“Understanding the Long Game”
Interview with Sensible4 Founder & CEO Harri Santamala.
Self-driving vehicles are becoming all of the rage in all corners of the world. But what happens to autonomous vehicles when the weather is less than perfect? That is the problem being addressed by Finland-based startup Sensible4. With a background more focused on robotics than autonomous driving, Sensible4 is focused on commercial applications for self-driving vehicles while also addressing the problem of those vehicles responding appropriately to bad weather.
Sensible4 founder and CEO Harri Santamala appeared on the Midstage Startup Momentum Podcast with startup coach Roland Siebelink this week to talk about the inspiration and progress of his startup’s technology. They also spoke about Sensible4’s past and present journey and plans for the future:
- The best methods to gain access to established names and industry leaders.
- The importance of building relationships with potential business partners.
- How investors can be used for more than securing funding.
- The unique advantage Sensible4 has when it comes to finding talented engineers.
- Finding a balance between employees who have the necessary experience and those who have a startup mindset.
- How young startups can reduce the risk of running out of cash.
Roland Siebelink: Hello and welcome to the Midstage Startup Momentum Podcast. My name is Roland Siebelink and I’m a coach and ally for many of the fastest-growing founders and startups around the world, one of which is in our studio today, and it is Sensible4, founder and CEO Harri Santamala has joined us. Hello, Harri, so nice to meet you.
Harri Santamala: Hi, Roland. It’s great to be here today.
Roland Siebelink: The honor is entirely ours, Harri. We’ve heard so much about Sensible 4, but if you had to explain to the audience in a few sentences what you do, what would you say?
Harri Santamala: Well, I think in a nutshell, Sensible 4, we are a software company in the auto automotive industry, in the auto driving space. Coming from Finland, which is not your main automotive country, partially because we are also focused a little bit differently. What we do with the self-driving technology, we are actually focused on commercial applications, anything which is not owned by the person inside the vehicle. We anticipate that through the technology, we can actually enable autonomous mobility anywhere. That’s the core essence of it for us.
Roland Siebelink: Excellent vision. We can see in a way the autonomous driving market in that sense is already developing like markets usually do where there’s people finding new niches, new ways of looking at the business model. I love that.
You already said, Harri, that Finland is not your typical automotive country with not a lot of companies active there. Can you talk us a little bit through the starting history of Sensible 4? How did you get to this idea and how did you guys get started?
Harri Santamala: Just like so many of the self-driving companies, we are actually spinning off from one of the leading research groups - not in the automotive industry because there wasn’t really autonomous driving research until some years ago but more coming from robotics. The story actually began already in the late 80s - not by myself, I was still playing with transformers - when my co-founders were already building their first outdoor mobile robot applications.
In Finland, we like to say that we don’t have oil or we don’t have any of these natural resources except we have plenty of bad weather. It comes in in all forms and shapes and you never know if it’s going to be raining cats or dogs on any given day. Just imagine doing a robot in such a climate. For outdoor applications, we have to face all these conditions. This was a lucky coincidence for the journey where we are heading today, starting by basically researching and later developing better agnostic technology and building experience and know how around the problem of bad weather.
Roland Siebelink: Oh, excellent. You’re really getting to a core competence of Sensible 4 here, I understand, which is really the optimization of autonomous driving or robotic technology for whatever weather it can deal with. Is that correct?
Harri Santamala: Yeah, 2016, in the middle of the self-driving hype - I’m the petrol head, the automotive guy of the company. We started to look into this industry and we saw that it was lacking the performance of the weather. And at the same time, we saw that there’s a huge opportunity for different varieties of commercial vehicles available, which you can solve through this technology. But the challenge is that if you live somewhere where 90% of the global population lives, which is subject to seasonal weather, and the typical thing for the commercial applications is actually that there has to be quite high up time if you want to make a business. These things were very contradictory, and we saw that there’s an opportunity to bring something by providing a solution for these harsh conditions to enable these business cases.
Roland Siebelink: Absolutely. How do you think about the business model? Do you see yourselves primarily as a supplier to people who develop autonomous driving technologies or is it more companies that build specific use cases? One focused on trucking, for example. Or is it more aftermarket solutions that some of the owners of those autonomous vehicles would then add on to deal with specific use cases?
Harri Santamala: I think in the old fashioned way of describing, we try to be a software supplier for automotive manufacturers. We have a few of these companies with whom we are working with and they are either modifying production vehicles to have this self-driving environment or developing something specifically for the industry. The challenge of self driving is a combination of having the right sensor sweep, redundant hardware, and software that’s working with all of this. And to validate your safety, you need to look at the whole picture. I would say self driving is more like a partnership than supplying anybody. We really have to work hand in hand as much as possible to be able to meet the challenges coming from those end use cases.
Roland Siebelink: Absolutely. Harri, many of the listeners to this podcast also have a similar target group in mind to you - maybe not just all the automotive companies but large industry players, big established names. What has been your approach in even getting access to these companies to try and find interest to see if they could work with you and to break through that barrier? Because it’s not always easy to get in touch with those big players and find the right person that would be interested in your solution.
Harri Santamala: I think that’s really the essence of the challenge when you go to an industry that used to be - I would say, before the infotainment started to come to the industry - I think before that the auto industry wasn’t really keen on working with any startup. We would have to grow to a really serious player before you could get to the industry. But I think they learned from a few success stories. Companies like Mobile used to be startups as well. The industry is much more open to different collaborations nowadays than it used to be. And that was a little bit surprising to us, to be honest. But how to approach the big guys - we were working with some of the leading names like Toyota here in Europe, quite a few others in Europe and Japan, which are our main markets. It’s a long game. You start by trying to get your initial POC to get to know people and get them to see that you are serious about that.
Of course, POCs are only good for moving forward in the commercial corporation. But when we established the company, we didn’t have any investment or savings for that matter. We just had four guys, two of them really experienced researchers. Then I was the petrol head or automotive guy. And then we have one guy who was all about the business. We started to approach these companies early on, usually through different kinds of events. Most of the big names do have some kind of innovation unit. And it took us some time, but I think it was a little bit over a year when we got our first major sign up on a quite big POC and at the same time also one major OEM doing exactly the same. Meanwhile, you have dozens and dozens of contacts developing and you give them some time and try to develop the relationship until the time is right.
Roland Siebelink: Yeah. The relationship building and going through the long haul is an important part of it. I saw in your investment lineup that you even signed up some Japanese investors or Japanese partners. How has that been working out for you? Are they advisors or board members? How’s the general investment strategy been so far?
Harri Santamala: There’s always money available if you have a great idea and the right team and the right timing. But then the question is do you get something more than just funds, especially in the early stage for a company who doesn’t have any customers nationally, so we only can go abroad. We were very lucky and very happy to find our first two investors, who were both from Japan. NordicNinja is a hundred million Euro fund in Finland but originating from the Japanese auto and banking industry. Then the second investor was Itochu, which is one of those huge Japanese trading companies. And it has been incredibly helpful getting these investors to back us up. Both of them have been taking a very active and advisory role. If we need their help, they are there to help us. But not pushing in case we don’t need them for something. It has been a really good balance. and helped us already to acquire a few very prominent customers overseas.
Roland Siebelink: Yes. I can imagine being able to build on their relationships and getting warm introductions from people is so supremely helpful when you want to reach those big corporations.
Harri Santamala: My understanding and perception from Japan is that it’s quite a closed country in a way outside of the first couple of Japanese companies that everybody there knows. Then it’s a seal of acceptance. And that’s really helpful.
Roland Siebelink: Harri, can you talk a little bit about the team you’ve built so far? You said you started off with two researchers, a petrol head, and a business person. How big has this team become and what are the key divisions, the key functions in there?
Harri Santamala: I believe we are approximately 90 people as of today, where 85 are in Finland where we do the R&D. Of course, for this kind of deep tech company, you can assume that the biggest team in the company is developing the product. The second biggest team in the company is working with customer production and then projects. Then we have a few other people who run the administration and sell the product. But that’s really about it. This is a guesstimate, but I would say that 65 out of the 90 are working in either R&D or the customer projects.
Roland Siebelink: Okay. That’s pretty heavy but understandable for the kind of company you’re building. Where do you find all these engineers and technically-adept people and how do you make sure they fit into Sensible4 from a values perspective?
Harri Santamala: That’s a good question. The advantage we have is that our CTO and CBO, through their decades in academia, have been teaching most of the workforce available in Finland. Because it was also the biggest such group in Finland. I believe it might still be. They really know everybody and we are known. And that has been a great source of getting the talent who doesn’t want to move to Silicon Valley and work for a big company.
When we talk about autonomous driving, at the end of today, it’s a software which has to get working. It’s not only about robotics but actually it’s a software development exercise as much as it’s robotics. Being the only company doing this kind of full stack product for the industry in the country has had its advantages in getting the attention and being able to grow the resources in a cost-efficient manner. Of course, we also had a lot of people moving into the country to work for Sensible4.
About the question about the fit, that’s the eternal challenge. You never know. When you hire somebody, the industry standard is a six-month trial in Finland. That’s quite long, so there’s mutual time to get to know each other to see if there’s really a fit before that trial period ends.
Roland Siebelink: Absolutely. Have you got some explicit things you look for or things you absolutely do not look for in an employee that you know won’t be a good fit or is it really more experience, talking through these six months, and getting to know them better each in their own way?
Harri Santamala: I think this is a startup problem. You start, the organization and the processes are being built by the people in the company. But you can assume that for quite many positions, it’s going to be an empty table. This is the big goal, get us there, and do what you must. For some people, they thrive with this kind of challenge and environment. But for some people, if they’ve been working only in big automotive corporations their whole life, coming into this kind of environment where things don’t work in the waterfall model and there’s no processes or everything is not defined, it can be a huge challenge.
And I think in self-driving, that has been one of the challenges we have to face. On the one hand, we need people with automotive experience to make an automotive product. But at the same time, the startup is such a different beast compared to established big corporations. You are always balancing when making a decision on hiring somebody. This is one of the questions we have to ask every time to make sure. It’s a big mutual commitment to make sure that that goes as planned.
Roland Siebelink: Absolutely. Let’s move a little bit toward the future. You mentioned you’ve signed up a few big customers. You’re about 90 people, as I understand, so already huge growth from starting just a few years ago. How big can this become? And when do you know you will have achieved the vision behind Sensible4 if you look in the long-term future, maybe 10 years ahead?
Harri Santamala: The business model comes - there’s a huge lack of drivers in Europe and Asia, and trying to tap into the low-hanging fruit use cases - the business model is comparing the cost of the drivers that are not available for these use cases to the total cost of ownership of this self-driving vehicle. We’re talking about weak numbers and a highly scalable product. Of course, the sky’s the limit for this kind of technology that can truly disrupt the industry.
Roland Siebelink: Okay. And if the sky’s the limit, that’s good for the long term, but in a two to three years time frame, you have to set some intermediary goals, so where would see Sensible4 at the end of 2025?
Harri Santamala: At the end of the 2025, we will have a serial production, already second generation available and multiple serial production vehicles or data types, as the company should be well-positioned to be the next unicorn from Finland.
Roland Siebelink: Last question before we move into where people can find out more about Sensible4, Harri, when you talk to founders that are a little bit behind you - maybe three, four years, that are just starting out, just starting to get some success with their products - what would you advise them? What’s the biggest lesson learned for you as a founder?
Harri Santamala: It was really about trying to get into the business on day one. And that doesn’t only mean selling demos and POCs and whatever you can sell at that point but actually bootstrapping in a sense that part of the business is also maintaining the cost of the operation. We often had growing pains by bootstrapping for the first three years. And that really helped us to establish a business model and cost structure that was profitable for the first three years but that can become profitable again upon the product launch.
I think in today’s world where the tech market is tumbling like the stock market, it’s becoming more and more important that you have really solid traction about finding those customers and making a business wherever you can because at the end of the day, it’s reducing the risk of running out of cash but also increasing the chances of landing those big customers.
Roland Siebelink: Excellent. That’s a great lesson, Harri. Thank you so much. If people want to find out more about Sensible4, where should they go? And is there something particular they should download or look at on your website?
Harri Santamala: I think the website should give a quite good overview. But we also have a very nice YouTube channel with both professionally made videos but also some of those cool videos from the bootstrapping times we made whenever we had some bad weather or we were doing cool stuff. This would be the best place beside the website. Use the link to find places to look at.
Roland Siebelink: Excellent. And remind us of the URL for the website to make sure that everyone goes to the right place.
Harri Santamala: Sensible4.fi. Four with the number 4.
Roland Siebelink: Sensible4, one word dot FI. Excellent. Well, we’ll put that in the show notes as well. Thank you so much, Harri Santamala, CEO and founder of Sensible4. It was an honor having you on the Midstage Startup Momentum Podcast.
Harri Santamala: Thank you so much for having me.
Roland Siebelink: Absolutely. And to the listeners, we’ll have a new episode for you again next week. Keep recommending the best founders in the world to us, and we’ll keep putting all their insights together for you. Thank you so much.
Roland Siebelink talks all things tech startup and bring you interviews with tech cofounders across the world.