Before launching Wolt, Elias Aalto first built a successful software consultancy, Qvik, and created an early hit game for iPhone.
How did you become an entrepreneur?
I was working as a consultant at Digia and someone showed me what they billed for my hours. It was 120 euros an hour and I was getting paid about 17. I thought: that’s over seven times more. I was, of course, naive in thinking that – as if there were no overheads in running a business and no risk associated with it. But that kicked off the emotion for me that I could sell myself doing the things I was doing at Digia. Why not cut out the middle man? Although I’m not saying that everyone should start their own consultancy, even if they’re working in software development.
I remember, years ago, listening to you speak about your game, Wooden Labyrinth 3D, and how you struggled to make money from it.
A lot of people saw that speech because I did it a couple times. It turns out that no one understood what I was saying though. This was before in-app purchases were really happening, but we had figured out how to make money using mobile games – it was the time of premium applications. What I discussed in my talk was how I had failed to monetise through advertisements and in-app purchases. Actually, the game sold quite well through the premium site, so in the end it made about half a million euros in revenue, prizes and so on. It was downloaded about 13 million times.
How did you decide to jump into Wolt?
I had been at Qvik for over five years. When you do consultancy it can be hard. Most times the projects that you do are not really that successful. Most products in the world fail. They’re not spectacular failures, but they’re not breakout international successes either. On the other hand, if you manage to create a project that is really successful, you’re then a bit annoyed that you don’t actually own a piece of it. You think: “Oh well, that was nice. Now it’s big and great but … well, I got billed by the hour.” I was looking back on the success of the game I had made, Wooden Labyrinth 3D, and thinking how it would be cool to make something again – something where I could say: “This is mine and this is the best.” So when I was contacted by Miki Kuusi to form a company I jumped at the chance. We had a meeting over coffee and I promised to get back to him over the weekend, but I called him back 30 minutes later to say “let’s do it, let’s give it a shot.”
When did that happen?
It was early 2014. At that point it was just me, Miki and Mika, our designer. We spent the summer building the proof of concept and gathering the rest of the team, then we founded the company. It was announced at Slush 2014.
We have seen quite a boom of food delivery startups across Europe. Wolt takes food to homes. We have been doing this for a hundred years. Where’s the startup? What’s the revolution?
First of all, there are two things here. We are not, and we never were, strictly a food delivery startup. That was not the thing that we were going after, and we’re still not. We’re in the business of restaurants and creating a digital interface for restaurants. Part of that is the delivery business. A delivery business provides instant gratification. You have this magic power to get something that you couldn’t get before – having something delivered that isn’t delivered naturally. But we also feel there’s an even bigger piece of the puzzle in the rest of the restaurant business, whether eating at the place or picking it up for yourself. We are trying to look at the restaurant business as a whole and sell all of that. The restaurant partners that we work with didn’t get to the industry just to found a kitchen. During delivery, they’re essentially just the kitchen, but they wanted to be restauranteurs. They want people to enjoy not just the food but the atmosphere and the spirit of going there. We want to help with that as well.
And now for the “why now?” That’s a good question. The thing I like about Wolt is that it’s not high tech. We could have created the same service six, or even eight years ago. I don’t know why it has happened now. When we started Wolt we didn’t know that there would be such a boom. I looked at when our big competitors became known and raised their big rounds. It appears that our big competitors raised their big rounds long after we had formed as a company. When we started the company we didn’t think there would be so much competition. It’s great to be in such a hot market, but it’s also scary – it’s a double-edged sword. There’s a lot of cash going around, so there are opportunities everywhere, but of course there is the risk that a winner will take it all and you will be sidelined at some point.
How did you share the tasks between the six co-founders?
We started in early 2014 and only raised money during that autumn. We didn’t pay salaries so we worked as much time as people could invest in it. Some would work more in the evenings while others could work more fully during the day. Since I had Qvik as a sustainable, profitable company behind me, I could take more risk and was working almost full time. Others weren’t able to do as much. At that point Miki was still the CEO of Slush, so he was quite busy. That’s why we really got things started after Slush, when we raised the funding. Of course we didn’t start with six co-founders initially. Some of them joined a bit later. It was an interesting summer and, against the odds, we managed to pull six people together. Six people is a lot of co-founders – a lot of opinions for the early stage of a company. Just finding a name for the company was very hard for six people with differing opinions on what it should be called.
I was in one of the weekend hackathons with a team of 13 people. It took us more than 24 hours to agree on the name for the team. And then the organisers said that there was another team that had almost the same name, so we had to change it.
The codebase is still called Bank. Initially we were thinking of concentrating more on the transactional and money side of things – restaurants were just the first vertical we would attack. Later we realised that it was a big enough vertical for us to just go all in on it. We were called Red Lane at one point, then Skyliner. My personal favourite, Hindenburg, was thrown around for a while, and Zeppelin. It was a mess. It took months and tens of hours of cumulative time to figure it out.
Wolt is a cool name.
A good thing about the name is that it’s flexible, because we didn’t know if this was the bet that was going to work. We could still pivot. If we were called fooddelivery24, or something like that, and it didn’t work, then we would be stuck and have to do everything we could in that vertical. Instead, we gave ourselves a bit of leeway in terms of what the name means. I think it has nice connotations – like speed and efficiency and so on. Then again, in a world where our competitors are pink and it says food in the name, there’s an instant sort of understanding about what the business does when you compare it to our name, which is more subtle. But I’d rather be subtle than in your face.
How much have you been able to benefit from Miki’s status and the startup boom? Trying to raise 10 million in 2008 might have been slightly more complicated.
It would probably have been trickier. Of course, Miki’s personal status as a celebrity in startup circles – being very well connected – has been of immeasurable value to the company. In terms of the startup boom, that’s more tricky because we also know that there are a lot of successful companies working in mobile now. We are a mobile first company, so our consumer-facing applications are mobile and even the back end is mobile. But we are running out of talent in Finland and it’s very hard to hire now. It took over two years to find an iOS engineer that that could work alongside me. Luckily, we now have a couple of great people. It was a pain to get good people though. The people are running out and the compensation that they can receive is high. Qvik is having the same issue at the moment – hiring good people is one of the biggest challenges.
How can the problem be solved?
You just need to put in a lot of effort and, of course, you have to have a story and trajectory to show that this is the right path. All our full-time employees have stock and are owners of the company, so you can’t make too many bets before you get tied down. Eventually life happens. We really have to sell that this is the shot to take. The good part is that we are in a consumer business that is massive in scale, so there really is no upper bound. The impact we can have on the world is crazy. We increase sales for the restaurants through our career partners and, of course, the number of jobs we therefore create is in the thousands. That’s kind of cool, although of course it’s still partly due to VC funding. A lot of our competitors just capture the market by incentivising purchases, while we are actually building a business. Some of them are simply trying to solve world hunger by using VC money to give people free food.
That sounds a bit weird.
If you can capture the food market, it is so valuable – like, over 10 percent of all consumer spending is on food, and half of that is food outside of the home. It’s one of those trillion-dollar businesses where the value of the market and the leading position in that market can be huge.
Taizo Son spoke in our previous issue and his one piece of advice to all startups was: think big. In the food sector it’s kind of built in, isn’t it?
The opportunity is so massive. That’s why even if you were a niche within that, the niche can still be hundreds of billions, or something like that. It’s crazy.