Everything I Know and Think About Estonia
People ask me about Estonia every day.
It makes sense because everyone is talking about it: Wired, New York Times, Wall Street Journal, The Economist, BBC, The New Yorker, Forbes, Fortune, the World Economic Forum, UNESCO, and many, many, many more. Even I’ve been asked to talk about it in the media multiple times (1, 2, 3).
I decided to write a post that 1) summarizes everything I’ve come to understand about Estonia, and 2) share the names and resources that I recommend following to anyone that wants to learn more about Estonia (you can see the list at the end of the post).
My perspective about the present and potential of this baltic country comes from my personal history and current relationship with Estonia:
- I first started researching Estonia for a potential move in 2010, thanks to the suggestion of my mentor at the time.
- My ex-business partner lived in Estonia for years, and thanks to our conversations I started following Estonia’s tech and e-governance news closely since 2012.
- Moved to Tallinn in January 2015 to work very closely with Karoli Hindriks, one of Estonians’ most famous CEOs, in the early business development strategy of Jobbatical. I worked with them for a “6-month jobbatical” and we have remained friendly since.
- Became an e-Resident of Estonia (the first one from Argentina) back in February 2015, and was asked to present my story to government officials as a case study during the early phase of the e-Residency program.
- Set up my company in Estonia via LeapIN in 2016.
- Met Kadri Timuska, my former loving partner, in early 2015 and we spent time living together both in Buenos Aires and in Tallinn. Since June 2018, Kadri and I are co-founders of Estonia Experience, where we help international entrepreneurs, executives and leaders visit Estonia and see a mix of local organizations that we believe represent the country’s innovations.
- In May 2019, moved to Estonia with a Startup Visa to build a startup.
To be clear, I’m NOT the best person to talk about “life in Estonia”; there are plenty of expats that have been living there for many years.
I’m also NOT the best person to talk about the opportunities, challenges and future implications of Estonia’s policy and e-services; there are many experts that understand the field much better than I do.
However, I think I can offer a valuable opinion on what makes Estonia special compared to other entrepreneurial ecosystems.
Before diving into what’s different about Estonia, I feel it’s important to share some of my past experiences with other regions that are also considered “innovation hubs”:
- San Francisco (US): I’ve been to SF more times than any other city in the world, outside of Argentina. Even though I never lived in Silicon Valley, I’ve spent a lot of time networking, exploring and understanding what makes it special. I’ve had the most intellectually stimulating conversations of my life in the Bay Area, home to many of my closest friends and allies in the world.
- Santiago (Chile): I moved to Santiago to start a business shortly after Startup Chile got started, and lived in Chile for two years. I spent a ton of time discussing the beginnings, challenges and vision of this government program with some of its founders and first “poster boys.”
- Buenos Aires (Argentina): As a local “porteño”, this is the city I’m most familiar with. In case you never thought of Buenos Aires as an entrepreneurial city, it houses four of the six “unicorns” of Latin America (coincidentally, as many as Estonia).
Of these three regions, I see Silicon Valley as the only true innovator, which is why the whole world is trying to emulate it. Most global attempts to replicate it, Buenos Aires and Santiago included, end up as top-down approaches with much paraphernalia and many real estate initiatives but very little true innovation. Argentina’s unicorns, for example, are mostly replicas of existing companies (Mercado Libre came after eBay/Amazon, Despegar came after Expedia, OLX came after Craigslist, etc.).
Carlos Baradello, ex-Associate Dean at the University of San Francisco, says that “the Valley’s entrepreneurial mindset has been 165 years in the making”:
“Silicon Valley probably could not have invented itself today. By many measures, Silicon Valley’s genesis was a fluke of nature. The Valley flourished without a master plan and without a blueprint from enlightened bureaucrats. Instead, it resulted from the aligned self-interest of multiple stakeholders, a favorable geography and climate, and a series of historical circumstances.”
By trying to become more like Silicon Valley, most countries end up with a mix of events, contests, grants, associations, accelerators, legislation, workshops, coworking spaces and “innovation parks” (where the real winners are the real estate owners), etc. These things are the makeup, the facade of an ecosystem, but they are of little relevance when it comes to its DNA. Alas, governments are incentivized to boost projects that will yield results quickly, no matter how inconsequential, so they can leverage them to impress their constituency.
To be clear, I’m not saying that these initiatives are all bad (e.g.: the economic and PR impact that Startup Chile had for Chile is undeniable), but they don’t install systemic long-term change in a culture’s values and mindset in any discerning way. Andrew Nicol of TripExpert says that “Chile is essentially trying to buy a start-up community that does not exist organically.”
The result for most countries trying to become more innovative is a disproportionate amount of time and money invested in the superficial, which distracts from grasping the key perspective to learn from a story like Silicon Valley: the ONLY way ANY place can become truly innovative is 1) for ALL its stakeholders to align towards a vision, and 2) leverage what makes that place unique.
Which brings me to Estonia…
Estonia is the first time in my life where I experience something truly different (I imagine visiting Estonia now must feel a little similar to going to Silicon Valley during the 70s and 80s). In the words of Marten Kaevats, National Digital Advisor of Estonian Government:
The proliferation of tech-gadgets has become a goal in its own right. Fortunately, Estonians have proved otherwise; building a digital society is about a culture of openness and trust, rather than gadgetry.
Estonia is different from places like Buenos Aires and Santiago, not because of its technology and “gadgetry”, but because, like Silicon Valley did in the 20th century, it focused on its strengths and unique opportunities:
Chance to “reboot”
Most countries are always “in motion.” They are looking to move forward while still dealing with the baggage of political, cultural and social disagreements of the past. This baggage can be as “light” as the country being divided between different parties (as it has been the case for many years in both the US and Argentina until now, for example), or it can be as terrible as slavery, dictatorships, or war.
But all baggage slows down, and the bigger the country, the harder it is to stop once it’s moving. As long as the past influences a country’s agenda for the future, it will affect the speed and possible directions than it can take. It’s good to learn and honor the past, but many countries have to constantly negotiate and compromise the future in order to appease egos, emotional wounds, and ideologies that once served a purpose but don’t anymore.
Rare is the situation where a country can “pause” and ask itself “what kind of country do we want to be?,” but that’s the situation that Estonia and other countries had after the Soviet Union crumbled. While the circumstances were not easy, Estonia turned a crisis into a great opportunity: they regained their freedom to govern themselves, and with very little baggage to limit their options.
Digital adoption as the only way out
After the Soviet Union, the country was underfunded but needed to find a way to provide services for its citizens. The usual “solution” of public spending in excessive offices, staff and paperwork wasn’t realistic. As it often happens, these financial constraints forced Estonia to come up with an alternative, and so they committed to digital. From Wikipedia:
In 1991, Estonia restored its independence as a sovereign nation, defeating the Soviet occupation. Prior to this, there was little in the way of technology. Under half of its population had a phone line. Following independence, the first Prime Minister Mart Laar helped push the country through a period of modernization, establishing the foundation needed to bring the country into the digital age.
Digital reform followed through to the present. Early during the reform Estonia refused an offer from Finland to give it its old analogue telephone exchange for free, electing instead to build its own digital phone system. An initiative to provide schools with computers succeeded in granting every school in the country with internet access by 1998. In 2000, the government declared internet access to be a human right, causing its spread into rural areas.
Estonia turned a constraint into an opportunity, and it explains why thinking digitally is the default now. The technologies that we see now coming from Estonia are the result of a philosophy decades in the making. It’s their default way of solving challenges.
Small size (for a country)
A common argument one hears about why other countries cannot become as digitally efficient as Estonia, is that Estonia is a very small country (total population of 1.3 M), and therefore can try and adopt things faster than countries where there’s larger consensus and changes to be made.
I’ve heard a few influential people involved with e-Estonia disagree with this, and claim that size is not an impediment, citing examples like India’s Aadhaar, the 1.3 billion people country’s digital identity system (which has many critical flaws).
My conclusion is that both perspectives are incomplete, but necessary to get to the truth.
To believe that size is irrelevant is inaccurate. But to simply say “Estonia is small, so we can’t do as they do” is lazy.
The key is to stop asking “How do we become more like Estonia?” Most politicians ask this question because they want a top-down short term solution (and get the credit if they succeed). Instead, they need to ask “at what scale can we change fast enough?”
If you’re Iceland with 330.000 people, you can start at a country-wide level. If you are Finland with 5.5 million, maybe. But if you are Argentina with 45 M, Germany with 82 M, or the US with 325 M, you are setting yourself up for failure if you want to force change down the whole system.
For example, the province of Neuquén in Argentina, which has half the population of Estonia, has already succeeded in implementing the X-Road and digitizing the services for its citizens. Argentina’s national government should leverage Neuquén’s success and invite them to share with other provinces how they can also become digital (bottom-up approach), but instead it chooses to ignore it and keeps failing to implement a country-wide digital system that has buy-in from every stakeholder.
Pride
One of my favorite questions to ask people from different nationalities is “What does it mean to be {insert nationality}?” You usually hear a vague mix of positive and negative attributes, like “hard-working”, “happy” or “entrepreneurial”, but every now and then, you hear something specific… Something unique that gives them pride.
Singing, for example, is such a thing for Estonians and other baltic nations. Music and song are ubiquitous in Estonian culture. It sometimes feels that every single Estonian has been blessed with a beautiful voice (they remind me of Colombia, since every Colombian seems to come to this world knowing how to dance).
Events like “The Singing Revolution” and the Estonian Song Festival are examples of the power of music to unite them as a country.
Technology and startups are now another source of pride for Estonians. In 1996, the “Tiger’s Leap” project was created to invest in the country’s computer and network infrastructure, with a focus on bringing Internet and computer labs to all Estonian schools. Later, the birth and acquisition of Skype by Microsoft for US$ 8.5B in the 2000’s kicked off the tech startup movement. It also helped that the Skype founders reinvested their profits in the country.
Since the new valuation of Taxify, even the president Kersti Kaljulaid is showing how proud she is of her country’s startup scene:
Estonia is 1.3million people and we have 4 unicorns. There are no other so small countries in the world with 4 unicorns today.
Estonia is now a country that wants to show the world how to protect and promote entrepreneurship and technology education. With the global recognition they are receiveing, it seems to be fueling them to work even harder.
The typical conclusion I hear people say after learning all this is “we must invest more in entrepreneurship and education!”
That’s the wrong conclusion. Just like their singing culture didn’t come from expanding the budget of the Ministry of Culture, their embrace of entrepreneurship and technology education didn’t come from investing more money in buildings and government programs…
They got to where they are, and they move forward as fast as they do, because entrepreneurship and technology are part of their identity.
It gives them pride to say “this is who we are, this is what we do well, this is what unites us.”
It took me a long time and lots of international travel to appreciate the importance of national pride. I understand now that there’s a healthy amount of pride; enough to bring people together towards a vision, but not so much that it closes itself or looks down upon other cultures and ideas.
For example, the US used to have the right amount of pride but now the country is divided between those with too little and those with too much. Argentina’s patriotism, on the other hand, is shallow: we are expected to come together around symbols (a flag, a hymn, a political party, or the isolated success of a few extraordinary individuals), as opposed to daily actions and beliefs that we all practice and can be proud of.
It seems Estonia struck a good balance: “let’s be artistic and technological, but let’s learn English and boost programs like the e-Residency, startup visa or digital nomad visa to attract talent, partners and ideas from other cultures.”
If you want to learn from Estonia, I think it’s important to ask “what is everyone in our country proud of? What can bring us together?”
Why should Estonia matter to you, and why now?
Innovation doesn’t happen equally everywhere. On the contrary, it’s a great example of Pareto’s Principle.
If you think it’s important to be around innovation, first you need to accept that it’s statistically more likely that it’s NOT going to happen where you live.
Second, you need to decide what innovations you want to work on, or learn from, and where it’s more likely to occur.
Estonia is a global leader of innovation in certain areas, such as a digital governance, the meaning of nationalities, borderless banking, etc.
But if you want to hear stories about how to build the closest thing to Silicon Valley, maybe go to Israel. If you want to experiment with education, maybe go to Finland. If you want to innovate in the hospitality industry, maybe go to Las Vegas.
I believe the reason Estonia is so popular today is because what they are doing is relevant to everyone.
No matter whether you live in a big city or a small town, it’s very likely that you’ve had to deal with some level of bureaucracy and inefficiency from the institutions you belong to. Every time a citizen must interact with his/her government or bank, he/she feels the impact of their negligence or lack of technological adoption. This translates into wasted time and productivity for each citizen, augmented by the knowledge that things could be better!
Meanwhile, Estonia’s X-Road technology, which no other country has running properly yet, allows 99% of state services to be done online, and has saved Estonians an estimated +800 years of working time last year alone.
While many countries claim to be following Estonia’s steps, there’s only a handful, like Finland and Iceland, that have shown concrete actions to replicate its success (and empower each other in the process). After having many conversations with experts around the world, I’ve come to understand that while many governments tell their people that they are becoming digital, it is only a partial, diminished version of Estonia’s philosophy and interoperability. Most of these attempts seem to be limited because of inner politics, demagogy, lobbyists, and all the other usual suspects that slow down governments’ progress.
I recently heard a concept in Spanish that roughly translates to “country fatigue”; every time the systems are down, every time we have to do a queue, or come and go with different papers, or a certain office is closed… We get more and more tired of living in that city or country.
The more things don’t work like they could or should, the more stressed, pessimistic and skeptical people get. Eventually, people are simply less happy and less invested in their country.
The reason Estonia matters so much right now is because, if the rest of the world listens to what they can teach us, everyone can have a more convenient, relaxed, productive and happier life.
What I choose to ignore
For all the praise that I’m giving to Estonia, there’s a couple of points I’d like to mention that I tend to hear but don’t like.
First, I would be careful of letting the press, global rankings, international awards, or other forms of top-down public recognitions form your opinion of Estonia (or any other place, for that matter). There’s usually a number of hidden incentives, biases or agendas guiding most forms of public acknowledgement.
Second, Estonians tend to proudly share many “per capita” statistics, such as “most startups per capita” or “most unicorns per capita” or even “most olympic medals per capita.”
The reason I’m not a fan of these metrics is because some people use them to imply that there’s an even distribution of above-average entrepreneurial qualities among Estonians, and I’m not convinced of that.
But more importantly, I don’t think it matters; the whole point of an ecosystem is that it fosters innovation because 1) its members share a set of values and priorities, and 2) it attracts foreign talent. Not because everyone is a great innovator. The United States is the most entrepreneurial country in the world, but it has many more non-entrepreneurs than entrepreneurs, and it didn’t stop them.
It’s not necessary to have an equal distribution of entrepreneurship; just a few talented and crazy visionaries AND a context that supports them or gets out of their way.
What does the future hold for Estonia?
I don’t know what’s going to happen, but as I said before, this is the first time I’m truly excited to see what’s coming next for and from a country. For example, the e-Residency program’s potential for creating a “virtual state of digital citizens” sounds fascinating.
Maybe everything that Estonia is trying will crash, not scale, or stop improving… But how can we truly move forward without trying things that may fail? If there’s one thing where Estonia is SUCCEEDING is at pushing ideas and technologies forward in important areas of life.
I hate predictions, so I’m not trying to tell you what will happen.
I’m simply inviting you to celebrate and learn from one of the few places in the world where one can breathe optimism.
UPDATE (February 17th, 2019)
After completing another edition of Estonia Experience, wanted to add two remarkable quotes:
- On Estonia’s commitment to the digital and global path of innovation and entrepreneurship: “There was no fallout or plan B for Estonia, which explains why they are still working hard to be great.” — Tom Pooley, from Funderbeam
- On Estonia’s belief in programs like e-Residency: “Estonia survived in the past because of international friends, and seeks to grow and develop through international friends as well.” — Adam Rang, Chief Evangelist of e-Residency
RESOURCES
Below is a list of people and platforms I recommend, but if there’s other individuals or resources that you think I should add, feel free to email me (me@carlosmiceli.com) so I can review them and add them.
Influential People
Kersti Kaljulaid: President of Estonia — Twitter
Toomas Hendrik Ilves: Former President of Estonia (2006–2016) — Twitter
Kaspar Korjus: Managing Director of e-Residency program — Linkedin, Twitter
Siim Sikkut: Chief Innovation Officer of Estonia — Twitter
Marten Kaevats: National Digital Advisor of Estonian Government — Twitter
Taavi Kotka: First Chief Innovation Officer of Estonia and co-founder of e-Residency — Website, Twitter
Karoli Hindriks: Founder and CEO of Jobbatical — Twitter
Allan Martinson: Estonian tech entrepreneur and investor — Linkedin, Twitter
Ivar Siimar: President of Estonia Business Angel Network — Linkedin, Twitter
Riho Oks: Founder of Roksnet — Twitter
Kaidi Ruusalepp: Founder and CEO of Funderbeam — Twitter
Kristo Käärmann: Founder and CEO of Transferwise — Twitter
Special mention to Gustavo Giorgetti of Argentina for being the only person to successfully implement the X-Road technology and principles in a Latin American government.
Organizations and Platforms
e-Estonia — Website
e-Residency — Website, Blog (for all your e-residency questions!)
X-Road — Website
Digital 7 — Wikipedia
Nordic Institute of Interoperability Solutions — Website
Stakeholder Community Once-Only Principle for Citizens — Website
Work in Estonia — Website
LeapIN — Website (my personal choice for running my online business in Estonia)
Estonia Experience — Website (for those interested in visiting Estonia’s startup ecosystem and learning firsthand what makes it special)
ACKNOWLEDGMENTS
Thanks to Kadri Timuska for being my main teacher of Estonia’s culture and lifestyle. Thanks to Josh Kaufman and Antonio Manno for telling me about Estonia’s attractiveness early in my life. Thanks to Karoli, Ronald and Allan for taking a chance on me to help Jobbatical, and inviting me to experience your beautiful country. Thanks to Maria Lamp and Dea Martinjonis for your friendliness when I was new in Tallinn. Thanks to Kaspar Korjus for letting me be involved with e-Residency early, and follow its amazing progress all these years. Thanks to all the companies and hosts during Estonia Experience, which gave me all sorts of unexpected insights about Estonia’s potential. Thanks to Joonas, Keidi and Kätlin for being good ambassadors of Estonia around the world. Thanks to Liisa, Kaia, Eliisabeth, Kullar, Maria, Gelly, Tõnis, and the rest of Kadri’s friends for your generosity and hospitality in welcoming me to your fun activities over the years; they’ve taught me more than you can imagine about what makes your country so lovable.
