Start-up nation Estonia: an Austrian’s view

By Georg Singer

Georg Singer is a development manager at the UT Institute of Computer Science. Last autumn he defended his PhD on web search engines and complex information needs at UT and will teach a course on software entrepreneurship during spring semester. This article first appeared on University of Tartu blog: http://blog.ut.ee.

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Every now and then I find myself immersed in Tartu’s nightlife. Estonia’s second biggest town still hosts some of those nicely improvised places to hang out. I often wonder if they ever make money, but it is about the fun, isn’t it? This is an attitude that many “older” countries have slowly lost along the capitalistic way.

Georg Singer

Tartu also calls itself owner of the world’s first pub started and run by IT geeks  – I am in the country of patch cables, smartphones and programming languages. As a matter of fact, sooner or later, somebody asks me: “So how long have you been living here?”, quickly followed by, as sure as death and taxes: “How about your Estonian?!” This second question almost makes me feel guilty about still not being fluent in this difficult language that is spoken by less than a million people. I convince myself that I do what I can.

Fast rewind to 10 years ago: Estonia? Isn’t that a little country up north in the Baltics? That was pretty much what I knew back then in 2003. A school classmate of mine had been to Lithuania in the 90’s. After the horror stories he told us, I had no intention whatsoever to go or even live there. Well, never say never! Life sometimes takes surprising turns. Why did I, born in Austria, having lived in Germany and the UK, come to Estonia in the first place? When people ask me that “why” question, I simply raise my left hand and show them my wedding ring. Yes, I came to Estonia for solely romantic reasons.

Estonia supposedly is host to more start-ups per capita than any other nation in Europe. Impressive! I never managed to verify that, but my empirical observation seems to prove it.

Why is there an Estonian start-up shortlisted in a major start-up event such as TechCrunch, or Startup Weekend? Why aren’t there more German, Austrian or French ones? Why isn’t there a Garage48 in Austria? Are we less entrepreneurial? Are we less creative? I have to doubt the latter. My hypothesis: The more mature an economy becomes, the less entrepreneurial its people are. How could it be, then, that two-thirds of French university graduates strive for a job in the public sector and I doubt this statistic is much different in Austria or Germany? Those are young and energetic people who obviously find it more compelling to waste their time in an ordinary job instead of proving themselves on starting something up and changing the world. It is exactly this different mindset of the younger generation that Estonia must conserve.

Why can Estonia afford to offer free WiFi at every corner when other countries such as Germany – and even worse in the UK – strongly believe in having to charge a fortune for such a basic service?  That is a clear signal: We are IT. We believe in the Internet. We have no natural resources, but we are small, flexible, and innovative and invest into our people. Even our primary school children learn programming. While many developed countries are keeping themselves busy, protecting what they have, being plagued by an overburdening bureaucracy, a torrent of regulations, an army of notoriously corrupt politicians who are filling their pockets first (a very common sport in Austria in recent years) and bleeding out their education systems financially, literally hindering innovation and progress, young countries such as Estonia have the chance to position themselves as the winners of the 21st century.

Just look at the UK and the US to learn what happens if nations become complacent and slow. The UK, the world’s dominant nation of the 19th century, and the US, the world leader of the 20th century, are both fading into insignificance, troubled by slow growth, lack of innovation and entrepreneurship, high unemployment rates, overburdening government debts, and uncompetitive industries in most sectors.

Obviously, the reasons  for this miracle of entrepreneurial activity in Estonia are manifold. Good guesses might include history, mindset, culture and politics. At first glance, Estonians and Austrians seem to be rather similar. But of course the devil lies in the details.

Estonia’s laissez-faire attitude not only makes it one of the most economically liberal countries in the world (number 3 according to some as-yet unverified statistics).  Little interference also is an obvious character trait. This can go so far as sitting next to an Estonian for hours without exchanging a single word, with the Estonian seemingly enjoying the situation.

Small talk is obviously a concept that does not exist up north. This can feel as equally weird as having to think twice about whether shaking hands for a welcome is currently politically correct or not. This kind of communication at its bare minimum sometimes makes me wonder how entrepreneurial activity is possible with the world outside of Estonia. Yes, fellow Estonians, believe it or not, there are people who do see relationship building as an essential part of business and even life. On the other hand, this very straightforward attitude is very efficient – as long as you do not take one-dimensional conversations and blank face expressions personally and cope with a service and sales mentality done “the Estonian way”.

Walking into a shop in Estonia is something you should only do when you are up for adventures. You might be faced with sales clerks staring hard at their computer screens to avoid saying “hi”, reminding themselves “I understand you want to buy something from me, but I do not sell it to you, because I do not want to talk to you and answer your questions”, or dining out and working hard to convince a waitress to serve you more food and drinks. In the UK, or also in Austria, you would follow a different strategy not to finish your drink as long as possible just to keep the waitress from selling you more immediately.

Estonians have to build up their country. That is an opportunity.  In Austria, which is equally beautiful and small, almost everything is finished by now – there is nothing to do anymore, apart from skiing in winter (if only climate change does not put his oar in and make the white oil of the Alps disappear), mountain biking and hiking in summer and listening to the Vienna Philharmonic orchestra over the New Year. We had over 50 years since the last World War to achieve that comfortable situation – culminating in an era of high growth rates, full employment and rising living standards in the 80s of the last century (in Germany called the “Wirtschaftswunder”) and now seemingly forcing us even to cut back.

Looking at Maslow’s pyramid of needs, most Austrians have obviously fulfilled their basic needs. Lucky ones! They can spend their time exploring the meaning of life. You would imagine Austrians as content with that situation, growing long grey moustaches and taking yoga classes. Anything related to spiritual enrichment would be the ventures to start, yet I do not see a lot of that.

What this situation of “finishedness” really seems to bring along with it is a mixture of risk avoidance, complacency, and discontent. The unemployment rate is low in the country of Mozart, one of the lowest in Europe. Yet most often those lucky ones are not overly happy. This kind of ordinary work is usually not very fulfilling, but it is reasonably well paid, and often too well for what is achieved. But! Why take on the risks of becoming an entrepreneur when a much easier life is also possible? Well, needless to say, entrepreneurial activity means taking risks. Every German statistically has about 8 forms of insurance and I assume Austrians are not much different. I wonder how many Estonians have? And I do not think Austrians are cowards per se. People simply have a second, easier option and they go for it.  For Estonians it is a bit simpler: Either get paid a lousy salary or move your ass and start your own venture. And that equation is obviously convincing. Either Estonians have a different perception of risk or are forced into having a different one, only history will show.

All in all, it is this very unique blend of an open, liberal and minimal interference mindset, a well-educated workforce and an accordingly open economy that will earn Estonia the rank as one of the leading knowledge societies in Europe within the next 5–10 years, if only politicians put the nation’s well-being first and understand to keep giving Estonian people access to the latest technologies, focus on education, and keep the red tape to a minimum.

The opinions in this article are those of the author and don’t necessarily reflect the views of the Estonian World Webzine.

Georg Singer photo by Andres Tennus

Front page photo by Erik Riikoja/VisitEstonia

Second photo by Anneli Tandorf/VisitEstonia

About the author: Estonian World

Estonian World is a global independent online magazine, founded in London in 2012 and headquartered in Tallinn, Estonia. The magazine has editorial representations in London, Atlanta, Toronto and Tallinn, and contributors all over the world, on every continent.

  • Analyst

    Your points are good but I think you failed to look at macro-level trends. 10,000 people emigrated from Estonia last year and most of those were young people. The overall population dropped by over 100,000 in the last decade, which is equivalent to the city of Tartu disappearing.

    Why is this happening, if things are so great in Estonia? One theory is that the government’s policies have left some groups feeling disenfranchised and eager to leave. Few countries have seen such severe declines in population.

    • Well, conditions in Estonia are certainly great for ICT start-ups. That only a small fraction of the population (founders and IT professionals) benefits from these conditions is obvious. I would hypothesize that those who emigrated, were not part of this group of people.

  • ameeriklane

    The US is fading into insignificance? By what measure? I see no lack of innovation in the US, and the thousands of startup companies in the Silicon Valley, who produce the technology everyone uses daily, would likely agree.

    You noted that the US has uncompetitive industries in most sectors. Which are those specifically?

    • The Silicon Valley area as a whole had a “GDP” of roughly USD 180 Billion in 2011. The US had a GDP of USD 14.000 Billion in 2011. So despite the fact that there are very innovative companies in Silicon Valley with world class products, they only contribute about 1% to the overall GPD of the US. I would call this contribution insignificant. Hence, when looking at those numbers, Silicon Valley is not a proof for America’s overall innovativeness.

      What do I mean by “US is fading into insignificance”? I am simply looking at some trends here. The US’s overall competitiveness has been falling since years (e.g. http://usatoday30.usatoday.com/money/economy/story/2012-09-05/us-competitiveness-decline/57597074/1). The US is suffering from an ever growing trade deficit – running up huge piles of debt since decades. Industries where the US is certainly falling behind other countries are automotive, steel and others. As I see it, the 19th century was the century of the UK, the 20th century was dominated by the US. The 21st century will have yet another superpower to take over – maybe China?

  • Best quote of the day “For Estonians it is a bit simpler: Either get paid a lousy salary or move your ass and start your own venture.” and it is true :). If you are not satisfied then you do something about it …