning they have just the most common credit cards and Finnish e-bank systems. PayPal will be coming only later, which is understandable, given that using credit cards and e-bank accounts is much more common in the Nordics. Fraud management is going to be a huge task to Fruugo, as Fruugo will take responsibility for all transactions, both merchant-consumer and consumer-merchant. The company has reserved the second floor of their office for most part to operational and fraud management activities. Waltonen commented due to fraud issues they have needed to also rule out some product categories due to the requirements by the credit card companies.
So far Fruugo will not introduce any deeper social shopping features, like group shopping. Rather, there are “social traces”, meaning users can review products, seek assistance from other users, and see actions of others. Interestingly, the recent product views and searches of all users appear on the front page in real time (anonymously). Registration event of new members will be be shown with the users’ real name. Fruugo isn’t planning on introducing any sellable promotion slots, rather they expect merchants to rise in the ranks and get visibility due to reliable service, popular products and good prices, and complete product information, which will generate positive reviews.
One major problem in integrating with merchants is that really few Finnish online merchants are used to providing outbound feeds (e.g. RSS), Waltonen described. In Sweden, UK, and Netherlands the situation is much better, as apparently feeding the different comparison sites is more common there. Considering Fruugo takes care of billing fees, fraud management, first line customer support, and managing the customer returns, the 10 % revenue cut the company is taking does not sound bad at all. If they can get the support for the rest of Europe up and running as per their vision, it seems Fruugo might even be the only sales channel a small webshop could need. In that case there could be clear business opportunities open to 3rd parties for helping small e-tailers setting up Fruugo-compatible shops.
Fruugo’s CEO Juha Usva did an interview with Finnish MTV3 this morning, you can watch it here (in Finnish).
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Update: Check out also Startupbin’s and Ekana Innovation’s posts.
Read also our previous coverage on Fruugo.
Set Up A Business With Zero Cost: Scred Introduces MiniCorps
Scred, a Finnish company building tools and services to help friends, groups and communities manage their money, has released a new version of their service. Before Scred enabled me to track debts and share expenses in multiple currencies. I found the basic Scred service already useful in sharing expenses with my flat mates. Now Scred has come out with a new version of their service, which has a set of new features that take the service to a whole new level.
Fruugo’s Ownership Structure Revealed
Adding to the yesterday’s news on Fruugo’s service launch plans, just this morning the Finnish business media Talouselämä has published the ownership structure of Fruugo.
Risto Siilasmaa, founder and chairman F-Secure, is the biggest owner with 30,9 % share. Fruugo’s founder and Evangelist, Nils ”Nippe” Forsblom is the second biggest owner with almost 30 %. Risto Siilasmaa came aboard in the very beginning and brougth in Nokia chairman Jorma Ollila and the ex-CEO Reijo Syrjäläinen. Jorma Ollila owns 9,4 % of the company. A year ago, Seppo Sairanen (the previous main owner of FIM financial group) invested in the company, and last summer the Finnish media group Sanoma, who’s Kim Ignatius recently entered the board. Sixth biggest owner is Kalle Vuoristo, the CTO of Fruugo.
The full ownership structure of Fruugo, as published by Talouselämä:
| Ownership % | |
| First Fellow (Risto Siilasmaa) | 30,9 |
| Queensway Dev. (Nils Forsblom) | 29,2 |
| Kestrel (Jorma Ollila) | 9,4 |
| Optiopaja (Seppo Sairanen) | 6,8 |
| Sanoma | 5,9 |
| Kalle Vuoristo | 5,0 |
According to the article, Fruugo has burned around 10-15M euros so far, maybe even more. They have slightly above 60 own employees at the moment, plus tens of consults.
Fruugo is an aggregator bringing the online web stores under one service. Pan-European web commerce is still difficult, but through Fruugo the European web stores can sell their products to the whole Europe, and all consumers can buy the products of all merchant integrated with the service, using their native language and local payment methods. The business model, as we reported yesterday, is based on transaction commissions. The cut Fruugo takes is around 10 percent, more or less depending on the product category. The company believes the rate is justifiable to merchants, as using the service Fruugo will take care of payment systems, fraud management, customer service, and currency exchange.
Fruugo’s public launch is coming up in Q2, but the exact countries are not disclosed. Next Fruugo faces the challenge to make itself known to the millions of European online shoppers.
(See our previous coverage on Fruugo.)
Fruugo Goes After EUR 60 Billion Market with One-Stop Online Mall
Fruugo, the ambitious Finnish e-commerce startup (see our previous coverage) has announced (see Reuters’ press release Tarmo Virki’s interview news below) the company is on track to launch closed beta still in January, as stated previously. The service will next open in Sweden by early February. The public opening is planned for April, while the news does not specify in which countries it will be available.
Siilasmaa states in the press release interview they “are working to create a European marketplace, so that all those merchants would find all those consumers and all consumers would find all those merchants.” Fruugo has said before the company wants to be the trusted 3rd party of e-commerce. Based on the latest press release news, this means Fruugo aims to unite the online shopping market by opening a “one-stop mall” for Europeans (Europe is the firm’s main target market for now, as it has declared before as well). Fruugo will have hundreds of links to different online stores available in its mall. This explains why the company has been using user experience and website optimization and monetization consults. The initiative could certainly become something big if the company is able to execute the vision.
The addressable market is around EUR 60 billion ($79.50 billion), the company states, half of the total online shopping market in Europe last year. As Fruugo stated in the autumn, it targets all consumer durables and content sold in physical boxes. According to the news, there are some 30 merchants currently integrated with Fruugo, while further 100 in the process. The merchants carry brands like Lego, L’Oreal, IBM, Nokia, Adidas, Lacoste and Nike.
The big question speculated a long time has been, what is the business model? Fruugo now states it does not collect any sign-up or monthly fees from the merchants, it only charges transaction commissions. Fruugo’s business model is said to mix “online retail with search and price comparison capabilities”, and in addition, social networking, which allows consumers utilize their online networks when seeking the best shopping deals. There isn’t more information given on the last point, but it certainly sounds interesting if Fruugo has created some way of utilizing social search (cf. Google speculations) while shopping for products, which might lead to much more relevant search results and recommendations.
Just recently, to add to Fruugo’s well-known board members Nokia chairman Jorma Ollila and founder and chairman of F-Secure Risto Siilasmaa, Kim Ignatius has joined the company’s board (the news in Finnish). Ignatius is Director of Finance and Administration in the Finnish international Sanoma media group, while he served before as Finance Director of TeliaSonera, the biggest mobile carrier in the Nordics. In the same General meeting the board also allowed usage of stock options. Sanoma has been very active in the past years buying internet and media startups so we will see if the corporation plays any role with Fruugo.
Apparently Fruugo’s cash position is healthy after all, as the owners are reportedly not after quick profits – Siilasmaa states confidently “The day will come when this firm is cash flow positive.”
See full press release interview news below.
Michael Arrington On What Works In The Current Economic Climate
I acknowledge that our postings have a been a bit video heavy lately and continue to be so this week, but still wanted to give you a few, what I think is very useful, soundbites from Michael Arrington, editor and founder of TechCrunch. Despite the on-going general post-LeWeb brouhaha in the web, this is worth a watch. Andrea Vascellari, CEO of iTive.net consultancy did a good job asking Arrington where he sees the startups given the current economic climate.
Here’s the key take aways from the video:
- In a tough economic climate winners find an aggressive way to expand without spending a lof of money by
- Reducing head count
- Paying lower salaries now that they are collectively down
- Paying less for everything = lower expenses overall
- Acquiring competitors pennies for dollar when they are about to belly up
- A lot of startups make headcount adjustments already, which is probably a smart move (Think Fruugo and Blyk)
- Those startups that have better execution end up being winners (this is something that I believe always bares repeating even though it’s a no-brainer)
- Remember that this downturn is different! Those who act as they acted in the previous one probably end up being one of the losers.
- You have to be quick on your feet and agile
- Those who focus on technical market analysis on what used to work tend to too poorly in the new climate: You should look at the playing field as a new one and compete given that
Risto Siilasmaa Keynote in Slush Helsinki
Risto Siilasmaa, the founder and former CEO of F-Secure (among other tricks of trade), kicked off Slush Helsinki last week with his keynote addressing the current economic situation. Mr. Siilasmaa is one of the most famous Finnish entrepreneurs of all time, having IPO’d F-Secure and now directing such companies as Fruugo, Nokia and others as a board member.
Apologies for the small ticks in the film, you’re not missing more than a few secs in total – technical glitches.
Fruugo’s Presentation From SIME
Taneli Tikka posted a video of Fruugo “launch” last week in SIME (there wasn’t any product launch as such, most things mentioned where the same as we reported before the event).
The video shows Fruugo’s VP marketing Janne Waltonen giving a presentation and then answering a few interview questions.
Fruugo talk in SIME by Taneli for http://tane.li from Taneli Tikka on Vimeo.
Fruugo will be present today at digital marketing seminar DiVia in Helsinki, and might tell a bit more, although they’ll still not show their actual product.
The Finnish business newspaper Kauppalehti released an article last Friday, stating that Fruugo has “forgotten” (as commented by Fruugo) to leave their financial statement to Trade Register at the end of August as required, but has just posted them a statement of losing the company’s share capital. That doesn’t necessarily mean the company wouldn’t have cash or other liquid assets to run their operations, though, but looks like they’re most likely looking for more money. Also, the previous CEO Reijo Syrjäläinen has left and Fruugo is now run by the company’s operational director Juha Usva.
Fruugo to ArcticStartup on Tomorrow’s PR Launch
Fruugo is preparing to come out tomorrow afternoon in a keynote (titled maybe a bit exaggeratedly “Meet the most ambitious start up on the planet”) at SIME in Stockholm. Fruugo will explain where the company is coming from, what markets and product categories they will go after, and what are they’re next steps.
Prior to the keynote, Fruugo’s VP Marketing Janne Waltonen today disclosed a few things to ArcticStartup regarding Fruugo’s positioning and go to market strategy.
First of all, the company will focus on physical products in the beginning, concentrating on the favorite products of online shopping like books, records, games, clothing, electronics, etc. Fruugo is running a closed Beta at the moment with a few tens of retailers and consumers, and they are starting an invitation beta in January targeted to consumers.
The first three online shopping segments they’re targeting will be a) early adapters of social media and online shopping, b) pregnant women and mothers with babies, and c) outdoor sports enthusiasts (say diving, hunting, fishing etc.). The first is pretty self evident, the second two have been selected because of the unique characteristics in their online shopping behavior, based on extensive amount of research and focus groups. Waltonen explained pregnant women and recent mothers value, and are very active with, social relationships, product recommendations, comparisons, and have a huge need for detailed product information on the web. In the outdoor segment there are likewise very active communities formed around certain sports, with the habit of using web extensively for information and purchases.
Fruugo will start from the Finnish and Swedish markets, then expanding to key markets elsewhere in the Central and Western Europe. Waltonen commented Fruugo doesn’t t have direct competitors as such, and most of the players concerned with Fruugo entering their space could actually rather be quite interesting partners (like Kelkoo and other product comparison sites for example).
Regarding the recent rumors, Janne Waltonen set straight they’ve indeed done some adjusting on the cost structure, somewhat due to the economical environment, but much due they being done with heaviest R&D and are moving more into more operational structure now, which has eliminated a few roles. Anyway, Waltonen told Fruugo’s own workforce has been reduced less than 10%, in addition to terminating some consulting and outsourcing contracts. Some of the rumors out there are quite off the scale from their point of view (like their rumored private jet), but they haven’t wanted to spend time commenting all of that before their phase of more active PR starting from tomorrow.
Apparently Fruugo’s got something working already, as Waltonen told he’s actually already bought and received all his Christmas presents using the company’s service. We (and Santa) look forward to hearing more tomorrow.
Rumors Circling Around Fruugo
There’s a number of gossips around the big stealth mode Finnish startup Fruugo currently. The rumor has it they are firing a lot of their employees, their product is late from launch and it hasn’t been that well received by potential customers. Fruugo commented earlier they are aiming to become the “trusted 3rd party of e-commerce”, set out to solve the problems in the internet ecommerce supply chain making online shopping safer, and “more fun”, for both consumers and etailers.
Fruugo is assumed to have tens of millions in funding, and they state having 150 employees. Taneli Tikka also addressed the rumors in his recent blog post, mentioning Fruugo may have been still hiring last month. Fruugo is burning through the cash quite fast with that amount of employees. However, even if the company would be spending around 1M 11M euros [typo corrected] per year, the assumed funding of tens of millions should be enough to carry on operations for quite some time still. If the funding is not as generous, though, Fruugo might be having tough time in the current economic situation.
Fruugo’s CEO Reijo Syrjäläinen mentioned in our interview in the summer that the service would be available in closed Beta in a few months. We should see that coming up very soon if the rumors are not true. Taneli has also heard Fruugo would be going for bigger PR at SIME Stockholm.
Building a service sized what Fruugo’s comments so far hint of, is likely to be a huge and difficult a task. Thus it may not be any surprise if the old “Pi rule” of startups might have gotten Fruugo as well (take your original plan and multiply the time-to-market by Pi, and divide the expected revenue by Pi).
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