Estonian business stories around the world

In conversation with fashion designer Piret Ilves

On minimalism, pink cashmere coats, and the Estonian fashion scene. In conversation with designer Piret Ilves.

Piret Ilves I

The work of Piret Ilves was a fortuitous discovery. Walking along Tallinn’s cobblestone paths with a friend, I stumbled upon the store of this young designer and walked in. Piret’s work struck me as contemporary and confident; her clothes, with their clean lines and luxurious fabrics, as distinctive yet wearable.

Ilves showed her first collection in 2008 at the Estonian fashion designers competition SuperNoova. She has since created nine collections and regularly shows at Tallinn Fashion Week. In February 2012, she was nominated for the Small Golden Needle award (Estonian fashion awards – Editor).

Piret was happy to chat with EstonianWorld about her work and inspirations, sketching out a vision of what it means to be an Estonian designer with a cosmopolitan aesthetic.


Have you always known you’ll be designing clothes? How did you get into fashion design?

When I was fourteen, I decided that I would be a fashion designer. I don´t know exactly why I made that decision, but I did. I have to mention that there are no artists in my family. My mother is an excellent tailor, and today we also work together. Maybe that affected me.

During my fashion design studies, I worked at the Tallinn Department Store (Kaubamaja) as a visual merchandiser. After that, I became a fashion editor in Estonia’s largest weekly women´s magazine Naisteleht. All that time I also made small collections and dealt with private clients.

At one point I realised that now I have seen the backstage of fashion world and I am ready to create my own label. I have run my own company successfully for three years now. That for me is an achievement!

What did you enjoy most about working as a fashion editor?

Working for a weekly magazine is very different from working for a monthly fashion magazine. Everything happens fast, and you are not expected to make art. All articles and stories are about giving overall fashion advice and tips on shopping.

Having to produce these kinds of news every week makes you very clever in the end. This skill now comes handy in my own marketing! In addition, you get many contacts and learn a lot about journalism. Both of these things have an impact on my current work.


Could you tell me a bit about your creative process? What’s your typical day like?

I enjoy working in the morning a lot more then late in the evening. So I arrive to my studio around 9 am and start with emails. Around 10 am, other employees arrive, and we discuss the plans for the day. As I am making all the patterns for my designs, this is my everyday task. I desperately need another pattern maker. I have two to four private client fittings per day. A big part of my day is also creating new collections – sketching, designing, making toiles, finding suitable fabrics and so on.

What inspires your designs?

I am a huge fashion history fan and I love the fifties and sixties elegance. I know the theme inside out, but still, I always find something new to draw inspiration from.

The key is to find a detail or shape or even an attitude, modernise it and then use it throughout the collections.

Could you describe what a Piret Ilves woman is like?

A Piret Ilves woman is feminine, chic and stylish. Most importantly, she understands the essence of minimalism. She is not particularly a trend hunter, but may be a trendsetter. She believes in good quality and great design.

My client is rational, but once in a while she understands that – let’s say – an absolutely impractical pink cashmere coat is a must!


What does the Tallinn atmosphere, the essence of Tallinn-ness, mean to you?

I like to think of myself as a Scandinavian designer. I have never thought about Tallinn-ness as such. I have spent my whole life in Tallinn, I was born and raised here. And I am glad that I have – I love Tallinn. To be a fashion designer in one of Estonia´s smaller towns – I can imagine that it would be a lot harder.

What is working in Tallinn like? What are the specific opportunities and constraints of the Estonian market?

Considering Estonia, Tallinn is by far the best place to work as a fashion designer, simply because it is the biggest city in Estonia. And still, it is way too small for a designer to be really successful. I don´t know whether I am mistaken, but somehow I remember that there are approximately 500 women in Estonia who really can afford and are willing to buy designers clothes. But it may also be a myth. Many women would like to buy Estonian design, but they simply can’t afford it. On a plus side, Estonia is so small and it is really easy to get noticed here compared to for example, London.

Your show at the Tallinn Fashion Week was really successful – congratulations!

That was my fourth time to participate and it went really well. I have gained a lot of good feedback, and by today most of the collection is already sold (the interview took place in late January 2013 – Editor).

What are your plans for the future, now that Fall/Winter 12/13 is done?

Spring/Summer 2013 is the first big thing of course. Future… I am most definitely interested in the international market. The research part is almost over, and I am making plans. I am dreaming of going international with the collection for Spring/Summer 2014, but Autumn/Winter 2014/15 is more realistic.


Photos: Piret Ilves Fashion House.

Carpet designer Heleri Alexandra Sits attracts attention in Germany

During the recent international Domotex Trade Fair in Hannover, an Estonian company attracted a lot of attention from visitors and local media alike with their extraordinary and eye-catching hand-tufted carpets. One of the most well-known newspapers in Germany, Hannoversche Allgemeine Zeitung, wrote a short story on the company, praising the uniqueness and quality of their carpet creations, as did the local Fahrgastfernseher, a kind of a TV-programme shown at the local metro.

This is the second year I have been visiting OÜ Valley at Domotex, and besides having a close, hard-working team (and always offering me Kalev candies), they are very proud of their talented young designer, Heleri Alexandra Sits (27). She is the creative brain behind most of their extraordinary products, which are much more than carpets, more like independent pieces of art. Heleri Alexandra talked about her creations with a gleam in her eyes – to be recognised as a sign of someone really passionate about her work.

Could you tell us more about the company and how you ended up working there?

OÜ Valley is an Estonian company located in Vändra which celebrated its 20th anniversary last year. Right now we export our carpets to 18 countries, among them USA, Canada, Iran, and India, to name but a few. I first did my internship here during my studies, and was actually planning to go to Italy for a while, when they called me and offered me a job. This was 2,5 years ago and I am still very happy that I stayed and took on this opportunity.

Carpet III

Over 18 experienced tufters are employed, as well as the staff in our small office. It feels more like a family since we are all working very close. And as an interesting fact, we can produce around 2000 m2 of carpets every month.

How long have you been attending the Domotex Trade Fair?

We have been taking part in Domotex for three years now,  This is one the biggest trade fairs in our business in Europe. Although the first time we took part was rather difficult, I am happy to say that everything works very well already – we have created a lot of interest this year, and we´ll certainly be coming back next year as well.

IWhere did you study carpet design?

I graduated in June 2012 from Design and Applied Arts/Textile Design in Estonian Academy of Arts (EKA), after doing both my Bachelor and Master in EKA, and most of the carpets seen here are part of my master project. My supervisor was Monika Järg, to whom I am also very grateful for her support.

How did you come up with the ideas and how long did it take?

The whole process took me around 3 years in general – to gather ideas, come up with everything and put them into results. More than everything, it takes a lot of practice, and technical skills, which I have gathered in OÜ Valley. The main idea was to introduce the technical opportunities of hand-tufting. My first idea was to depict people on carpets, which can be very difficult since the technical possibilities are limited in a way. One of my first sketches was an underwear model for example, but it didn´t quite work out. I had an idee fixe – that it has to be eye-catching, but also with a message, to depict the inner world of a human being on the surface of the skin, to let it glow outside. Finally, with the advice of my supervisor, I came up with an idea to do the main design on human face instead of the whole body.

I put together the suitable tones and colours together with tips from my employer in OÜ Valley, Aadu Juhkentaal. Since we were hoping to find customers also outside of Europe and Scandinavia, mostly in Russia, but also in the Asian and Arabic countries, the choice of tones is also more colourful, more exotic and oriental. Another example from my collection is a butterfly with bright colours, in accordance with the general colour theme of my collection.

The carpets employ different layers of yarn, using both wool and viscose, there are a lot of transitions and nuances. It took very meticulous precision at first to draw the designs and follow them exactly while tufting. The tufters were following my designs, but in the endphase I also did some tufting myself. As for my fifteens minutes of fame, the master project was also shown in “Aktuaalne Kaamera” (the local news programme in Estonia) among other EKA final projects as an exhibition.

What are the future plans for both you and the company?

The carpets have aroused a lot of interest in potential Asian and Arabic customers during the Trade Fair, even more than we were hoping for. They are often said to be too beautiful to be lain on the floor, and are being proposed to be hung up in various hotels in Asia as eye-catchers, pieces of art.

We are also opening a new salon in February in Tallinn as well, with a ready-made collection of carpets. I am very happy to continue working with my colleagues, we are more like a family, and they let me try out new ideas and be innovative.


Photos: Reelika Virunurm/Heleri Alexandra Sits.

Reinventing banking and revising capitalism in Estonia

A tiny Estonian outfit offers a way out of the credit crunch and, possibly, a way to rebuild banking

I have started making loans to total strangers – scores of them. I am not mad, rich or philanthropic. The loans are tiny. The safeguards are good. So far, the borrowers are paying me back and I am turning a handy profit. Even nicer, I feel I am part of a revolution which could save Western capitalism. It is all happening in Estonia.

Banking is the economy’s biggest weakness. It offers stingy, fee-ridden savings products and over-priced loans with nasty hidden costs. Intermediaries gain colossal profits, especially when they are greedy and reckless. When things go wrong, as they inevitably do, the taxpayer picks up the bill. Apart from that, it works fine.

So alternatives are welcome, such as ‘peer-to-peer’ lenders, which put the cash-thirsty and the cash-rich in touch with each directly (they make their money by charging a fee for the service). Zopa, a British peer-to-peer outfit, has lent £260 million (€310m) since it started in 2005.

Isepankur (it means ‘Self-banker’ and sounds like ‘Easy-banker’) offers a better deal, because it is lending in countries where the banking system is less developed. Estonians (even with a good credit rating) typically pay 50% for an unsecured ‘doorstep’ loan. Isepankur gives me and other outsiders a chance to lend to them at much lower rates – 28% is typical.

That is a good deal: the best savings rate I can get in a British bank is under 3% (and half the meagre proceeds go in tax).

Isepankur opened for non-Estonian investors late last year. I sent off a few hundred euros to get going – and immediately got a phone-call from the chief executive. That was an impressive bit of customer service. (I have since helped tidy up the English on the website.)

The potential borrowers have to convince lenders of their creditworthiness. ‘Tanelvakker’, for example, is a telephone engineer wanting to renovate his flat. He wanted to borrow €2,600 for 36 months at 12%. He is a single man, with a salary of €2,500 a month. The capital and interest payment would be €86. I took a look at his other outgoings (mortgage, car-lease payment and a credit card) and reckoned he could afford that easily. So I lent him €10. Dozens of others did the same. He makes one payment a month to Isepankur – which splits the money among us. If loans go bad, Isepankur sells them to a debt-collection agency.

Competition drives loan costs down. Good risks pay less. ‘Akiraam’ (a secretary on €600 a month) wanted €200 to pay for a Finnish-language course. She was ready to pay 28% but ended up paying only 12% because lenders piled in. Dodgy borrowers struggle, or pay more: lenders can grill them online. If they provide inadequate answers (or none), then their credibility suffers.

Some borrowers do default: an average of 3%, Isepankur reckons. But the interest rates that the successful ones pay more than make up for that. So far three of my loans are a bit late – but the money from the good ones more than outweighs that.

My net average return (like most Isepankur lenders) is about 17%. I have so far lent €1,570 to about 50 borrowers, in amounts ranging from €5 to €25. I have received €60 back in repaid capital and €24 in interest. I also got €0.06 in ‘penalties’ (my share in a small fine levied on a borrower called ‘Lillekas’ who paid a few days late).

Isepankur’s costs are low: mainly running its website and advertising. It is still tiny. Perhaps it is too new, and too different. But I remember when they said that about another Estonian invention: Skype.

This article first appeared on European Voice:

Tallinn named one of top7 intelligent communities in the world

Intelligent Community Forum names the world’s Top7 Intelligent Communities, all with a track record of new jobs and innovative development. Estonian capital is among the Top7.

The Intelligent Community Forum (ICF), based in New York, has named the 2013 Top7 Intelligent Communities of the Year. The Top7 list includes three from North America, two from Taiwan and two from Europe, including Tallinn. “The Top7 communities of 2013 have made innovation – based on information and communications technology – the cornerstone of their economies and fostered economic growth through high-quality employment, while increasing the quality of life of their citizens,” said Lou Zacharilla, ICF co-founder in announcing the list at the Pacific Telecommunications Council’s annual conference (PTC’13) in Honolulu, Hawaii, USA.

According to ICF, these centres demonstrate how to embrace technology in order to gain several advantages including new jobs. A study this month from an arm of the World Bank says the key to creating jobs lies in dealing with four key issues; weak investment and limited financing as well as poor infrastructure, and insufficient skills training. All of these issues are addressed in the strategies of Intelligent Communities.

The ICF 2013 Top7 are:

Tallinn, Estonia
Columbus, USA
Oulu, Finland
Stratford, Canada
Taichung City, Taiwan
Taoyuan County, Taiwan
Toronto, Canada

Economic uncertainty tops the list of concerns for many global communities, The International Labour Organization notes in a January 2013 report that global unemployment was on the rise again in 2012 and forecast it will likely continue to rise in 2013 through to 2017. The Top7 demonstrate what can be accomplished by embracing information and communications technology to power growth, address social challenges and preserve and promote culture.

Among Top7 accomplishments: Tallinn has expanded an industrial park by 50 per cent to 250 companies – making it the largest knowledge-based development in the Baltic region. Columbus created 29,000 new jobs in the last two years, while Oulu created 18,000 new technology jobs in the last five years. Taichung City uses ICT to help farmers boost yields and the city’s shared cloud-based system enables small firms to reduce production costs and time to market. Toronto has the largest urban renewal project currently in development in North America: Waterfront Toronto. This new community will provide Internet at 500 times the speed of conventional residential networks, a foundation that will propel Toronto to the upper levels of intelligent communities.

In a more detailed report about Tallinn, ICF says the following: Estonia saw a major boom from 2004 to 2007, as loan capital poured in from Scandinavian countries. The country’s rise from Soviet occupation, beginning in 1991, had been miraculous, but the wave of investment was more than the market could usefully absorb. When the financial crisis came, it hit Estonia and its principal city of Tallinn very hard. Several thousand companies went bankrupt and layoffs, particularly of the low-skilled, rose into the tens of thousands. Yet beneath the froth, Tallinn has put into place the foundations of ICT-based growth and generating a strong comeback.

Tallinn’s first wave of IT industry growth was driven by national government spending on an amazing range of e-government applications. Its return to growth has a more sustainable basis in education and entrepreneurship. With 23 universities and technical schools, Tallinn has the resources for a knowledge workforce: it has focused now on expanding access and filling demand for ICT and digital content skills. From 2007 to 2011, Tallinn Technical University doubled participation in lifelong learning programs.

The city is expanding public access computer sites and training programs for the disconnected, while a public-private project called EstWin will extend 100 Mbps broadband throughout Estonia by 2015. To support local startups and attract talent from beyond Estonia’s borders, Tallinn and its educational and business partners have launched multiple incubators targeting creative services, medical and biotech, mechatronics and ICT.

Europe’s first gaming accelerator opened in Tallinn this year, and its Ülemiste City industrial estate is expanding 50 per cent to house 250 companies, making it the Baltics’ biggest knowledge-based development. When the 2008 global economic crisis struck, Tallinn moved fast to launch aid packages to get residents and companies through the bad times with their skills and ambitions intact. The value of the city’s short-term response and its long-term strategy will be proven in coming years.

About Intelligent Community Forum

The Intelligent Community Forum seeks to share the best practices of the world’s Intelligent Communities in adapting to the demands of what it calls “the Broadband Economy” by conducting research, hosting events, publishing books and newsletters and producing its high profile international awards program. ICF’s mission to make “place” align with prosperity has drawn the attention of global leaders and thinkers everywhere. The ICF Foundation consists of over 100 communities, cities and regions that have been globally designated as Intelligent Communities and which participate in an ongoing dialogue to strengthen local economies. For more information, go to


Main photo: Allan Alajaan/Tallinn City Tourism Office

Second photo: Erik Riikoja/VisitEstonia

Is the London-based money transfer firm TransferWise the next big thing to come out from Estonia?

Europas – Europe’s equivalent of  Tech Startup Oscars – took  place in Berlin on Tuesday evening with over 1,000 guests gathering to celebrate the best of the continent’s tech entrepreneurship. Estonian-owned TransferWise was among them and didn’t come away empty-handed.

Among the audience were two young, London-based Estonian startuppers – Taavet Hinrikus and Kristo Käärmann – founders of online money transfer firm TransferWise who were here for more substantial reason than just mingle with like-minded tech and IT stars. Their company was plotting against 11 other start-up firms to win in the „Best Middleweight Startup” (Less than 3 years and/or less than €2m in funding) category. Hinrikus and Käärmann didn’t need to be anxious for long – they won indeed. Almost three years of hard work of building up the “Skype of currency exchange” or “Easyjet of money transfers”, as the founders like to call it, had just produced another fruit for the thirty-something entrepreneurs.

Taavet and Kristo are two friends, both of whom already had promising international careers going for them, before setting up TransferWise. Taavet was Estonian-developed Skype’s first employee and Kristo worked for Deloitte, having set up his first company when he was 18 – Estonia’s first financial portal Until few years ago both of them split their lives between the UK and mainland Europe. Taavet was paid in euros, but spent his earnings in London. Kristo was paid in pounds, but had a mortgage in euros and spent a lot of time in Belgium.

Whenever Taavet needed to get pounds for rent, Kristo had pounds to spare – but lacked euros to pay his mortgage. Hence the two friends came up with a simple scheme: Kristo put his pounds into Taavet’s UK bank account, and Taavet topped up his mate’s Belgian account with euros. To find a suitable exchange rate, the friends picked that day’s mid-market rate on Reuters.

This way, they avoided paying enormous charges to banks and other conventional money transfer institutions. And that’s when they saw “the apple fall.” “We suddenly started to see a business sense in this. What if we added technology and turned this scheme into a global platform? This was the start of TransferWise,” says Kristo.

Hence in 2010 they transferred their personal experience into business model and the business was launched in early 2011. TransferWise enables individuals and businesses to send money between countries for a fraction of the price that banks and others charge, using internet based, a peer-to-peer, “crowdsourced” model — where money destined for transfer doesn’t unnecessarily actually leave each country. To put it into perspective, if the banks and Western Union style money transfer services usually take a cut of around five percent when transferring money internationally, plus a three percent commission on the exchange rate, then TransferWise offers straightforward mid-market rate (or “the real rate” as they call it at the firm) and take as little as £1 fee for transactions below £300 and a small percentage of about 0,5% of any transactions over that. “The point is that there are hidden charges which the banks don’t tell their customers about – they don’t use the mid-market rate when transferring your money, meaning that customers pay far more than the actual transaction fee,” explains Kristo enthusiastically.

And it seems that more and more people share their enthusiasm: the firm’s customer base has expanded at a rate of 20% to 30% per month and their staff numbers have grown to over 20 at offices in Tallinn and London. Money transfers are supported for the British pound, euro, Swiss franc, Polish zloty, Swedish krona, Norwegian krone, and Danish krone – and since November last year also for US dollars.

“Last year we attended on a pitch competition at a banking conference in Toronto. Among the panel were also some CEO’s from the big banks. They certainly raised their eyebrows and looked slightly nervous when hearing about us,” smiles Kristo. This fact was also underlined by The Financial Times last year, when they chose to feature TransferWise under their headline “Exchange start-ups challenge banks.” In a global exchange business, where 4 trillion dollars change hands every day, a lot is at stake.

Although there are some who argue that they cannot see TransferWise ever making big profit unless they have massive amount of customers from around the world, many investors have been rather more optimistic – to date they have secured $1,8m seed capital, including from the co-founder of PayPal, Max Levchin.

Kristo and Taavet epitomise yet another example of newly found global Estonian entrepreneurship. They are children of the period when Estonia became free of the Soviet occupation and it was normal to start things from scratch: set up a company, set up a bank etc. The difference of course is that if their older colleagues stuck with the home market and surrounding countries, then these start uppers belong to a generation who see the globe as their “home market” – simply because Estonian market, small as it is anyway, is already full of pretty good service companies, hence the expansion abroad.

And of course, in Taavet’s case, being Skype’s first employee helped to get a ball rolling too: “I gained a great insight from early on how to launch a great global product and it created a feeling that we (Estonians) can create big things in a small place” he says.

Their task now is to make TransferWise a global, sustainable business which will make money transfers more straightforward for people. With generally favourable reviews from their customers and their Nike-inspired mantra of “just do it”, Taavet Hinrikus and Kristo Käärmann are in a good position of possibly turning TransferWise into next big thing to come out from Estonia.


Photos: TransferWise

Estonian World’s Best of 2012 – Business & Technology

Here we look back at some of the more remarkable business & tech stories that we published last year:


Start-up entrepreneur Priit Salumaa wrote a comprehensive report about Estonian start-up scene – or what has become to be known internationally as #estonianmafia:

#estonianmafia: The Insider View


Estonian architects Maarja Kask, Karli Luik and Ralf Lõoke from the Tallinn-based practice Salto built the world’s longest trampoline in a Russian forest, submitted as part of an arts festival:

Estonian architects create the world´s longest bouncing trampoline

Feature story about London-based fashion designer Kriss Soonik who emphasised that it doesn’t matter where one physically lives in today’s cosmopolitan world – she maintained that she would always be an Estonian, no matter where she chooses to live geographically:

Lady who created “loungerie” and helps Saudi Arabian women to find their sensuality – meet lingerie designer Kriss Soonik

Feature story about another London-based Estonian entrepreneur, CrowdIPR’s Taavi Raidma:

Intellectual Property World is Our Oyster: Meet Taavi Raidma, co-founder and CEO of UK-based CrowdIPR


We wrote how the international think tank Intelligent Community Forum (ICF) included Tallinn, the capital of Estonia, on its list of the 21 most intelligent communities in the world:

Tallinn among Top 21 Intelligent Communities in the World

Every Estonian schoolchild will soon be able to write their own code and produce software

Feature story with New York-based Erply’s founder Kris Hiiemaa:

Erply’s Founder & CEO Kris Hiiemaa: “Estonian start-ups should take full advantage of the opportunities that they’ve been offered”

Start-up entrepreneur Andrus Purde wrote about Estonian tech company Toggl – an online time tracking tool, which is popular with freelancers, groups, and small companies.  It allows people to track the time they spend on various projects:

Keep it simple, talk to users – how Toggl has

attracted 20’000 paid users, and counting


Ryan Bourne who works as the Head of Economic Research at the Centre for Policy Studies in London, concluded in October:

Estonia proves that it’s possible to cut spending and continue to grow

Photos: VisitEstonia/Tallinn Image Bank/Private Collections

Estonia: path to growth via austerity defies eurozone doubters

Economic growth of 3 per cent in the eurozone? It sounds like a statistical error at a time when the common currency area is braced for a 0.4 per cent drop. But Estonia is set to record a 3 per cent expansion in 2012, nearly double the government’s forecast at the start of the year. And officials expect another 3 per cent in 2013.

By Stefan Wagstyl

Much of this is a rebound from the extra-severe shock that passed through Estonia and the other two Baltic states of Latvia and Lithuania in 2009 when Estonian GDP dropped by a cumulative 18 per cent. Three years of growth have generated a combined recovery of 15 per cent, but Estonia’s output is still around 3 per cent below pre-crisis levels.

Lithuania is in a similar position. In Latvia, where the crisis was the most dramatic with cumulative GDP drop of 20 per cent, even a fast recovery still leaves GDP around 10 per cent down on pre-crisis levels.

All three countries responded to the crisis by drastic austerity packages, including public pay and pension cuts and all saw their property markets sink as pre-2008 credit-fuelled booms collapsed in mountains of corporate and household debt.

Recovery has been driven by sharp increases in exports in which benefited from the resilience of much bigger economies in the region, including Germany, Scandinavia and Russia. In Estonia, for example, Sweden’s Ericsson boosted output of export-oriented mobile phone equipment at the crucial time.

But the credit boom and bust has left a serious burden. In Estonia, private debt as a percentage of GDP soared from below 100 per cent to a peak of nearly 170 per cent in 2010 before falling back to 140 per cent. This is bigger even than in Latvia, where private sector debt peaked at around 150 per cent of GDP.

Much of the debt is tied to property. In Estonia, house prices are some 50 per cent off their peak even after a 20 per cent recovery since the start of 2011.

Where Estonia stands out is in its single-minded aversion to public debt. Even in the depths of the crisis, it allowed itself a maximum annual budget deficit of just 2.9 per cent of GDP in 2008. For 2012 it will be 1.2 per cent, with further reductions next year and a return to surplus in 2014. While public debts across the EU have ballooned, Estonia finished last year with a public debt stock of just 6 per cent of GDP.

Even the fellow Balts, frugal by EU standards, look profligate in Tallinn – in Lithuania, the public debt stock to GDP was at 18 per cent at the end of 2011 and in Latvia, which had to spend public money controlling the worst banking in the region, it was at 38.5 per cent.

Paul Krugman, the Nobel prize-winning US economist who argues against fighting the economic crisis with fiscal cuts, attacked Estonia’s approach this summer. In a blog called Estonian Rhapsody, he criticised “the poster-child of austerity defenders”.

He got more than he bargained for. Estonian president Toomas Hendrik Ilves hit back with tweets that condemned Krugman’s comments as “smug, overbearing and patronising”. The exchange was picked up around the globe – and Estonia’s unusual approach to the crisis secured even more publicity.

Krugman is wrong to say, as he did, that Estonians are “far poorer” than before the crisis. Not only is GDP set to return to pre-crisis levels in the next year or so, this growth looks far more sustainable than the credit-fuelled pre-crisis binge.

As Meelis Kitsing, director of the economic analysis division at the ministry of economic affairs and communications, says: “We are better off than we were in 2005.” Kitsing also argues that as a small open economy with limited access to international debt markets, Estonia could not borrow like the US did, even it wanted to.

Moreover, most Estonians back their government’s programme. Prime minister Andrus Ansip last year won a third term in office at the head of a centre-right coalition. Parties calling for big increases in public spending made little headway. The central government and local authorities do intend to boost investment – for example, in infrastructure – to make full use of EU funds, which usually require co-investors.

But this is a pragmatic response to circumstances, not a policy shift. Krugman or no Krugman, the Estonians are sticking with austerity.


This article was first published by the Financial Times. Cover photo by Kaarel Mikkin/VisitEstonia

Getting off the ground: Estonian startups

In recent years, Estonia has developed a notable start-up ecosystem. How can others benefit from Estonia’s booming startup economy?

Estonia has been said to produce more start-ups than any other country in Europe per capita. In addition to Skype’s success story, there are many new companies which have taken the world as well – amongst them GrabCadTransferwiseZeroTurnaroundFortumoPipedrive and Click&Grow. How can others benefit from Estonia’s booming startup economy?

There is no question that Estonia has technological solutions which are attractive globally. In parallel with a large portfolio of governmental e-services, the private sector is showing results as well. One of the recent notable achievements was the acquisition of Modesat – an Estonian wireless modem technology company – by US-based stock-enlisted technology company Xilinx.

In a talk with Tarmo Pihl (co-founder and COO of Modesat) and Margus Uudam (Head of VC at Ambient Sound, original investor in the company) we asked them what the local start-up ecosystem has to offer and how involvement from foreign participants can help create new success stories.

According to Margus Uudam, there is an overall European trend of reduced investments in early stages of funding startups. Venture capitalists are looking for companies which already have established some presence on the market before taking the risk of investing into a new company. However, in Uudam’s experience there is an increasing growth of interest from investment bankers who are looking for new technologies from which to profit.

Both Uudam and Pihl feel that the skills which Estonian innovators lack are commercialisation and international connections. This is one of the reasons why Estonia can be attractive from a foreign perspective because laboratories and incubators are full of great technologies which can be globalised. Co-operation between the investor and startup is essential here and Modesat’s case proves it in a great way.

“The ability to listen is important, but what’s even more important is the ability to have discussions. Meetings between venture capitalists and a start-ups shouldn’t be a tennis-table style exchange of information, but new ideas need to be created from the discussion. The willingness to pivot and make changes in strategy is essential. VC-s often have the position of power, but they need to understand that they’re not always right,” says Margus Uudam.

The success of Estonian startups shows that the location of the company doesn’t matter and the most important argument for investors and potential team members is having exciting technology. Estonia is not known for its wonderful climate but providing a unique solution helps bring new talent into the company.

Regarding talent acquisition, Margus Uudam feels that the lack of experienced management is one of the main bottlenecks for Eastern European start-ups: “Countries here are only two decades old, which is fantastic from the innovation perspective as we have no historical technological burden. It’s easy to implement new solutions. On the other hand it means there are also very few executives with long-term experience in the IT sector. Such people are extremely welcome and when start-ups get funding there should be strong consideration on hiring executives from other countries who have what locals lack – commercialization and contacts.”

Overall, Estonia has created a strong ecosystem for starting companies to help them get off the ground. Many accelerators are fostering new ideas, amongst them Europe’s first gaming accelerator GameFounders. Public sector e-services also support the creation of new companies – for example, creating a new company takes 18 minutes on the internet and exchange of signed documents takes a few minutes. Even though there are still challenges to be tackled, it’s clear that Estonia has the potential to become a new start-up hotspot.


This article was first published by e-Estonia for their Digital Society newsletter:

Photos: VisitEstonia

Estonia’s Friends International Meeting: That’s what friends are for

The Estonia’s Friends International Meeting is a joint initiative launched by Enterprise Estonia, Estonian businessman and entrepreneur Mr Margus Reinsalu and President of Estonia Mr Toomas Hendrik Ilves to thank and recognise business, political and cultural figures whose actions and advice have helped Estonia to become a truly European country with a dynamic economy and thriving culture.

The first Estonia’s Friends International Meeting was held in August 2010 in Tallinn, right before the anniversary of Estonian re-independence. Intended as a gesture of appreciation and a marketing event, it featured a brainstorming session on choices that lie ahead for Estonia. Participants got acquainted with Estonian culture. The friends of Estonia were hosted by President Toomas Hendrik Ilves, Prime Minister Andrus Ansip, Enterprise Estonia representatives, and businessman and honorary counsel of Morocco in Estonia Margus Reinsalu. Former Prime Minister Mart Laar served as Tallinn Old Town tour guide.

EstonianWorld interviewed one of the main initiators of the Meeting, Mr Margus Reinsalu, to get a better insight of the event.

Where did the idea came from – to set up the Estonia’s Friends International Meeting?

The idea got off the ground after my meeting with President Toomas Hendrik Ilves and EAS (Enterprise Estonia) in the spring of 2010. I had noticed at my meetings with foreign investors that when I spoke about great investment opportunities in Estonia, they listened politely, but no decisions were made – the conversations were not stirring enough interest for investments to follow. But when you actually invited the same people to Estonia and showed them our success, good and reliable investment climate and beautiful environment at first hand, the results were immeasurably better.

How do you choose the “international friends” of Estonia, what is the criteria? And what are the long-term aims of the meetings?

The aim of the annual meeting is to recognise businessmen, politicians and people in arts who have actively helped along with their advice and support in the development of Estonia – people who have contributed for Estonia’s success to become a dynamic European economy, as well as a vibrant cultural environment.

We usually invite politicians who have helped Estonia to achieve its goals on an international stage; businessmen who have either already invested or are interested to invest in Estonia; cultural figures who have introduced Estonian arts to the wider world.

We don’t invite the same people every year – rather, we try to gather different figures for the purpose of spreading the positive word about Estonia among as many channels in the world as possible.

So we have two main objectives: first, to make sure that the positive message about Estonia gets across to as many and as far as possible; and secondly – to have as many Estonia’s friends in the world, as possible. In the latter sense we see them like our own, personal friends – just like in our personal lives, we don’t always expect something back from our friends, but rather that they are always there for us in difficult moments, for example.

As I understand, every annual meeting has got a certain theme and agenda – did the previous meetings also kick-start some kind of innovative idea or plan?

Well, in a broad sense the theme is always Estonia. For people interested in our country’s development, we give an opportunity to discuss and exchange thoughts and ideas. For example, this year the main discussion revolved around Estonia’s place in Europe and the future of European Union.

Throughout the years, one of the dominating themes has been culture – this is something that unites people regardless of their background and nationality, and through which Estonia finds its way into many people’s hearts around the globe.

Indeed, Estonia’s Friends International Meeting has given a start for at least one cultural tradition – an annual ERSO (Estonian National Symphony Orchestra) concert every summer, which is open to the public and has become more and more popular every year.

What is the main agenda for the 2013 meeting?

The main theme for the 2013 meeting is the development of e-democracy (e-democracy is concerned with the use of information and communication technologies to engage citizens, support the democratic decision – making processes and strengthen representative democracy/Editor) and Estonia’s success in the IT-sector generally.

As Estonia is one of the leading countries in public sector digital services in Europe, we think it appropriate to cultivate it further – to become better ourselves, and to share the advice with others.

I have an impression that currently most of Estonia’s international friends are from the Old World (Europe), so to speak – and from North America. Are you planning to develop more contacts in Asia, the fastest growing region in the world?

Actually, we are inviting people based on their activity and profession, rather than their geographical position. Each year’s theme influences the selection of invitees: in 2011 we had more people with finance background, but next year we are concentrating on those who influence information technology.

On the other hand, people from South East Asia have been involved since year one – guests from Japan, China, Singapore, for example.

Photos: Estonia’s Friends International Meeting

9 practical tips on how to get into a top startup accelerator

Each year thousands of startups try to get into top accelerators. The best ones – Techstars, Y Combinator, Angelpad and 500 Startups – usually get around 2000 applicants for 10 – 60 seats, which makes the odds of getting in worse than getting into Yale, Stanford, Harvard, and other top universities. Here are some practical tips how to stand out and increase your chances based on our experience with Pipedrive.

Homework is important.

Accelerator programs and their teams are different. You get some credit from Y Combinator founder Paul Graham when you have been active in Hacker News. Meanwhile, Angelpad tends to favor b2b startups, while 500 startups is more open minded about international startups and female founders.

Do your homework before you apply. For example, you should know how successful startups are after the program, what kind of real startup experience their mentors add, how much time they can give and ask from you, and who is running the program daily. Also, find someone who has been part of the the program you’re considering and ask for their honest opinion.

Show that you have real talent.

Something all incubators seem to agree upon is that it’s all about the team. So much so that Y Combinator just announced that they are now considering teams without an actual idea. The majority of successful startups have been started by only two to three people. Incubators sometimes accept single-founder teams, but they rarely accept more than four founders per team. I’ve heard many investors commenting that the more founders you have, the less confident you are, that you also have diluted equity and motivation.

So make sure to shine your experience and skills. Google, Facebook, Skype, Harvard, and Stanford are the magic words which usually help a lot. If you’re missing top school and company badges, then achievements like, “I hacked my first site, when I was eleven” will do just as well. Tech startups need engineers as co-founders: One non-technical founder is okay, two will reduce your chances, three means you don’t understand what startups are about.

Good chemistry between team-mates matters.

Another thing investors care about is how long you have known your co-founders and whether there is chemistry between teammates. If your teammates have worked together for many years, the risk of founder break-up is a lot smaller. Disagreements between co-founders is one of the common reasons why many startups fail to raise capital after graduating from an incubator.

Have a comprehensible product in a big market.

Some investors say that if there is a great team, product doesn’t matter at all. In the context of accelerators, I disagree. Great fit between the product and your team’s experience can significantly increase your odds to succeed. Furthermore, it’s not rare that accelerators and investors make decisions and accept teams because they have personal connection to the problem a team is trying to solve. So make sure the accelerator “committee” understands the problem you are trying to solve, and how.

Have traction, either money or users.

Sometimes accelerators accepts teams even without a prototype. Still, you can significantly raise your chances with a beta product and by showing traction. If you show your first users’ positive feedback – or better still, their dollars – you’re on the right track!

Keep your application short.

Popular accelerators go through more then 2000 applications, sometimes reading through a few hundred per day. Which means they can’t spend more than just a couple minutes per application. You have to get their attention from the first second they look at it. Oh, and it helps if you send in your paperwork towards the beginning of the application process, rather than the last day.

Get feedback from people with more experience.

Before you will submit your final application, ask feedback from experienced investors or entrepreneurs. Best of all if you can find someone who has been accepted into the same accelerator before. Their insider tips are priceless.

Practice your interview over and over.

If you make it to an interview, show up with as many founders as possible. And practice, practice, practice. You only have 10 – 30 minutes for the interview, so you have be to sure that you have a chance to state the most important aspects of your idea and approach.

Good intros and recommendations help.

If a well known entrepreneur recommends your team, you’re sure to catch the attention of the incubator in question. Things like having many followers to your AngelList profile are also helpful. With Pipedrive we had three misses (or should I call them lessons). But just a few months later we were in a position to choose between three programs. Today we are extremely happy to be the alumni of AngelPad.


Photos: VisitEstonia/Wikimedia Commons

Scroll to Top