Estonian business stories around the world

John Mauldin and George Friedman’s take on European crisis

John Mauldin is a leading financial analyst, New York Times best-selling author and a pioneering online commentator. George Friedman is an American political scientist, author and CEO of Stratfor, a private intelligence and forecasting company.

I recently saw a very good video on the European Crisis that gave a really simple overview for the root causes of the crisis. I would like to share the main points of the talk with you.

To start with, it should be said that the two men have a very different perspective on the subject. John is looking Europe from a financial and George from a geopolitical perspective.

John Mauldin states that the problem with Europe is that finance is not the driving force in decision making, politics is. So the world has turned upside down in a way.  John Mauldin: “It is the end of the world as we know it, the operating word being “the way we know it”. And thank God, because that world sucks. Who knows what these politicians are going to do. I can pretty much tell you economically what should happen, but politicians are not economically rational.”

When thinking about different nations and the economics and the structures within these: Italy and the national character of Italians is different than that of the Dutch, which is different than that of the English etc.  We could say that the creation of the monetary union has been dysfunctional to begin with.

John Mauldin and George Friedman both agree that the Europeans have tried to abolish the nations. They have tried to argue with Karl Marx that capital has no country, but it does. Capital can be locked up by a country and in the end it comes to the fact that Spaniards are interested in how Spanish is doing and Germans are interested in how Germany is doing. And it is actually even deeper than that, it is frequently even local. When we think about European crisis we tend to think about the trade flows and financial flows and all of that whereas there is a more fundamental question: the Europeans are trying to bury hundreds of years of history. It seems as they wanted to abolish history but history keeps coming back and biting them.

John Mauldin admits that it is hard to forecast anything because it is a political decision in the end but the economic decision would be to go to a multi-tier Euro. Being economically rational, Germans should know that they would have to write a multi multi trillion € checks to save the Euro they way are trying to do it now.

Europe has got three different problems:

1) Sovereign debt, so there is too much debt

2) The banks have too much debt, so the banks are all technically bankrupt. It is not just Spanish, but French banks as well. But French can not save their banks, because they are three times the size of their GDP.

3) There is a trade imbalance.

It is impossible to solve the problem of Europe without solving all three of those problems. The ECB at the moment is addressing the first two of those problems but are leaving out what is fundamentally the most important problem.

You can see the full video at

Hope you got some new insights and thoughts on the ever-hot topic of European crisis.

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Start-Up Chile is OK. Nothing more.

Start-Up Chile is a program of the Chilean Government to attract world-class early stage entrepreneurs to start their businesses in Chile

Chilean Government gives you up to $40,000 equity-free money (depending on the number of founders) and welcomes you to spend half a year in their country, providing your company a place in a co-working space, a one-year working visa and a local volunteer madrina/padrino to help you survive in the city for the first couple of weeks.

Almost 6 months ago me and my business partner took everything we had and moved to Santiago, the capital of Chile. Now looking back at the time I have spent in Chile, I have to admit – the experience turned out to be quite different from what I expected.

Around 300 companies per year participate in Start-Up Chile. The companies they accept are in very different stages – some have only an idea and they’ve never worked on a start-up before, others have been working on their current products for years. The same is with entrepreneurs – very young and “green” guys versus those who have been working in the industry for years. Plus some who join the program only to travel and hang out for the money.

All entrepreneurs in Start-Up Chile need to do two main things – work hard on their companies and educate local Chileans. Your stake to the society is measured by RVA points. This means every team-member needs to create and manage different events constantly to gather the amount of RVA points needed to get your money. We organized two events – “How to get into top U.S. accelerators” and a meet-up with a Skype co-founder Ahti Heinla.

A lot of Start-Up Chile participants assume that as soon as they land in Santiago, suitcases full of money are waiting for them in the airport. In reality, for a start you will spend every single peso from your own wallet – although you will most likely get it back later. The first reimbursement you are able to get from Start-Up Chile, is 2-3 months after you arrived. To start submitting invoices, paying salaries, contracting freelancers etc. you need to:

1)      Get your Chilean ID (takes about 2-3 weeks)

2)      Get a local bank account

3)      Get your company registered in an existing office space in Chile

4)      Go to SII and register yourself as an entrepreneur (this needs to be done to get your salary from Start-Up   Chile)

All this bureaucracy takes time – a lot. Not to mention that you need to find yourself an apartment, which itself is a real hassle – all 300 startups arriving in the center of Santiago and wanting to live near the office means that very few good apartments are left.

I think Start-Up Chile fills it’s main goal. Which is getting as many entrepreneurs to the country as possible.

I think it fails hard on using all this talent. There are least 600 young people moving to the country every year, many of them have great connections, big visions and super talented teams to build stuff that sells.

I don’t consider Start-Up Chile as a startup accelerator because next to money it provides a very little additional boost, if all. There aren’t any mentors, advisors and useful events organized by Start-Up Chile. Every interesting or useful event I have attended and advice I have got, has been managed by the participants. Which is cool – people do great stuff and network. But all this time and effort comes from building our own “next billion dollar” companies.

Our team members have experiences of three awesome accelerator programs – AngelPad, TechStars and Haxlr8r. This is why I think Start-Up Chile is not a startup accelerator, it’s rather an educational program for Chilean people. Or let’s say – a summer camp for entrepreneurs.

I believe companies with the following would get the most out of Start-Up Chile:

– Your market is in Latin America
– You want to co-operate or get in touch with large Latin American companies
– You want to put most of the effort on marketing and sales
– You don’t expect to meet top notch experienced advisors and investors
– You don’t plan to raise money after finishing the program
– You want to network with other entrepreneurs

What knocked me out:

– The program has very few connections with U.S. accelerators and investors

– Getting all the paperwork done to get the money at all, is a huge hassle. We spent over 100 working hours only on that part.

– The expectations for your company (from Start-Up Chile) are quite low

– Start-Up Chile entrepreneurs themselves do the main selection of companies getting into the next round

– Entrepreneurs don’t have relevant advisors and mentors provided by Start-Up Chile

– The office spaces don’t have decent lighting and it’s not safe – you can’t leave your stuff on the table even for 5 minutes, or otherwise it might get stolen

– Demo Day was in Spanish. Not to mention, most of the entrepreneurs didn’t speak Spanish.

I met some awesome entrepreneurs in Start-Up Chile. That’s mostly it.

Estonian mentor-led start-up accelerator Startup Wise Guys completes its first program

The new Estonian accelerator program Startup Wise Guys, backed by the Estonian government-owned Estonian Development Fund and 11 Estonian angel investors, has completed its first developing program of whipping up some serious startups.

Its working model is similar to UK based Springboard, which through its program provides small seed capital and the magical ingredient of smart advice from mentors and other entrepreneurs. Startup Wise Guys is backed up by a roster of more than 60 mentors – home grown and international, and many of them seasoned start-up entrepreneurs. Springboard co-founder Jon Bradford is also involved.

Appropriately for the 21st century, it’s not all about “guys” anymore – Elise Sass is the startup “wise girl”, community manager at the Startup Wise Guys. Elise kindly shed some light on the program for us: “We received over 200 applications from all around the Europe and shortlisted 8 teams – from Germany, Ukraine, Netherlands, UK, Croatia, and Estonia. The program started in April and included three steps: shaping (3 weeks), building (4 weeks) and selling (3 weeks), supported by Wise Guys mentors. It culminated with investor days in Tallinn and London. There was a slight skepticism in London first but as we co-operated with Springboard and presented our teams on a same day as theirs, there was a good comparison moment and the feedback we received by the end of the day was very positive – according to potential investors and visitors our teams presented excellent and were comparable with London grown teams. I would also like to underline the fact that this was our first program, so there’s an opportunity to do better.”

Psychology graduate Elise, who also holds master’s degree in interactive media and knowledge environments, is in a way a typical of new generation of cosmopolitan Estonians – not confined within the borders of a small nation but eager to explore the world, take up new opportunities and make their mark. Her very own start-up experience started five years ago at United Dogs & Cats, Estonian website for dogs and cats “community”. From there on she got involved with Garage48 – an early stage start-up boot-camp and hackathon style event series, which started in Estonia and now organises events in many countries, including Africa – their idea is to build new web and mobile services/prototypes in just 48 hours. As the event organiser for Garage48, Elise has taken stints in South Africa, Kenya and Uganda, among others. Occasional social media expert post at a New York based real estate agency also occurred last year.

It was the Startup Wise Guys program which brought her firmly back to Estonia, at least for now. “Last autumn, before flying to South Africa through Estonia, I had a conversation with Jon Bradford (Springboard) and he reckoned that I would be suitable person to lead a start-up accelerator program here in Estonia. So I packed my bags in New York and flew back, because I saw a challenge in helping to develop Estonian start-up culture further. Together with the rest of our team we came up with the name – although “wise guys” has sometimes got a negative connotation, we are emphasising on the word wise – the ability to make good judgments, based on a deep understanding and experience. And this understanding and experience exchange should work both ways – between the qualifying teams and our mentors.” Startup Wise Guys provides a seed capital of up to 15,000 euros per team in return for the 8% equity but according to Elise Sass it’s the experience and advice which counts:”The teams have got a fine opportunity to meet experienced start-up mentors and investors during the 3 months program – for free. It’s up to the teams to take an advantage of this opportunity – luckily in most cases they seem to take it.” Elise runs the program together with Mike Reiner, a Dutch who moved to Estonia in January and has IBM and start-up background. “The team is excellent, and it makes us strong to provide support system for the start-ups – to get additional people and advice that they need”.

Startup Wise Guys application process runs in September-October and next accelerator program will start in January 2013. In future they are also hoping to attract more start-up firms from Russia and other eastern countries to participate – as the start-up culture in St. Petersburg and Moscow is on the rise. They are also hoping to tighten the relations between possible investors and the accelerator program. Elise is sure that the next batch of Startup Wise Guys accelerator program will give even more positive surprises.

Ivo Aulik leads another Estonian success story in London’s Canary Wharf

In less than five years, Ivo Aulik has built up one of the most successful minicab firms in London’s prosperous Canary Wharf business district, favourably rated by local corporations and hotels alike. His company is called Carrot Cars and although its cars are not sharing their colour with a vitamin rich vegetable, they offer sharp and highly sophisticated service otherwise.

Their call centre is using latest state-of-the-art technology to constantly track the movements of “carrot cabs”, and is therefore able to offer their clients precise timeline, from call out to driving from A to B.

Ivo Aulik is typical of a new breed of cosmopolitan Estonians, who left the country after the fall of Iron Curtain, and is making the best of it. After starting in the UK at the hospitality business, he quickly worked his way up, and first experiences in entrepreneurship soon followed. Using latest IT solutions and state-of-the–art technology is just another part of being a “typical Estonian” – birth country of Skype.

Ivo says that he was always confident that his taxi business would be a success. “It’s not a rocket science. Give a good service, control your business and make sure the drivers are not overcharging or doing anything improper. Working in the industry we saw the mini cab sector is failing in customer service and we thought that was something we could provide. I think we are now the biggest firm in both fleet and business in the area.”

Ivo has found that the most difficult area is hiring suitable staff. The average recruitment campaign sees him and his business partner speak to 50 applicants and inviting five for interview. Three make it through to the training programme and two would be taken on. “We have to be very selective. We need drivers with big smiles because they are the ones who earn the company its reputation.”

Ivo does not feel that his nationality plays any part when it comes to deal with business partners or employees: “London is a cosmopolitan city, there’s no sense here that you are a stranger.”

Chef Andrey Lesment runs the first Estonian-owned restaurant in London, UK

Andrey, who started his career in Sweden and Denmark, has been London based for the past 15 years. He has honed his skills at the Savoy Hotel, as well as working for Gordon Ramsay at Maze in the past. Having had a clear destination in mind, he worked towards his goal of opening up his own restaurant and managed this at the beginning of 2011. Verru, as his elegant 26-seat restaurant is called, is situated in the affluent area of Marylebone. Lesment’s menu reflects his background and influences from the Baltic and Scandinavian cuisine, yet he claims to have learned most of his cooking skills at the French influenced top restaurants of London. “The Estonian influence is in the nuances, mostly in the pure and organic ingredients”, says Andrey.

His cooking book of fusion Scandinavian-Estonian-French recipes is apparently also on the agenda.


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