Technology

Technology news about Estonians

Keep it simple, talk to users – how Toggl has attracted 20’000 paid users, and counting

Estonian tech company Toggl is basically 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. It’s internet-based and can be up and running from scratch in less than a minute. It has desktop widgets, an iPhone app, and an iGoogle gadget for even faster access.

I recently attended one of the lunch talks at Garage48 Hub in Tallinn, where the guest was Alari Aho, co-founder of Toggl. Toggl is a SaaS time tracking app that is doing well. They have more than 300.000 registered users and around 20.000 paying users. It’s a freemium product that is free to up to 5 users per team.

Due to the nature of the lunch (no slides, people ask questions, and sometimes very random questions) talks, Alari didn’t go too deep into any topic, but he openly shared some light into what Toggl has done, and had his suggestions for other SaaS startups. In this post I’ve tried to structure Alari’s nuggets under different “headers”.

The first lesson is focus

Toggl was started as a side project in a software development house back in 2006. For the first couple of years it didn’t make any money and growth was rather flat. Things kicked into gear, when the main client work stopped due to recession, and the team properly focused on building the product.

Another aspect of focus is building an app that does one thing very well, and talks to other apps, not something complicated like a “swiss-army knife”. To provide more value, Toggl has introduced additional products like Planner, or made Toggl better by making it simpler (eg. removing features that are being used by 1% of users) and faster to use.

Toggl has some very specific target groups like lawyers or designers, and the company has been toying with the idea of making dedicated apps for each one. But so far users in different verticals have rather homogeneous needs, and there hasn’t been a real need for that.

For wantrepreneurs Alari’s advice was simple: to do one thing at a time, rather than build several products and “see what sticks”, because it takes time to do something properly. He advises to plan 2 years for getting something done properly, and not counting on much income during that period.

Talk to users a lot

When probed about the most important things that have led to Toggl’s success, Alari emphasised the importance of talking to customers. They frequently travel to US or UK with the sole aim of visiting customers, seeing first-hand how they use the product and getting feedback. He brought in the example that sometimes a feature that works well in the office, simply doesn’t work in real life.

Toggl has also introduced some scalable means of talking to users. For example, when they found out that conversion to paid service is much higher for users that have invited the whole team, they set up an email that encouraged users to do just that. 14% of people who received the email invited the team vs. 7% for those who didn’t.

Be very pragmatic about marketing

Toggl only hired their first marketing person a couple of months ago. This is not to say that Toggl hasn’t done any marketing at all, but they’ve just been very pragmatic about it (like the email example above).

A whopping 75% of traffic to Toggl comes from non-branded search (try googling “time tracking”). And this hasn’t come by itself – they’ve invested into SEO-friendly website and good copy. It also helps when you’ve been around since 2006 and been linked to by LifeHacker and lots of forum posts and discussions.

To get the word out, Toggl emailed around 20 relevant bloggers back in 2006, and – lo and behold – one of them wrote about Toggl. This trickled over into posts downstream and the company hasn’t had to work hard for a PR later.

Today Toggl does lots of marketing experiments. For example, Dropbox-style “refer people to get free service” didn’t work well – there were some signups but they didn’t convert.

Raise prices when you can, and raise money only when you need to

Toggl started out by charging $1 per user and now charges $5, without introducing new features. With the latest price hike, existing users kept the old price for 3 months, and could lock in the price for 12 months thereafter by paying in advance. 5% of customers decided to leave but because 10% decided to pay upfront, revenue increased both in short and long term.

Toggl was initially funded by proceeds from software development services, and is profitable today. They haven’t felt the need to raise additional funds and – as of now – are planning to self-finance their future growth.

This post was first published by Andrus Purde via http://purde.net/

Garage48 Tartu 2012 produces myriad of potential world beaters (video)

Estonian hackathon Garage48 had a prolific weekend in Tartu, where a number of new innovative start-up firms were set up in a space of two days.

Garage48 hackathonis an event in which computer programmers and others in the field of software development, like graphic designers, interface designers, project managers collaborate intensively on software projects within 48 hours over the weekend – and the aim is to set up working firms by the end of the weekend. Garage48 event series started in Estonia in April 2010 and have since expanded to other countries in Northern Europe, and even Africa. All Garage48 events are held in English and have up to 100 international participants. Participants have different skills, ranging from software development to design, marketing, sales and entrepreneurship. Usually taking place in Tallinn, it was 3rd of its series in the university town Tartu.

Garage48 Tartu 2012 winner Matemaatik is a collection of math problems for teachers to export and use

Tom Godber (CTO and co-founder of London based mobile ticketing provider Masabi) said that the most impressive thing for him was to see that the winner was a team he had written off at the beginning based on their one line pitch. “But they turned round an excellent site serving a real need in a tiny amount of time,” said Tom Godber. Matemaatik impressed the jury the most with a web solution that helps teachers to export and use math exercises. Matemaatik came the winner of the 3rd Garage48 Tartu event.

From 25 ideas pitched on Friday, 9 ideas managed to attract a team and started product development and all the ideas presented their working prototype by Sunday.

The 3rd Garage48 event in Tartu, co-organized and hosted by Tartu University, Faculty of Mathematics and Computer Sciences had a high level of specialists as mentors and in the jury, including Tom Godber and Ed Howson (Masabi), Ragnar Sass (Garage48, Pipedrive), Priit Salumaa (Garage48, Mooncascade, MobileMonday Estonia), Tanel Vari and Rainer Paat (Skype), Dmitri Sarle (ArcticStartup).

Teams and winners were:

MATEMAATIK – Collection of Math problems for teachers to export and use. Currently, teachers don’t know which problems are more useful than others in a given topic – rankings will solve that. Having Math problems online allows teachers to create new problems, using the web’s capabilities (like adding videos).

AJAPAIK (mobile app) – uses crowd sourcing to collect location metadata and contemporary rephotographs for historic photos from public collections. During the weekend at Garage48, they were building native apps for iOS, Android so that users can more easily rephotograph historic photos at Ajapaik.

E-GARANTII – Piles of paper receipts are collected in drawers and wallets all around the world. Until now it was believed that this is the only way for preserving valid warranties. E-Garantii is trying to prove this misconception wrong.

BATTLEGRID.ORG  – Augmented Reality web application to extend the experience of tabletop games (e.g Dungeons & Dragons, Battleships, Monopol etc.). Whether you are friendly team of players or professional gamers – BattleGrid can automatically visualise your monsters and creatures for you.

MOMOTE – Momote lets you decide what music is played at your favourite pub. This is accomplished by real-time mobile interaction with socially controlled jukebox. Want your favourite tune to replace Justin Bieber on the dancefloor? Let’s make the next bar experience better!

MASHDAY.COM – Mashday is a platform of open calendars for users to find their most relevant events and see them in their existing calendars. The site has categories for different events, such as national holidays or high school vacations, which are ranked according to their popularity of usage and suggested to users according to their defined profiles.

TOP THREE – Long lists don’t work. Top Three is helping people to share their Top 3 preferences in a visual way. It’s a twitter for pinterest.

CULTUREMETER – Virtual environment for evaluation of culture. Votes of audience and experts can be crucial aspect in getting funding from local governments or entrepreneurs.

BETONIT  – they are building a platform to help mobile game developers monetize on their product by enabling betting in mobile multiplayer games. Betonit is building an easy to implement SDK (software development kit) for developers to incorporate in their games. The player can then register an account with them, transfer funds to his/her account and then go to the game and bet real money in a multiplayer game against a real-life opponent.

Garage48 Tartu 2012 was sponsored by tech giants Nokia and Skype, as well as Hedman Partners, Fortumo, and Creative Mobile.

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Photos by Meelis Lokk/VisitEstonia & Garage48.

New IT hobby groups called Smartlabs for 10-19 year olds announced in Estonia, backed by Microsoft

The creation of new hobby groups for 10-19 year olds involve getting instructed in robotics, programming, mobile app and web design.

The idea was generated by Vaata Maailma Foundation which has been working on other IT education initiatives in Estonia since 2001 – such as helping with IT education programs for adults, as well as public awareness campaigns about IT, and creating 500 public Internet access points for those without computers to get online.

To start with, there will be 36 nationwide Smartlabs for about 500 pupils who want to improve and cultivate their skills in IT. The hobby groups take place after school and the teaching is conducted in three languages – Estonian, Russian and Seto, and one group is also for people with hearing difficulties. The private funding of € 90000 is coming from Microsoft – who has recently muscled up its presence in Estonia, first by snatching up Skype – as well as from EMT and Elion, telecom companies owned by Sweden’s TeliaSonera, Europe’s 5th largest telecommunications group.

The Smartlab hobby groups will be evenly split between junior and upper schools, and about half the investment will go towards robotics, with the rest going to mobile and web app design as well as other coding. Some groups will focus on specific areas like 3D modelling, or computer building.

Enn Saar, the chairman of Vaata Maailma Foundation, said: “Most of the hobby groups in Estonia are currently geared towards sport or music, dance and art. If we don’t offer the choice for after-school IT and science education, those with a knack for these subjects might not get their interest and talent elevated enough. In the long term, we are also hoping to substantially increase the number of IT-specialists in Estonia.” In a country where 3 year old kids spend their time playing games on ipads, these sound like wise words.

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Cover photo by Martin Sild/VisitEstonia.

Shape-shifting Fitbots from Estonia help shoppers to try on clothes in virtual fitting rooms (video)

In the late 70´s, the members of innovative German band Kraftwerk decided that, for their concerts, they would send look-alike robots to perform, instead of doing the hard work themselves. Kraftwerk’s robots, although looking cool, were basic and could only move their “arms” up and down, and their “heads” sideways. About 30 years later, Heikki Haldre and Paul Pallin, CEO and CTO of Fits.me respectively, found a way to produce a robot in Estonia that rather than just moving its arms, actually changes its body shape.

Haldre and Pallin don’t call them robots though – they call them Fitbots. And instead of playing music on stage, the Fitbots have got another purpose – to make sure that online customers of various retail chains around the world buy perfectly fitted shirt or suit, according to their exact body measurements.

Four years ago, when entrepreneur Haldre got less and less time to go for fashion shopping, he became a more avid online shopper. The problem he found though, was that it wasn’t that easy to find a perfectly fitted shirt or suit when buying online – an issue made more complicated by the fact that the meaning of small and large size can be light years apart in different countries and continents. Hence he and Pallin came up with an idea to invent a new solution – to find out perfect fit by creating and using specially modified robots which can change their body shape.

With a development from  Maarja Kruusmaa, professor of biorobotics at Tallinn University of Technology, Laboratory of Intelligent Materials and Systems at the University of Tartu, and Europe’s largest body scanning and anthropometry research company Human Solutions GmbH in Germany, a new kind of robot was born – named “Fitbot” by Fits.me entrepreneurs. At first, a “male” version was made – as according to Paul Pallin whose task is to „tame“ their Fitbots in Tartu, Estonia “It takes much more complicated biomechanics to produce a “female” Fitbot.”

Fitbots have artificial muscles able to mimic the shape and size of any body type, in almost 100 000 shapes. They are electric and are controlled by sophisticated software. Artificial skin has also been used to make Fitbots look like humans.

Fits.me business model is thus based on this: they “implant” their software on their client’s (usually large fashion chains) online store page, where the Fits.me’s Virtual Fitting Room would appear. An online shopper would then enter his or her basic measurements – height, neck, chest, waist, arm length and torso length. The fitting process is implemented in the software based on the thousands of shapes worked out by Fitbots – which are physically dressed in each item and each size of clothing by the retailer. Shoppers can “try on clothes” in the virtual fitting room, where they will be shown an image of a chosen item and how they fit their body shape. Fits.me charges the retail chains based on the usage of their software online, taking about 25% cut from a retailer’s profit.

Although somewhat slow in their expansion due to sophisticated development of Fitbots and backing software, Fits.me is now using their virtual fitting rooms with about 10 retail chains in the UK, US, Germany, and Italy. More famous ones include Thomas Pink and Hawes & Curtis in the UK, Otto in Germany, and Ermenegildo Zegna in Italy. Vogue fashion magazine picked the company as one of the 100 most influential names in the digital fashion world in their 2012 Online Fashion 100 power list. Their expansion was also slowed down due to lack of female version of the robot – something which they solved this year with an introduction of female Fitbot.

With the lack of similar products currently on the fashion market, Haldre and Pallin are positive about the future:”While in 2000 only two percent of clothes were bought online in developed countries, the share is now 10-13 percent and it is expected to increase to 35 percent by 2020.” “Our virtual fitting room will help to reduce the returns for the retailer by 35% on average”, they claim. And according to Heikki Haldre, there´s another wild card apparently hidden in the pack:”We also collect the customers body measurements and obviously the data insights are invaluable as we are literally the only technology that provides the retailers data on what the customers do inside the fitting room.”

An extra 1,5 million euro venture capital from the Entrepreneurs Fund this year prompted Fits.me to move their HQ from Estonia to London, UK – to sell their service more aggressively around the globe, while their 14-strong Fitbot force and R&D is still based in Tartu, Estonia.

http://fits.me/

Pictures from: Picture pictures www.pictures.com

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

Estonian Tiger Leap Foundation has launched a program called “ProgeTiiger”, through which Estonian students in grades 1 to 12 will be introduced computer programming and creating web and mobile applications. ProgeTiiger program will start with students in the first grade, which starts around the age of 7 for Estonians. The education will continue through a student’s final years of public school, around age 15.

Thanks to the program, children as young as 6 will be able to learn to write their own code and produce software.  “The interest of students towards using modern technologies has grown year after year. With the “ProgeTiiger” program we prepare students to become from consumers of software to developers of software,” Tiger Leap Foundation manager Ave Lauringson said.

In the first stage, the program concerns pilot schools, in the following years all public schools can join if they want to become part of the “ProgeTiiger” program. Teachers are being trained on the new skills, and private sector IT companies are also contributing.

Estonian Tiger Leap Foundation decided to start this project because they saw how many companies struggle to find decent programmers. This new program is expected to bring Estonia in front of the rest of the Eastern Europe in terms of IT development and growth. As the country with one of the highest internet penetration rates in the world and computerisation and digital connection for people encouraged and supported by the state, Estonia really sets to become an IT-tiger of the world.

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Pictures from: Picture pictures www.pictures.com

Tallinn University of Technology establishes Prototron Fund with the aim of supporting innovative ideas

Start-up fund Prototron was established on August 14 with the aim of supporting innovative ideas in making the first finished product or prototype. The fund was established by the Tallinn University of Technology, Swedbank and Tallinn Science Park Tehnopol.

Swedbank supports the fund with 120,000 euros during the first three years. President Toomas Hendrik Ilves, who took part in the opening of the Prototron fund, acknowledged the cooperation between the private sector, university and Tehnopol’s business environment. “Cooperation between scientists and companies advances production. Teamwork makes it possible for small producers to make bigger things and thus we can be greater. The market we are aiming at is the whole world. I hope we will always devise new products that could change the world. The close relationship between the university and incubator for start-up companies enables a synergy, which makes this possible,” Ilves said.

The fund was created based on the real need of inventors and companies, who want to create innovative products. This became clear from the survey conducted by Swedbank, which gave three reasons, why innovative ideas are never realised. First, many interesting ideas come to a halt, because there is no working prototype to prove the idea. Prototypes are important in building a real product, because without it, companies cannot get the necessary investments to move on. The second disadvantage that became evident was that the circles of enterprising people are too similar in Estonia and there is no cooperation between different fields. Third point the survey emphasised was the inability of companies getting their product to the international markets. “We quickly realised that these are the problem areas that need to be addressed and decided that helping young inventors is what Swedbank wants to do first,” Robert Kitt, Head of Corporate Banking in Swedbank, explained the reasons behind establishing the fund.

Pirko Konsa, board member of the Tallinn Science Park Tehnopol, deems the fund as a means to fill the gap on the way to new Skypes. “In Tehnopol we constantly come across ideas that get to nowhere, because there is no product to prove the idea. But the idea looks good on paper. We get to find out now with the Prototron Fund, whether there is an actual product that could change the world behind the exciting idea,” Konsa said. “We need a new fund to support realising the enterprising ideas young talents have in the university,” said professor Andres Keevallik, rector of the Technical University of Tallinn. “This is a great accelerator of innovation for Estonia, in order for the university to become a solid breeding ground for global start-up companies. An international interdisciplinary innovation centre MEKTORY operates at the Tallinn University of Technology. MEKTORY and the newly established Prototron Fund make up a single ecosystem, which is an important part of the innovation support scheme of the country,” Keevallik added.

Both private persons and start-up companies, who want to make their new idea, which has great potential for growth, come true, are welcome to apply for funding from the newly established fund. The funded fields include electronics, mechatronics, and information and communications technology. Applications can be submitted on the website www.prototron.ee, where you have to describe your idea and team. Applications will be reviewed four times a year by known innovators Priit Alamäe (Webmedia), Pirko Konsa (Tehnopol), Robert Kitt (Swedbank), Yrjö Ojasaar (Publification), Andrus Oks (Estonian Development Fund), Jaanus Tamm (Defendec) and Siemon Smid (Tallinn University of Technology).

Four or five ideas will be realised this year, but twice as much would be realised next year with the help of the fund. Swedbank will make the first contribution to the fund in the amount of 40,000 euros. “We welcome other companies to join the initiative, if they believe in new ideas and the profitability of prototypes”, Robert Kitt added. The first call for proposals is open and applications are accepted until September 15.

Estonian game industry is flying high

Just a few years ago, Estonia had no gaming industry to speak of. Although we were proud of our advanced IT and mobile sector development, games had been somehow left out of the big picture.  Yes, there was Playtech, one of the worlds leading online gambling and casino companies, but these are not the types of games this article is dedicated to.  The industry situation has, however, changed significantly – it seems Estonia has realised the value of games and is now quickly making up for the lost ground.

Just recently, the first European business accelerator focusing on games was launched – in Tallinn Tehnopol, the “Silicon Valley” of Estonia. The GameFounders accelerator programme helps game developer teams from all over the world to evolve their projects into commercial success with the help of seed investments up to 15K euros, 60+ experienced mentors,  access to gaming investment funds, VCs and angels, and many other benefits.

But this is only the tip of the iceberg. In Tartu, indie game development is booming, and numerous start-ups are working on their first game projects. This process is fostered by the Estonian Game Developers Club and a course on Commercial Videogame Design & Developmentthat I am privileged to co-read for the second year at the Institute of Computer  Science at the University of Tartu.

The University of Tartu also has an International Master’s Programme for ICT product development and entrepreneurship, called Design and Development of Virtual Environments. It is not game-oriented as such, but it can provide valuable experience, contacts and knowledge to anyone who is interested in making games.

But the first truly successful Estonian game company is Tallinn-based Creative Mobile. Founded in 2010, the company quickly became one of the top developers of freemium Android games, their hit game Drag-Racing reaching an impressive 20 million downloads in less than a year and 50 million-milestone later on.

While I have noticed lingering distrust and skepticism of educators towards educational games in several countries, the attitude is very different in Estonia. It seems most of our teachers have understood the value that fun and games bring to education, and try their best to utilize this newfound (or perhaps refound) magic. For example, The University of Tartu Centre for Ethics is developing a tabletop game that allows high-school students to understand and talk about ethical values, and value conflicts.

Even better example is the E-aabits or E-ABC book. Simply put, it is an MMO-like digital environment and a collection of games for 3-7 year old kids, aiming to revolutionise preschool education. The E-ABC will make life easier for young parents by keeping their toddlers busy educating themselves in a fun and intuitive way. And we’re not only talking about numbers and letters here, but also concentration, empathy and other non-traditional but incredibly important values that are often overlooked by traditional education systems.

So all this is happening here in Estonia and as a game designer I am incredibly grateful to be a part of it.

On final note, keen observers can spot several forces behind these exciting developments. In addition to important but singular inspiring sparks such as the success of casual games,  Minecraft or Angry Birds, there are larger patterns of change shaping the field.

Game industry has continued to grow since its start and my prediction is that the growth won’t stop until at least all age groups have been included. Currently, the oldest players are around 60 years of age, and it is so only in western societies where the gamers had a head start. There’s at least 10-20 years until the future oldest customer age  groups (let’s say aged 80+) in most countries have embraced gamers or rather, the gamers have become the oldest age groups. And this is a good thing since, unlike TV, games teach us that we are not passive observers – our lives and indeed fates are… interactive.

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This article was first published by the University of Tartu blog.

#estonianmafia: The insider view

It’s rarely when “mafia” actually refers to something positive. However, “Estonian mafia” (or #estonianmafia for Twitter users) has come to describe the entrepreneurial phenomenon stemming from the small country in the Baltics. The term was allegedly coined by the US venture capitalist Dave McClure at a well-known event for tech start-ups, Seedcamp in London. McClure apparently thought it was weird that from the 20 participants on the extremely competitive event, a whopping 4 participants were from Estonia.

I am honoured to be among the co-founders of two influential non-profit initiatives in Estonia: MobileMonday (established in 2007) and Garage48 (established in 2010). MobileMonday (MoMo) unites Estonian people connected to the mobile sector, while Garage48 is the first and, so far, most successful weekend hackathon (a hacker marathon) in Estonia, where ideas are put into tenetative action.

These initiatives and the fact that I have gradually turned into an entrepreneur have given me a certain overview about the goings-on of firms with lofty business plans that are firing up in Estonia, as well as a reason to ponder the problems in this sector.

Like mushrooms after the rain?

At the moment there is a lot of talk about startup companies and it might leave an impression that they’re really common, like mushrooms after the rain. London and Silicon Valley are paying attention to a small, as-of-yet unknown country called Estonia that keeps on delivering good and able teams with really high performance and great ideas.

When you start to count Estonian startup companies, you’ll soon realize that the fingers of two hands are enough to count the number of companies that are successful or close to being successful. Still, there’s no arguing that they are quite many when compared to our population. Hashtag #estonianmafia, which has lately had some Twitter buzz, might be the best recent example illustrating the success of Estonian start-up companies. It was first introduced in September 2011, by venture capitalist Dave McClure at the introductory day of Seedcamp, who brought attention to the fact that there were four strong Estonian teams among the 20 final contenders.

In autumn of last year, during the Garage48 in Tartu, I asked Jon Bradford, the co-founder of accelerators Springboard and Difference Engine, why he was visiting Tartu for the second time already. He gave a blunt answer: “In each incubation batch we’ve had an Estonian startup company. I want to know what’s going on here!”

At the end of September, four of 15 companies in competition at the Arctic15 conference in Helsinki were connected to Estonia or – upon closer scrutiny – Tartu. For some reason, Tartu is becoming the Silicon Valley of Estonia, and the eyes of the world seem to be on Estonian startup companies.

Is it because our heads are the right shape?

Surely one can say that the reasons for our success or good work ethic are obvious. Estonians have always served for material gain. We are hungry for success and obtainable things. As a nation, we possess the European work culture and the high quality control of the Nordic countries. “Work hard and feel the strain, then love will come as well”, is a famous saying around here.

On the other hand, it’s just that startup companies are popular right now. We can claim Skype and Playtech as our positive role models. These two constituted the real ‘Estonian Nokia’ back in 2005 when Nokia was a big success. By now, it seems the Finns have lost much of their former glory.

Many former or current workers at Skype or Playtech have good experiences with share options. If you work in the IT-sector in Estonia, you know the meaning of the word “option”. Lately, the media has noticed successful startup companies and initiatives like Garage48, as well.

All of this combined is bound to have some positive effect when it comes to emerging startup companies. Jevgenijs Kazanins, the co-founder of a startup company called Campalyst, conceived at Garage48, said, “In Latvia, you have to search really hard to find software developers motivated enough to accept a smaller initial payroll in our company. They just can’t grasp the concept of share options. It’s whole different story here in Tartu”. To back up his words, Campalyst has employed a 3-person development team in Tartu.

Why do we stand out?

One of the reasons why Estonian startup companies are noticed abroad is the fact that everybody spots a strange dog better in their own home yard. The name #estonianmafia illustrates that.

There are two reasons why Estonian startup companies leave the home market really fast. First, it seems there’s a lack of so-called smart money in Estonia. There is a rule that when looking for an investment, the money must be accompanied by competence. In more detail, this means competence in the very field that is addressed by the solutions of the startup company, and – even more importantly – contacts. Money with attributes like these is called smart money.

The microscopic size of our home market constitutes another reason for startup companies to escape their home country. The market is so small that only businessmen dealing with the primary needs of people, such as air, food, drinks, energy and shelter, can do considerably well. Most of the companies dealing with other fields have to look for a market outside Estonia. So, while living Estonia, it’s reasonable to found startup companies with global ambition.

It’s interesting that even after leaving Estonia, the manpower of our small- to mid-sized companies preserve their competitiveness. Sales and marketing departments could be located in London or Silicon Valley, but maintaining a development team is much cheaper in Estonia. Also, Estonian software developers have the right work ethic.

Don’t count your chickens before they hatch

Thus, one can conclude that the attention we have got comes largely from our striving for Western venture capital and Western markets, combined with our novelty. But its also well known that all hype has its end.

For me, only five Estonian companies are successful, as they have steady ground beneath their feet and positive cash flow: Erply, ZeroTurnaround, Fortumo and Kinotehnik.

Next to them, GrabCad, Transferwise, Guardtime, Sportlizer, Campalyst, Pipedrive, TaxiPal, Flirtic, Click and Grow, Zerply, Qminder, and Kurat, along with some others, might be on the road to success.

Time will show how many of them can reach the first five. Just one out of ten startups might make it.

Giving a push

We have to support startup companies and help them reach the level where they could do it on their own. Statistically speculating, to have a greater number of well-to-do startup companies, we have to nurture the birth of them.

It definitely requires greater flow of smarter money into Estonia, and it’s dubious if a venture capitalist from Silicon Valley would even want to go further east than New York or London. Also, it’s not entirely clear if a good accelerator could even be founded here, when venture capital and the related knowledge prefer to stay in the old location.

Of course, hard work is needed. One can see that the last years have brought good initiatives, that a proper incubator could be founded and smart money incorporated. Of course, there is still help needed that could come from the universities or endeavours such as MoMo or Garage48.

After all, entrepreneurship means, first and foremost, the ability to initiate – to enterprise. A successful entrepreneur also has the ability to turn an idea into reality. Surely, the amount of success depends on the potential of the idea, but smart and inventive implementation is even more important. On its own, an idea has no worth – only the realisation and the realiser can provide it.

To nurture entrepreneurship and increase people’s ability, the field must get some attention already in high school. The ability to initiate must be appreciated by the entire society, and co-working must be made as popular as possible. Also, people have to be encouraged. The entrepreneur’s road is a hard one, but the reward is worth it.

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Priit Salumaa is the Co-founder of software development company Mooncascade. He graduated from the University of Tartu in 2002 with a bachelor’s degree in mathematics and computer science. This article was initially published in the Estonian-language collected essays by UT alumni.

This article was first published by the University of Tartu blog.

Photos: Wikimedia Commons

Rise of The Machines – Skype’s co-founder Jaan Tallinn on why we need to give a serious consideration

One of the founding engineers of Skype and Kazaa recently visited Australia to sound a warning to the human race: fasten your seatbelts, as machines are becoming so intelligent that they could pose an existential threat.

Jaan Tallinn (40) argues that human-driven technological progress has largely replaced evolution as the dominant force shaping our future. Machines are becoming smarter than we are, but Tallinn warns that if we are not careful this could lead to a “sudden global ecological catastrophe”.

 

“It really sucks to be the number two intelligent species on this planet; you can just ask gorillas, they will go extinct.”

This sounds like science fiction stuff, but consider the breadth of domains where computers have already caught up to – and then dominated – humans.

We have already programmed computers to be better than us at classic games like chess, better drivers (Google’s driverless car being just one example), better at voice and face recognition and, as IBM’s Watson computer proved, even better at the game Jeopardy.

The US military is experimenting with robot fighter pilots, while the majority of trading on the stock market is done by computers in what is known as algorithmic trading.

“My core main message is actually that this thing is not science fiction, this thing is not apocalyptic religion – this thing is something that needs serious consideration,” said Tallinn, who gave a talk on his theory at the University of Sydney recently.

Tallinn isn’t your average programmer. The Estonian is a board member of the Lifeboat Foundation (tagline “safeguarding humanity”) and at university he majored in theoretical physics. His thesis looked at travelling interstellar distances using warps in space-time. He argues that we are witnessing an “intelligence explosion” – with neuroscience advancing in leaps and bounds to the point where scientists could replicate the human brain by the middle of this century.

The event when machines surpass human levels of intelligence and ability has been dubbed “the singularity“.

“In my view, the fact that computers caught up to humans and completely dominate humans in chess and some other domains already – says there’s evidence that yes, in principle they can be better programmers than humans,” said Tallinn. “Once computers can program, they basically take over technological progress because already today the majority of technological progress is run by software, by programming.”

The question then is how can you control something that can actually reprogram itself?

“Once you acknowledge that human brains are basically made of atoms and acknowledge that atoms are governed by simple laws of physics then there is no reasoning principle why computers couldn’t do anything that people are doing and we don’t really see any evidence that this is not the case,” said Tallinn.

It doesn’t take a rocket scientist to figure out what could happen to us humans if we’re no longer the most advanced, technologically aware species. “It really sucks to be the number two intelligent species on this planet; you can just ask gorillas,” said Skype’s co-founder. “They will go extinct, and the reason why they will go extinct is not that humans are actively conspiring against the gorillas, it’s that we as the dominant species are rearranging the environment; the planet used to produce forests but now it’s producing cities.”

“For example if the skill is to make sure that people are happy and the way the super intelligence is supposed to measure how many smiles are on the planet, the easiest way to achieve that is to sedate everyone and make sure their faces are stuck in a cramp or smiling.”

The key, he says, is to make sure that once we have systems that can rearrange the environment like we can, we need to ensure that those changes are beneficial to us. “We don’t want super intelligence to do terraforming projects; that means take the planet and change its atmosphere or soil or whatever,” Jaan Tallinn said.

“What we have to realise is that designing super intelligence is not a typical technology project because a typical technology project is something where we develop a first version of something and refine it. We can’t do that with super intelligence because in order to refine a first version of super intelligence, you have to basically kill or turn off the first version but if this thing is smarter than you, how do you turn it off?”

So, in the worst case scenario, smarter machines could rise up and destroy us all? Tallinn says the worst case scenario could be “even worse” than that. “If you build machines that understand what humans are and they really have some distorted view of what we want, then we might end up being alive but not controlling the future,” he said. “For example if the skill is to make sure that people are happy and the way the super intelligence is supposed to measure how many smiles are on the planet, the easiest way to achieve that is to sedate everyone and make sure their faces are stuck in a cramp or smiling.”

Thankfully for us, there is an alternative to this Orwellian doom. We can harness super intelligence to work for us.

“Once you have something that is smarter than you and is actively on your side, you can basically solve any problems really quickly.”

 

This article was first published by Asher Moses at the Australian newspaper The Age.

Pictures: Wikimedia Commons

Erply’s founder & CEO Kris Hiiemaa: “Estonian startups should take full advantage of the opportunities that they’ve been offered”

The energetic chap sitting opposite me is wearing an informal t-shirt and scans his eyes rather quickly through the pages of local weekly newspaper in front of him. By the look, age and dress code he’s fairly similar to Mark Zuckerberg. Like Zuckerberg, the young gent behind a coffee cup started his first technology ventures very young. Like Mr Facebook, he started his firm from basic facilities. But he’s not Mark – just not yet anyway.

His name is Kris Hiiemaa and he’s the founder and CEO of Erply, New York based enterprise software company focusing on retail and point-of-sale technology, helping companies deal with inventory control, bookkeeping, and other tasks, from their brick-and-mortar stores to online operations. And instead of basking under the Palo Alto sun, we are having a cup of coffee in a beautiful old café in Kadriorg, a leafy and picturesque part of Estonian capital Tallinn, stone throw away from residence of the tech savvy Estonian president, Toomas Hendrik Ilves.

Humble beginning

Programmer Kris launched Erply in 2009, tapping away on laptops and answering customer calls at a first  Estonian Republic era private home in Tallinn, Estonia – slowly but determinedly building up a local customer base. The same year, when it became clear that more funds and advice were needed for the Erply to expand internationally, they decided to try their luck and take part in Seedcamp’s event in London. Seedcamp, which is a London based early-stage micro seed investment fund and mentoring programme, was founded in 2007 by Saul Klein (previously involved with Lovefilm and Skype) to help European entrepreneurs successfully build technology businesses.  Slightly unexpectedly for themselves, Erply team won the Seedcamp’s business ideas contest and secured their investment of 50,000 euros – the first Estonian, Baltics and Nordic start up to do so. It was not long after when a technology blog TechCrunch described Erply as “the Skype of business software.” Investment rounds followed in London and in the US, and in 2010 Erply secured a $2m investment from Silicon Valley based Redpoint Ventures and Swiss based Index Ventures. That allowed Erply to hire a team in London and Silicon Valley and market the service in Europe and the US.

Move to the US

In 2010 they decided to relocate their offices and operations to US completely and have been based in New  York since. “It wasn’t easy to start in the US. We had to change a lot on our product and the retail business we are offering our software for, is actually pretty conservative and slow moving when it comes to new technology. ”, says Kris. “It’s not possible to conquer the world immediately with what we are doing. To gain a market share in Germany for example, we would need to hire German marketing and support specialists. Although the internet has got a global reach, it’s important to know the local conditions. That’s why we have so far been concentrating on the US, as the biggest market.” “When we first set our foot in the US, we had to compete with the likes of Microsoft, SAP and Oracle from the start – we couldn’t apologise that we are still a start-up firm and some of the functions on our software wouldn’t work yet – or that they only work for retail chains with 20 shops, not for example the ones with 100 shops. Luckily we had had an experience with few large retail chains in Estonia, that certainly helped” says Kris wryly.

Initially, Erply launched as a retail payment solution for small to medium sized businesses but have since expanded to bigger retailers and offer point of sale technology, inventory control, billing, business reporting, and custom barcodes. Their app gives retailers a quick overview of sold stock, as well as swift feedback about their customers. Additonally, Erply is cloud based, meaning that the retailer does not need to possess their own servers. Today Erply employs 35 people and has over 50,000 subscribers – from the 200 in 2009. Their biggest client in the US is a 500-store retail chain and their plan for future is…well, to expand. Their mentors include ex-president of Google and Seedcamp’s founder Saul Klein.

Kris as a senior startuper

Although running a barely 3 years old company, Kris himself is already seen as a potential mentor for start-ups in Estonia. He’s perfectly aware of the (well-deserved) positive hype which has started to surround Estonian (technology) start-ups in recent years. But he also thinks that there’s a long way to go for many to actually become successful companies in their own right on the international stage. “I have seen too many Estonian start-ups, including those taking part of Seedcamp, to stall at some point and not closing an investment deal for various reasons. Some of them think that their idea is so great that they deserve more than 50,000 euros (Seedcamp’s seed money) to start with, some of them are not keen to give away equity, some of them get sucked into pointless arguments about petty legal paragraphs with investors, scaring the potential investments away.” Kris is now getting more heated up: “My advice for fellow bustling entrepreneurs is this: try to close the deal and win your first seed money. Even if it’s just 50,000 euros, you can still do a bit with the money – but more importantly, it opens new doors and brings invaluable connections and therefore advice and experience, and may well lead you to secure substantial second round of investment, like happened with Erply. Do not waste too much of your energy and time contemplating, when a potential investor taps on your idea – before you know it, it has become an old idea and you’ve lost your chance!”

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