This week was all about the releases, new products, versions, and, er, some employees. Swedes-in-Berlin based startup SoundCloud launched their App Gallery, and we pronounced it good. Unfortunately, Sulake’s release was in the form of 28 of their employees. Hopefully, when their Facebook application starts to take off, they can hire everyone back.
There were releases coming from the financial and government worlds this week too. The Icelandic, Danish, Norwegian, Swedish and Finnish Ministries’ collaboration known as the Nordic Game Program awarded a total of 3,000,000DKK (400,000€, 4,200,000SEK, 3,300,000NOK, 73,000,000ISK) funding to 8 winners to develop innovative games. The Finnish Software Entrepreneurs Association released a manifesto demanding a tax exemption for startups that fund their operations from their own profits and are owned by the entrepreneurs themselves. Lastly, one of the very few investment banks left on the Earth, released a huge report on the future of the mobile internet, and we “filleted” it for you as best we could.
Finally, in a MUST SEE video for all European entrepreneurs, Mårten Mickos releases his hard won wisdom on challenges that are in the way of building world’s biggest anything
Back in October we wrote about the negotiations Sulake was having with its employees about reducing the work force. The plan back then was to reduce the workforce by 20%, which would have meant something along the lines of 40 people. They ended up sacking 28 people, to cut costs, and thus stayed well below the initial plan of 20%. Juhani Lassila, their Communication Exec stated in the Finnish M&M article that the current restructuring and cuts have dramatically improved their profitability.
While 28 people were fired, I’ve heard from close sources that others have left the company of their own will and the environment isn’t all that lively inside the company. This of course is completely natural when a startup that has grown to a multinational gaming house has its first real employee negotiations and ends up cutting its workforce by this much.
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Sulake, the company behind the popular Habbo Hotel, a virtual world for teenagers with 14,600,000 montly unique visitors, has come out with a new service, Bobba Bar. Bobba Bar is virtual bar where, according to Sulake, you can meet and make friends. And it’s not just any virtual bar, it’s a virtual bar for 18-year-olds and over, so teenagers stay away.
Clearly, Sulake is going for a new market segment after conquering such a big chunk of the teen market with Habbo Hotel. I’m just not sure 
if big people will jump on the virtual world in the same way as teenagers have. I’m already realizing I spend way too much time in Facebook for no reason. Compared to wasting time in Facebook, Bobba takes a lot more effort is you plan to waste time there as well and I honestly just don’t have any. After all, I have a Twitter to attend to.
Now, in all seriousness, I’m sure there are people who find Bobba to be for them, but I just don’t think the number will ever get even close to the ballpark where Habbo Hotel plays in. That said, it might just well be that Sulake is just experimenting without any more expectations than I do regarding Bobba Bar, and if I’d be Sulake I would probably try it out as well given the success of casual games among adults. Sulake also touts the possibility to data people in the virtual bar, but its bit of a stretch to go there just to hit girls. Also, not surprisingly, in the near future Sulake plans to provide virtual content purchases inside Bobba Bar, so the business model is clearly there as well.
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Sulake has just announced that will initiate negotiations to lay off up to 20% of its workforce in Helsinki. Sulake is the Finnish company behind the successful teenage web service Habbo Hotel. Just yesterday we wrote that they have managed to create a one million euro profit with their 50 million euro revenue.
I actually talked about this yesterday with some net savy entrepreneurs and we all had only one question in mind. Where does the 50 million euros go to when you’re operating an internet service? A Finnish entrepreneur, of French origin, Ramine Darabiha did a very non-scientific analysis into this in his blog post last March. It may not seem a big thing, but once you break the numbers down – a lot of money is going somewhere.
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According to Kauppalehti, Sulake Corporation’s 2008 was by a small margin a profitable one. The group of companies turned over 50,1 million euros and managed to create a 1 million euro profit on it. The company’s earnings before tax were still in the red, but the IFRS calculated tax receivables turned the company statements profitable. The company has been injected with some 45 million euros of investor money of which some 20 million euros have been put aside for the losses of the previous years.
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Sulake, the Finnish company behind the successful Habbo Hotel, has opened up Bobba to public beta. Bobba is a mobile only virtual world and is in very early stages of adoption. I was the 113th registered user on the site. This is something we heard of a while back with Sulake’s report on their 2008 profit.
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The Finnish corporation behind the overwhelmingly successful teen community site Habbo Hotel, Sulake, has reported a €4.8 million profit for the financial year 2008. The company also created record sales, up more than 20% in December, closing in at €50 million for the year 2008. Even though Sulake has made a nice profit, there is still plenty of downside to cover in the coming years to make up for all the loss it has accumulated over the years. This is the first year Sulake has reported a profit since its founding in 2000.
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Library House, a research house on startups and other fast growing ventures, has listed 100 of the hottest mediatech companies in Europe. The 100 companies were selected by analysing companies using Library House proprietary data and an expert advisory panel. Library House also states that these 100 companies are the ones that will most likely change the mediatech world (mediatech meaning media and technology).
To our joy, we can find 3 Nordic companies in the top 10 list; Blyk (Finland), Sulake (Finland) and Stardoll (Sweden). Other companies in the top 10 were Flirtomatic (UK), MOO (UK), Where Are You Now? (UK), Dailymotion (France), King.com (UK), Playfish (UK) and Plastic Logic (UK). It’s interesting to see that there is a healthy spread of gaming and entertainment companies in the top 10 as well as to note the absence of any media companies per se.
Other Nordic companies in the list were CCP (Iceland), Spotify (Sweden, Luxembourg), Betware (Iceland) and Xtract (Finland). The fact that most of the companies are from the UK or Central European countries pretty much states the overlooking of the Baltic market in total (I believe they are part of Europe, at least the last time I looked). Then again, this is exactly one of the reasons why I set about with ArcticStartup a little over a year ago – to give more insight to the Baltic and Nordic startup industries. Seems like we still have plenty of work to do.
Kauppalehti reports that according financial data published into the government files, the price Sulake paid for the acquisition of IRC-Galleria a while back is 12,5 million euros. The company behind IRC-Galleria is Dynamoid, where the Finnish serial entrepreneur Taneli Tikka has also gathered some experience.
The price was 6,6 times their annual revenue which at that time was 1,89 million euros and 25 times their earnings of 500 000 euros.
Jussi Laakkonen of Everyplay has compiled a very extensive list of investments to casual gaming startups in the US and Europe.
Laakkonen has compiled the list from public resources such as VentureBeat, TechCrunch, GigaOm, etc. He admits that there are possibly a lot of investments missing as they based on PR, which naturally works best in the US.
From the Nordics and Baltics, in the list are investments to Apaja Online Entertainment and Sulake, so I’m guessing there are many more smaller seed investments made to smaller Nordic and Baltic companies which aren’t present in the list.
What’s your take – is the casual gaming market the hottest corner of the internet industry at the moment?
The Internet Agency Valve has been all quiet about its plans, but there is something going on about its operations abroad. The agency is a famous flash house in Finland, that has hogged numerous awards from many different competitions. It seems like they have something going on in the US at the moment, more specifically San Francisco.
Valve is recruiting game developers and game designers with the work being located either in Helsinki, Finland or San Francisco, US. A guess is that they are looking towards some sort of Flash based social game as they emphasize the need for “good up-to-date understanding of social networks and web-trends“.
I’ve heard from an industry insider that the person pulling together team is a former Sulake employee. Sulake is the house behind the world famous Habbo Hotel. An educated guess is that Valve is planning something similar, with a different target market perhaps?
The Helsinki based virtual goods operator Sulake saw a profitable first half in 2008. According to Kauppalehti, net profits were around 400 000 euros. The revenues rose approximately 20% to 25,6 million euros for the first 6 months of 2008. Majority of the sales came from sale of virtual goods in Habbo Hotels world wide. According to the company, the annual growth for 2008 will be around 30%.
This is yet more proof, that the company is being heavily pumped into IPO condition. Some sources have told us that 2009 would be the year after all, as the sub-prime crisis smashed the IPO possibilities in 2007.
On Wednesday 27th of August, Sampo Karjalainen – a co-founder of Sulake – will tell the story of the company from the founding moments to this day in an event organised by Tommi Rissanen of Digibusiness – Digital content cluster.
Last year they had Jyri Engeström talk about the path that Jaiku took and it was a huge success, so they decided to redo it this year with another successful Finnish entrepreneur. I sure hope this continues every year and the industry keeps those successful speakers coming.
The event takaes place on the stairs of EGO at Unioninkatu 13, Helsinki at 2pm.
The event is free, but due to limited space – please RSVP to Tommi Rissanen if you’re coming.
Kauppalehti, a Finnish business daily, reported yesterday that Sulake’s CEO, Timo Soininen, is planning to take the company public. According to Mr. Soininen the earlierst possible date for the listing would be sometime next year.
Soininen thinks Sulake starts to be big enough for an IPO. Soininen’s comments takes place after Sulake was valued 9th in Alley Insider valuation (at 25 times revenues) for digital startups. Read more on the story here.
Soinen added that Sulake is profitable and aims to a 20 percent increase in turnover this year. Last year’s turnover was 43 million euro.
Despite the Alley Insider estimation Soininen himself refuses to comment on his company’s valuation.
At 25 times revenues Sulake is valued 9th in Alley Insider valuation for digital startups. The valuation is purely based on revenues and show the potential of companies in totally different perspective in favor of companies that have valued revenue creation, for example Facebook is valued at 9 billion USD instead of the 15 billion valuation which Microsoft validated when it invested in Facebook. More on the SAI25 at AlleyInsider.
This list tells something of the tides that are on the way, as tells this blog post. Companies are valuating themselves to check where their valuations linger. Sulake does relatively well when compared to the valuations of other US companies which have been hyped a lot in the recent months without a proper business model.
Is this a new sign as a result of the significant drop in investments that has been noticed in the US? Remains to be seen.
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