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Summary:

As e-commerce startup Fruugo closes its Helsinki office, its CEO takes a moment to attack the “deliberate negativity” from Finland’s press and entrepreneurs. But with $48m burned and no revenues, perhaps Fruugo should stop laying the blame elsewhere.

fruugo closed

Troubled Finnish startup Fruugo is on the move. After burning through some €37 million ($48 million) in funding over the past few years — apparently generating only €100,000 in revenues along the way — the ambitious-but-struggling e-commerce company is shifting the remainder of its operation to the U.K. and leaving Helsinki behind.

It’s been a long time coming.

After all, the site — which acts as a middleman for online retailers from all over Europe and in an attempt to eliminate national borders — has barely made a dent in the market, despite the heavy investment and involvement of high-profile figures like Nokia’s last two chairman, Jorma Ollila and Risto Siilasmaa.

With its finances weak, the business has spent the last couple of years cutting back its staff in Helsinki and concentrating on its new British base.

So, time for some soul searching?

Apparently not.

In what amounts to an exit interview with Arctic Startup, CEO Dominic Allonby explains a little of what has convinced Fruugo to quit its home country… and then lays the blame for the company’s failure on the negativity of Finland’s entrepreneurs and press.

Focus on the company’s financial problems has acquired the ring of “dull repetition”, he claims, and one significant reason for pulling out was the “overtly negative entrepreneurial attitude locally.”

“While Fruugo has been truly persistent in executing its strategy and has remained determined, resolute and focussed through very difficult times, the Finnish media has apparently rarely seen anything positive in our tenacity or vision. Fruugo has employed many great people over several years, helping many of them gain excellent skills and knowledge that they will take with them through the rest of their working lives – to the benefit of Finland.”

He follows that zinger up by saying that Fruugo’s contributions to the Finnish economy mean everyone should be cheering it along — and that it is only in Finland where the company would face such “deliberate negativity.” The result? Loss of employee motivation, hits to customer confidence and uncomfortable relationships with suppliers.

The message is pretty clear: the problem is everyone else’s but Fruugo’s — Finland, he thinks, is bad for itself.

Are you kidding me?

Sure, Finland may not be full of cheerleaders (though talk about Nokia and you’ll see there’s still plenty of optimism around, even in the face of disaster) but laying the blame elsewhere is just weak.

It’s time to get real, Mr Allonby. If you think poor press is what’s cost the company €37 million, then you are quite frankly deluded. Fruugo’s business may be ambitious, and it may not have got the reaction it wanted — but it’s also been poorly executed. Creating temporary jobs doesn’t buy you any favors; boosting the economy with jobs that you cut after a couple of years doesn’t win you friends. And if you that quitting Finland will change the way people look at you, then you’re about to get a rude awakening.

Nobody wants to see a company wither on the vine — but it’s your job to make sure Fruugo is a success, and nobody else’s.

  1. Rovio is based in Finland, and doesn’t seem to be suffering.

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  2. nettiapinafi Wednesday, May 9, 2012

    I think you’re right. It’s silly to burn through millions in funding, and blame others for not getting your idea.

    That being said, Fruugo CEO is right in his remarks on the negative attitude towards entrepreneurs. Too often they’re seen as some sort of shady characters who are just using the system to their own benefit. But as you point out, after that his logic falls apart.

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  3. When Muxlin went under, the Finnish press focused on the amount of state money that had been used, so it is true that there is a bit of a general, institutional bias against entrepreneurs. But if you’re going to let something like that stand in your way, then you probably don’t have what it takes anyway…

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    1. If a company has taken state money, I think criticism is in order. The state has no place investing directly into startups. Make the business environment startup friendly and build infrastructure, that is all.

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  4. Here’s a lovely email just received from a Fruugo sales rep when we turned them down (nice!):

    “Hi Luca,

    I assure you we will be going and we are healthier than ever, the Company has made major turn around since huge investments (and we are talking Millions) into the Company during it’s BETA stages, and if you want to ignore the fact retailers with us make 6 figures and tried us for free with no risk for a little time to send a feed, it then it’s a grave shame. As we have much bigger Companies and brands live that unlike you knew how hard it is to crack the EU market and Fruugo have given them new sales as well as major benefits without any risk at all?

    I’ll offer the place out, thanks for your feedback.

    All the best

    Lesley”

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  5. Disgruntled shareholder Wednesday, July 18, 2012

    Fruugo moves ahead with another audacious request for more investor cash to fund a business which appears to have no concern over profitability and adopting a differntiated business model which works. The current CEO has being bleeding innvestors of their cash since 1999 and returns received equals zero. Surely this business is unsustainable with investors less willing to part cash on speculative punts!

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