Estonians in the USA

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!”

How our age defines where we like to live: 25 – New York, 35 – London, 45 – Zürich

From time to time a magazine or a think tank publishes a study or survey, comparing the cost of living for different cities. In recent years, Zürich has come up on the number one spot invariably, and as more expensive than for example London or New York. Consequently, I have been getting questions from various parts of the world in a line of “Can you afford to take public transport anymore or do you have to walk to work?” and “Would I need a second mortgage to be able to eat at restaurants there?” I would like to address these concerns and explain why Zürich is expensive and why it is a good thing – and finally also put the discussion of New York vs London vs Zürich in bed once and for all.

Why is Zürich so expensive?

London commuters fear strain on the trains

Zürich is expensive for one simple reason – labour and service here is expensive, because people get paid a lot. In fact, another survey shows that the highest salaries in the world also happen to be in Zürich. Now, because almost every product or service we see around us is touched by human labour at one point or another – whether explicitly as in taxis in the form of cab driver pay, or implicitly in groceries in the form of transportation costs and check out girl salaries – everything you can buy, costs more money here. The good news is that the extras seem to be going to service staff, and everyone seems to be happy.

To illustrate this story, I recall one of the first occasions when my wife and I visited Zürich and ate at a small restaurant in downtown near Münsterbrücke. We could not help but to notice that the entire floor of about 10 tables was serviced by only one guy, who was not only taking orders and cleaning the tables, but also processing the payments. I finally pointed out to him that in New York or London there would be probably five people doing his job. He replied that it is only him here, but luckily he also gets paid five times as much. That is probably true, as people immigrating to mega-cities are willing to work for almost nothing and sometimes tend to feed themselves only by looking at the incredible skylines those cities have to offer.

Expensive is good – optimising on constraints and valuing time

One of the least recognised benefits of expensive cities is that they teach you how to optimise both time and money (which often amount to the same thing). When things are expensive, you begin questioning if you really need them, and as a result you notice collecting and consuming less “rubbish”, which in itself is a good thing -one could argue.

Because time is expensive in expensive cities, people do not hang around or loiter there aimlessly and idly on the streets. They are also more punctual, as they begin valuing not only their own time, but also that of the others. Then it should come as no surprise that when they measured the speed of postal clerks or the punctuality of trains in a study quoted by the book A Geography Of Time: On Tempo, Culture, And The Pace Of Life, Zürich postal clerks and trains easily came up on top.

Consequences of expensive cities – skinny people in large spaces

One of the consequences of living in expensive cities is that people find it too expensive and tend to stay away from them. As a result, there seems to be a lot of space – for instance, real estate here is less expensive than in many densely over populated mega-cities like New York, London or Hong Kong – but on the other hand food is expensive. One of the clear consequences of this for example is that people in Zürich tend to eat less and are skinnier but live in bigger spaces, whereas people in hyper-cities like London tend to be fatter and live in smaller spaces. A casual visit and a glance at the street picture of these two cities will certainly confirm this observation.

Where should I live then? 25 – New York, 35 – London, 45 – Zürich

A natural question arises that if some cities are more expensive than others, where should one live if you are an expat and if you can choose where in the world to live? The answer is that it depends on your values, which in turn depend mostly on you age.

To add a bit of colour to this argument, an older British gentleman living in Zürich once made an observation that your value system and your preferences for certain cities will change over time. He summarised it with a simple expression: 25 – New York, 35 – London and 45 – Zürich, which I thought is quite catchy and quotable.

The reasoning is that in your twenties you want to be in a place like New York, which resembles a giant night club, thronging young people who live and party as though Friday is the last day of their life, and on Mondays begin working like it is the first day of their life.  As you grow a bit older, you realise that there are other things besides living in a compact grid and being able to attend multiple gallery openings in a single night and so you move to London which is a bit more serious place. Finally, as you graduate to the later part of your youth in your forties, you want to live in a place where you can also raise a family, have a lake view, be close to nature and have a bit of breathing space.

There are many expats that have certainly followed this path.

I

Cover photo: Zürich.

Pictures: Wikimedia Commons.

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