We asked Antti Sivula, the CEO of Mekitec to talk about growing and turning start-up companies to internationally successful Small and Medium size Enterprises (SME). Antti has extensive management background from small start-ups to Fortune 500 companies with involvement in multiple mergers and acquisitions, and also vast experience of managing global businesses in Finland, United States, China, India and Switzerland, for example.
Mekitec is a leading vendor of X-ray inspection systems for the food industry for food safety and quality inspection. The company has growing revenues of €5 million from last fiscal period and is looking to grow their market share by taking it from the incumbent competitors. Read their pitch material here.
1. How would you describe yourself as a manager, leader and CEO?
I love to manage change. Not an abrupt sudden change, but rather something that has long-term goals and a dedicated team working together to achieve those goals. An important part of change management is delivering results. I enjoy seeing progress taking place in small steps and I also enjoy seeing people grow. To be able to do that, I try to let people do their jobs without me intervening all the time. Sometimes it is difficult to keep your hands off when you realise that maybe, based on your experience you would get to the results faster.
As a CEO I have a very strong opinion that companies should make money. Being profitable is something that is very close to my heart. However, the fact is that small companies often spend years at loss. In all of my leadership roles: at Mekitec, at Bluegiga Technologies, at Elektrobit, at Orbis, at Tektronix and also at my first start-up company Logos Test Engineering, I have spent considerable amount of efforts to make sure the business I am responsible for stays or will become profitable. Profitability, by the way, is not about saving money, it is about spending the money right.
2. Why did you join Mekitec?
It was in 2015, right after we had done a very successful exit by letting Silicon Labs Inc. acquire Bluegiga Technologies. I had stepped aside and decided to take my life’s first 6 months just for myself. During that time, I still worked as the Chairman of the Board for Optofidelity and in one of the Optofidelity meetings I met a member of the Mekitec board, who introduced me to the rest of the Mekitec board.
I immediately liked the company for 3 reasons: it was a high technology company with an existing product portfolio and set of good customers, it was an international company that had already taken the first steps in making its business global, it had a professional Board and already venture capital investors backing the company up. It was clear that there was a good match between the company’s goals and my experience. So for the past 2,5 years I have been, and still am excited about Mekitec.
3. What makes up a successful company?
When you look at the successful companies you always see a team of highly motivated people. In creating the success, you can never underestimate the role of a clear strategy and the role of the management in implementing and explaining it. I was once given an advice by Rich McBee of Tektronix about management’s role: to keep the strategy alive and developing, hire talented people and then, with those people, motivate them, give them proper tools and support when they struggle. Easy to say but in many companies this is not executed that well.
In addition to above, there are a few additional items that make companies prosper. Number one is the customers. I have spent most of my early career in sales and marketing and I put a tremendous value on understanding and serving your customers. Failing to keep existing customers satisfied is a kiss of death. Another one is a thorough understanding of why we win and why we lose. What are the underlying key parameters that make the customers to buy from us instead of the competitors. Or vice versa. Having this understanding will allow you continuously improve your performance.
4. How do the start-ups change when they grow up?
There is a big change in the mentality. What you want to do is to keep the start-up enthusiasm, energy and ability to take risks but at the same time one needs to accept that in a larger organization you need controlled processes. “Putting processes in place” may sound like slowing things down but it is not that. When an organization grows to a certain size it becomes difficult to make start-up style ad-hoc decisions and keep everybody aligned with the direction. Processes help in this. Start-ups are entrepreneurial, and so should the larger companies be also. However, the decision-making in companies with more employees cannot happen at the top only.
Often times growing out of the start-up phase means changes in the management style are required too. This means agreeing on the roles and responsibilities and delegating the decision-making power accordingly to the functional teams. Last but not least, a fundamental change often happens also with the profitability. As start-ups are typically all about growth only, at certain point profitability starts getting more attention. Eventually all start-ups need to prove their business case by demonstrating their ability to be profitable.
5. What are your career high-lights?
If I would name a few that are close to my heart they would be:
- Two successful exits: at Optofidelity as the Chairman of the Board and at Bluegiga Technologies as the CEO. Both were very positive experiences. It was great to see the team achieving excellent results and also managing to execute everything as planned.
- Roughly 15 years ago I was responsible for Orbis Oy’s businesses outside of Finland, especially the operations in the US, China and Sweden were struggling with profitability. We managed to turn US and China around and made a huge improvement in Sweden too. At the same time, we started a completely new operation in India and managed to make that profitable from day one.
- Ultimately, I am also very proud of the start of my career as a Field Engineer in Hewlett-Packard Test and Measurement sales. By heart, I am a sales guy and I still remember those years 30 years ago as great fun and a lot of learning from many high technology customers in Finland. The times when I was selling clearly over my target are of course great memories.
- I can never forget the early 90’s and my first step as an entrepreneur with Logos Test Engineering Oy. A successful start-up company by Mika Holmström and myself that eventually, after I had moved on, was sold to Tecono of Sweden.
- Tektronix Wireless Field Test Product Line was a first business I was given to run by somebody else. It was a Tektronix internal start-up where I managed to get the development project finished, products out and I ran it until it was over $10 million USD in revenues.
6. What about the things that did not go so well?
Initially at Elektrobit I had RFID business to run and that did not make it. It was an invaluable learning experience to me when I had to close it by divesting parts of it. The market was not ready for what we were providing as RFID reader systems and we had no other choice but to exit that business. Exiting from any business by closing it or divesting the valuable parts is difficult to do. For a while you keep accumulating losses and there is no way ever to recover any of those.
7. Is there something based on your experience that you want to pass on as an advice to others?
Experiences are personal, and they do not necessarily work as a good advice, but I would say that it is utmost important that you are passionate about what you do. Today’s business world requires a lot from business leaders and there no “free lunches”. One must work hard and that is way easier when you get kicks from what you do. I am passionate about international business, growing companies and profitability. I don’t easily get tired when I am busy working on those fields.
Another item I have learned is the need to make fast actions. Afterwards we typically find that we had all the possibilities to make the correct actions way earlier. Jack Welch of GE put this really well: “I think the biggest mistake I made is a fundamental one. I went too slow in everything I did. … If I had done in two years what took five, we would have been ahead of the curve even more. You rarely do things too fast. If you think about your life and the decisions you’ve made, you can’t come up with too many where you said, “I wish I took another year to do it.” But you can sure come up with a list where you say, “I wish I had done a bunch of things six months earlier.”
8. Why crowdfunding and why with Invesdor?
Crowdfunding is something very new and we did have some doubts about it early on, whether it would work for us or not. We are not really a start-up anymore. Our main shareholders are venture capital funds and we had already secured some funding for this round. Public offering (IPO) was not a viable option for us, but we studied Invesdor’s platform and their way implementing crowdfunding round and learned that we can get significant number of new shareholders at the same time as we raise money from our current owners. Invesdor has been easy to work with and they have been running the process efficiently. We have clearly benefitted from their experience and support.
9. Why would you invest in your company? Give three reasons:
- The industry and the market provide a platform for growth to increase Mekitec’s valuation
Food industry is growing and the safety aspect of it is becoming more and more important. It is a global market governed by standards that allow the same solutions to be sold in almost all of the world’s countries. The food X-ray inspection market is still a relatively new and fragmented market that offers opportunities to grow and take share from the competitors. And that is what we are doing! We also expect to see some consolidation in the future which will open up different types of opportunities i.e. mergers and acquisitions. All in all, we are participating in a dynamic market where the winners will prosper.
- Our market position allows repeat business with existing customers supporting our profitability goals
We are already a significant player with over 700 systems delivered in more than 40 countries. The owners of these systems will buy additional systems and will invest in the maintenance and support of the existing systems. We are also a supplier who is starting to be recognised by the world’s largest food manufacturers and this offers us a significant opportunity for growth. We are already successfully competing against older incumbent X-ray inspection system vendors. Our strategy of focusing on providing X-ray inspection systems that are compact and easy-to-use with excellent performance and the best value in the industry gives us unique differentiator that resonates with the customers who are looking for long-term supplier relationships.
- Ability to scale and make money
We have products in the market and we have satisfied customer buying those. These products are designed by us and the major IPR, the software, is fully controlled by our own team allowing custom solutions when needed. We have our own effective manufacturing operation in Xian, China that gives us a cost benefit. The factory is designed to scale up to support building 500 systems a year. Our global reach through our own teams in Finland, China, Hongkong, Germany and North America allow building customer and distributor relationships globally.