Meet AirFaas – Winner of the DIGITALEUROPE SME Award 2018
During the Masters of Digital 2018, DIGITALEUROPE awarded it’s first-ever SME prize to AirFaas. AirFaas is a portal that allows companies to manufacture their machines and components without owning factories, production equipment or having production workers. Businesses can upload their product design and arrange a global supply chain closest to their markets.
Half a year later, DIGITALEUROPE policy manager Sarah Wagner visited AirFaas in Helsinki to catch up with CEO Edward Blomstedt and learn how AirFaas has developed since winning the award in February.
Good morning Edward. Last time we met in February when you were awarded the DIGITALEUROPE SME Award 2018. What has happened since then?
Good morning Sarah. Nice to see you again. Since we met last time, quite a lot has happened, actually. In a nutshell, we have started test marketing with a launch event in Lithuania and in that way tapped into the country’s market and acquired many new users. Another thing we managed to do was getting our first AirFaas-bound financing transactions. We made a finance loop transaction meaning that a factory could sell its manufacturing to clients and receive pre-payments from the system without having it on customer balance. So, it was a start to revamp the whole industrial finance world and it was a really big success.
You recently said AirFaas would be one of the world’s 50 largest companies in 10 years. Where is your confidence coming from?
Childhood! We have identified a specific need in the market and have developed a clear strategy and plan to implement our idea. We feel confident that our approach is the only way to do it. It is quite straight-forward: Either you succeed in this or you don’t succeed at all. And if you must choose between not existing and being one of the largest 10 companies we choose the latter, of course.
So, you have developed a clear strategy for the next 10 years?
Yes, we have a strict plan for what we want to do and what we want to build, indeed. Software development per see is usually not very successful in meeting a deadline, though. This is obviously a risk factor we have to count in. Having a clear plan gives us the confidence that we are able to deliver benefits for our users, being both factories selling their manufacturing and industrial companies looking for manufacturing.
How have you gone about developing this network of factories and industrial companies from scratch?
Let me start by explaining the context: The company was actually already founded in 2005 but back then, we were working in the sourcing sector only. We gradually expanded our scope to take on larger parts of manufacturing leading up to the level where we could make full-scale tractors without owning any factory walls or machines. Initially, we had to do much of that work manually, of course. Over time, we sought to digitalize how you handle manufacturing as much as possible i.e. all the work points within a supply chain. And this is what has become AirFaas. Air reflects that it is a cloud-based business model and Faas stands for Factory as a Service.
Having explained this, AirFaas is about helping companies that need manufacturing to design and build their product in a digital form. It gives access to factories within different categories to quote suitable projects. It allows factories to quote into the system so that clients get access to the prices, quotations, capacity etc. It also allows them to compare and provides the tools to do all the purchases and sales orders. It also standardizes the contract forms that are used within manufacturing and standardizes how you handle the quality as well as the critical dimensions and specifications within this manufacturing. All this is happening inside one single ecosystem and hence, double work and waste are reduced. The manufacturer does not have to handle anything outside the actual manufacturing process. In a nutshell, it makes the life of manufacturing companies much easier. A link to AirFaas’ new animation video is available here.
What are the current challenges that you are facing in implementing your business idea?
There are several critical areas that remain challenging for now. First of all, there is the complexity of our system. Compare our system to that of Airbnb: Their business model is to connect the apartments and the people that need them. We, however, link manufacturers from many different scopes and methods and give them tools to various types of documentation. To build a system that is broad enough to handle this complexity and easy enough to make it useful and fun to use is difficult. But we are willing to assume this challenge and are confident we will manage to turn our system into what we want it to be.
Secondly, the ecosystem requires many transactions. To become relevant, you must make it quite extensive and amass many users on both the buying and selling side. Yet, we are still in the initial phase. Our primary target for this year is to amass many users. Marketing and promotion would be one critical area to achieve this goal.
What are your plans for a successful marketing strategy?
Now, here is another challenge: We are pursuing a shared economy business model, which has until now mostly been known to the B2C scene rather than the B2B area. AirFaas is operating in a plain B2B field, though. Hence, our marketing strategy must be about gaining trust in the first place as people are more concerned about taking steps in the B2B setting. It requires trust and conviction to buy a large part of your manufacturing through a platform. Buying a large part of your manufacturing through a platform is quite a decision to make. Moreover, our marketing must convince users that it is easy to enter and understand our system. We seek to create a snowball effect: For an ecosystem to work you must have a seller and a buyer. At best, a user demonstrates a big interest in getting a partner to join the platform as it makes your process more efficient. To this end, we recently adjusted our marketing slogan. We realized that how we marketed AirFaas didn’t clarify well enough for users what we do and what types of benefits we are creating. As I said, it is a complex system.
Having faced so many challenges in the last years, what is something you are really proud of?
As I said, we feel that we have taken on a very complex business area. Nevertheless, we have managed to build a system that will create benefits and added value to the users worldwide. I am also very proud to have won this year’s DIGITALEUROPE SME Award, particularly in light of the excellent competition.
Why did you found your company in Finland? What are the advantages and disadvantages Finland provides to entrepreneurs?
As an entrepreneur, Finland is actually quite easy. It takes little time to start a company, it does not require a lot of starting capital either. Bureaucracy is fairly easy; the legal system is fair and, as a country, you know what to expect. You don’t need to worry about whether the legal framework will be stable!
What could be changed to facilitate the lives of digital companies in Finland and the EU?
There continue to be substantial differences between Member States regarding taxation and customs as well as standardization requirements. While we are supposed to be a single common market we still have to face many practical issues. We need to reduce bureaucracy and make reporting simpler so that we have a one stop shop system. Of course, this is complex and there is no easy solution to this.
Do you have any expectations for the Finnish Presidency?
If you look at Finland geographically, we are surrounded by water. We only have a land connection in the north to Sweden, within EU. So, transport-wise we are reliant on the sea to get all the supplies and export you need. Hence, for Finland, the connection to the EU is really important. The more we can make this common market work the better it is for the Finnish nation. I hope the Finnish presidency will take a stronger lead in trying to push forward on existing harmonization issues. I also hope Finland will mediate in politically difficult times. With the problems in Poland and Hungary, we see that there are many disparities and we should take them on before they escalate further.
What makes AirFaas special in 3 words?
- Firstly ‘Ecosystem’: AirFaas is an ecosystem which in itself means that it connects partners and creates transparency.
- Secondly, ‘Transparent’: Parties know exactly what they can expect and are promised and see the different layers in the manufacturing. So, it is easier to follow material flows, costs, reclamations etc. in a transparent manner and all of this being in one system that everyone has access to. This leads to greater efficiency.
- Thirdly, ‘Efficient’: Greater efficiency means higher productivity. In history, increased productivity has always led to more welfare and wellbeing for people.
Looking back, you founded your company in 2005. What is something you know today that you should have known back then?
It would probably have been a good plan to realize how complex this general area of business is. I would probably have chosen it, nonetheless. On the other hand, something I greatly value is an ability to balance work and business with private and personal life so that you manage to build a family and have children while having a meaningful business that makes the world better for everyone around. As an entrepreneur, you have responsibilities towards your company and the people therein but as a family father, you have an even greater responsibility towards your children. Being able to manage those is a challenge.
What is something you regret?
I regret to some extent that I am quite soft to accommodate everyone’s needs. Sometimes, you just need to take a harsher decision and enforce what is best for the company. Secondly, I regret every failure we have done, of course. However, I try to learn from every failure and see it as a learning experience that the company and its people can draw some use of it.
Do you enjoy leading? What is challenging about your position?
I cannot be under anyone. In that sense, it does require to be in charge. I enjoy leading and pushing people to become something better than what they are. I do like the feeling of helping people to grow by mentoring them. As a leader, I don’t have a Steve Job shouting leadership style but I can require a lot.