Finland's First Billionaire Isn't Who You Think SURPRISE! HE DOESN'T WORK AT NOKIA
(FORTUNE Magazine) – In the global market for software that fends off viruses and hackers, Risto Siilasmaa is an upstart--small fry. In his home of Finland, the CEO of security software maker F-Secure is something else: He's the richest man in the country.
That's been the case since February, when the rapid rise of F-Secure's stock, which began trading on the Helsinki exchange in November, pushed Siilasmaa's net worth past that of Aatos Erkko, owner of Finland's biggest newspaper. In March the value of Siilasmaa's 55% stake in F-Secure soared as high as $1.4 billion, making him his country's first dollar (or euro) billionaire. Finnish financial magazine Arvopaperi recently speculated that Linux creator Linus Torvalds, another Finn, may also be in billionaire territory--but Torvalds lives in California. The country's most famous businessman, Nokia CEO Jorma Ollila, is worth a mere $100 million or so, and that's all in stock options that are taxed at 65% when exercised.
Siilasmaa's quick ascent (F-Secure's stock and his net worth are each up 1,000% since the November IPO) appears to mark the first time a New Economy entrepreneur has risen to the top of a European nation's wealth ladder. But Siilasmaa, a 33-year-old with a slightly world-weary air who founded F-Secure (until recently called Data Fellows) 12 long years ago, is not impressed: "Things are fairly crazy today on the market. You can sell almost anything." He also says that in egalitarian Finland, it's not easy being rich. "Every time the stock goes up, the tabloids write another story about how much I'm worth," he says. "It is an awkward issue for everybody. It is a negative issue."
So why did he take F-Secure public? It wasn't really for the money, he says. Although it has lost money in recent quarters because of big marketing expenditures, the company has been profitable for most of its existence, which explains why Siilasmaa still owns a majority of it--he never needed much venture funding. "We felt it was time to come out of the closet," Siilasmaa says. "A public company just gets more exposure." So far most of the exposure has been in Finland, which is why he plans a Nasdaq listing relatively soon. That said, foreign investors haven't had trouble finding F-Secure on the Helsinki exchange--of the shares not held by Siilasmaa and other insiders, about a third are in the hands of non-Finnish institutions.
Foreign investors' interest in the company can be attributed to the current infatuation with wireless Internet connections. F-Secure, based in the same Helsinki suburb as mobile-phone market leader Nokia, is seen as having the inside track on this market. (It doesn't hurt that Nokia's CFO was recently named to F-Secure's board.) "F-Secure is going to rule the wireless security space," says Sharon Corr, a software analyst in the London office of Robertson Stephens, which co-managed the company's IPO.
In fact, Siilasmaa's ambitions are broader than that. He argues that the way security software has been sold to corporations--as a firewall built around local area networks--has become obsolete as employees increasingly tap into the Internet and corporate networks from outside the office, using PCs, laptops, Palms, or cell phones. "Every device must be protected," Siilasmaa says, and F-Secure has revamped all its encryption and anti-virus offerings to do that.
While corporate IT departments are potential customers for this software, the main market will be Internet service providers and application service providers, companies that allow customers to outsource their computer networks and important software. Accordingly, F-Secure's first two big U.S. clients for its new software are virtual private network operator Digital Island and Ensim, an ASP.
F-Secure's strategy isn't entirely unique, and in the all-important U.S. market, the company, which had revenue of $23 million in 1999, is a pipsqueak compared with competitors Network Associates and Trend Micro. But Chris Vargas, the former director of international marketing for Cisco Systems (and one-time Fulbright scholar in Finland) who signed on as president of F-Secure's U.S. subsidiary in August, says that's not a problem: "We're small. We move faster. We're very innovative." Also, the company's Finnish wireless cachet appears to be opening doors: It recently announced a deal with HP to develop security applications for wireless Internet servers.
All of which means that Siilasmaa may stay a billionaire for a while. He insists it's no big deal: "I honestly feel I've been well enough off since I was 15 and took my first job at a butcher's shop." Unlike his Silicon Valley counterparts, Siilasmaa will soon be forced to acknowledge his newfound wealth in a painful way. Finland levies a 1% annual wealth tax, which at F-Secure's current stock price will cost him more than $10 million.