Why Estonia Is The Hub For Most Of The Successful Startups

‘Sorry as a service’ is a platform that helps companies to retain customers by sending apologies, optimizing the activities and reducing the number of agitated customers. Companies can predict churn, suggest actions to rebuild customer relationships and consequently retain the customer.

‘AddGoals’ works with the goal to help people reach their potential and achieve more in life. It’s about offering solutions to people for creating and achieving goals in a motivated environment.

‘Jobbatical’ is a platform for techies and creative people to reach employers around the world so that their skills can be borrowed for a particular period of time. It’s a meeting place where Jobbatical matches the skill sets of the techies with companies worldwide.

Besides the fact that these are start-ups, what is common between them? Where were Skype, TransferWise and Pipedrive born? All in Tallinn, Estonia, Europe.

How has this Estonian country of 1.3 million people (the sixth size of London) managed to drive so many start-ups and become a start-up nation? It is also referred as the start-up capital of Europe.

It has been pretty interesting to dig into the dynamics of their culture to understand how so many successful start-ups have sprung in Estonia.

Entrepreneur’s dream hub.

Besides being a tech-savvy nation, Estonia is entrepreneur friendly too. The country wants to stop the brain drain of entrepreneurs by creating a technological support system and give tough competition to Silicon Valley. Quite an ambitious dream but, the path has already been carved by some talented tech-savvy minds.

Support system.

• TED has declared that Estonia has more startup companies per capita than any European country. Estonians are backed by London and Silicon Valley based Venture Capitalists and Startup accelerators. Estonian start-ups have constantly delivered success with their great ideas and high performing teams.
• Estonian government is extremely tech-savvy, they have initiated a process through which you can register a company online within 18 minutes.
• The i-voting system gives the opportunity to vote via the internet.
• They provide access to public WiFi in restaurants, bars and hotels which isn’t password protected.
• Strong technological modification was built through Startup Wise Guys and Garage48.
• The home market is evidently small so they approached the global market to eventually create an ‘Estonian Mafia’.

What is ‘Estonian Mafia’? No, it’s got nothing to do with the crime. This term was first coined by Dave McClure, founder of Silicon Valley investment fund ‘500 Startups’. He was floored by Estonians during the Seed-camp Week finals in London way back in 2011. This term spread far and wide supporting Estonian startup companies.

Jon Bradford, the co-founder of British start-up accelerator Springboard, has a similar opinion about Estonians. He remarked that in each incubation batch they had Estonian start-ups. This phenomenon has made everyone wonder, how does Estonia manage to do this?

What can we learn from Estonian start-ups?

Observing and learning:

Estonia has bred many start-ups; Skype is the most revered. Although Skype was set up by two Scandinavians, the software development part was orchestrated by four Estonian programmers. It stands a base to learn new skills and inspire new ideas. It gave the confidence to many Estonians that though they belonged to a small place they can create great revolutionary products.

Playtech, a great company for gaming software development and Skype, both provided Estonian youth programmers and developers with share option right from the beginning. The result of this decision can be reflected in the Skype example; when it was sold to Microsoft these youngsters gained seed capital to pump in businesses started by them.

Think bigger:

Estonian market is small so start-ups have to look abroad. They think about how their can weakness turn into a competitive advantage. With a low population, limited market, location, weather conditions, some people thought nothing grand could be ventured into.

But, software experts thought otherwise it’s not about manpower rather it’s about arriving at creative and effective solutions to a problem. It helped them develop a market from the beginning. They think “How can I through innovation contribute to the diverse global market?” Just think about what Skype did to the world? They changed a lot of things about how we communicate; they impacted the world.

Start-ups in Estonia plan for global market and neighbouring territories. This involves research about what the potential clients expect to come up with relevant products. They don’t have the luxury to come up with half-baked products so their research has to be thorough. In Estonia, it’s a trend to look beyond borders for business and create globally attractive products.

Contextual innovation:

I use this term with reference to innovating on the basis of the context. Let me explain what I mean to say:

Estonia economically faced many challenges due to the Soviet rule where the older generation of entrepreneurs learnt to invent to make things themselves based on their needs or either repair things to become self-reliant and sustain in the long run.

This self-reliance has taught Estonians to cope up with challenges, survive and innovate in all conditions. Estonians have learnt to be sensible with money which makes them live a modest life while they invest resources in developing, creating and innovating business ideas.

We are a TEAM.

Estonia is a small country so the bonding between citizens is well built, they exchange information and stick together. There is an excitement about their common identity.

They deal with people whom they know while looking for investments, they assess money as well as competency (expertise in the field they are doing business).

Furthermore, the company should have contacts and be well connected. Only then, they would lay a bet and invest. It’s amazing how Estonia’s weaknesses have been transformed to its competitive advantage to herald a string of innovations and start-up companies.

A league of innovators has proved that approach to challenges opens up paths to breakthrough innovations. The magnanimity of challenges ain’t important; they are an indication that you have been blessed with an opportunity to ‘think different’.

(The cover image is the representational image).