I met with cofounder of Starship and Skype Ahti Heinla at the Tallinn Creative Hub during the Robotex fair.
“Years ago, I thought I would take my robot to the fair and win it outright. In truth, I was eliminated in the first round,” Heinla recalled.
Now, his startup has reached a point where Starship’s platform allows residents of Tallinn’s Mustamäe borough to have robots deliver their groceries from the nearby Kadaka Selver supermarket.
How similar are the robot you built for Robotex back in the day and the modern Starship delivery bot?
They are nothing alike. They are built for completely different things. The first to play football on a field of 3 x 6 meters, the other for delivering groceries.
Starship’s delivery robots will be taking groceries from Kadaka Selver to people’s doors, but we have seen them out and about before. How have they fared in various tests?
We have tested the robots extensively to get as much data as we possibly can. We have been forced to make a lot of changes as developing robots is complicated. It takes time to reach a point where you can avoid mishaps. At first, our robots stopped where they shouldn’t, drove too quickly in some places and too slowly in others, failed to recognize when they had to cross the road etc. Things have improved a lot since then.
How will these deliveries work? How many orders can you take?
We are working an area of just a few square kilometers. Our service does not cover the entire city because our robots move at the same pace as pedestrians. If today, people are used to waiting a day or two for the delivery when they shop online, our robots will bring them their shopping in the same time it would take to walk to the supermarket. It takes half an hour for groceries to arrive in England, where we are already offering the service. We are virtually substituting trips to the grocery store. People would order more online today, but most don’t because they are busy. If you run out of milk today, it is not enough to get a new carton the day after tomorrow.
An e-commerce executive once told me that people under 40 cannot plan for more than one week in advance. Older people are used to planning, but the younger generation is unwilling. I also do not want to plan ahead. I want what I want to be on my doorstep in 30 minutes. Not tomorrow or the day after that.
Robots are not cheap. What is the price of the service?
Robots really aren’t cheap, but our fee is €1.5 per delivery. That makes us cheaper than the traditional alternative.
How much can a robot carry?
Up to 10 kilograms, enough for a few bags of shopping.
Your service will only be available in Mustamäe. When will you go nationwide?
Our goal is to cover the entire country. Everything depends on how we’ll do in Mustamäe and what changes will be needed. We need cooperation with the local community to get feedback we can use to improve the service.
I would prefer not to put a date on expansion plans. It will certainly not happen in a month, but if we are not busy all over Tallinn in a year or two, I will be a little disappointed.
You are not the only company on the market. Competition is stiff, and copycats are spoiling things. How are you holding up?
Hannes Tamjärv once said that if you copy your competitor, you will never overtake them. I believe that to be true. Even though we are not the only company in the world working on delivery robots, we have definitely come the farthest. We are the only company to have robots offering the service on a daily basis.
Has anyone been interested in buying your robots? How much does a delivery robot cost, and what are maintenance costs like?
There have been inquiries, but that is not our business model. A robot is too expensive to serve a single person or family. It would be a luxury item. I believe our current model makes more sense.
It costs thousands of euros to manufacture a robot. Maintenance cost is a very good question as we are actively working on optimizing it, and it is an important part of development. The consumer does not see maintenance expenses, but keeping them down is vital for the business side of things. One and a half euros for a delivery is not a lot and cannot pay for much maintenance and other costs.
In addition to maintenance, labor expenses are also considerable for startups. How have salary advance pressure and labor shortage affected Starship?
We are the most exciting tech firm in Tallinn. Especially for engineers. Everyone wants to build robots. It is exciting! Salaries are growing in the IT sector but so is professionalism. IT development has become a lot more professional in the past 5-10 years. We were all much more amateurish back when we were building Skype 15 years ago.
Is Skype still your greatest success or is Starship catching up?
Skype is bigger, looking at how far it has come. Starship is not a billion-dollar company yet, while its potential market is bigger. A situation where we would handle all manner of deliveries on a global scale would make us a hundred billion-dollar company, and that is precisely what we’re aiming for.
Do you still use Skype?
Less and less. Mostly because, as a software engineer, I use Linux, and Microsoft and Skype have decided not to contribute to that ecosystem. Skype has become inconvenient for me.
You have said that you regret not investing in Transferwise. Are there any other startups you regret not being involved with?
Hindsight is 20/20. The thing with Transferwise was that I realized it would be big already when it wasn’t. And I still didn’t invest! That is where I have to scold myself.
Big traditional companies are increasingly interested in our startups, and many, Starship included, have received proper investments in recent years. What is that a sign of?
A major shift has taken place inside the past decade. Major European companies have found themselves in a situation where business is thriving, they have a lot of money, but they can see the rise of startups becoming a threat to their business model. Traditional companies realize that while they are still doing well today, it might no longer be the case in a decade or so.
They have decided to invest in potential growth. We have received an investment from Daimler that fits perfectly into this pattern. Daimler has also invested in Taxify. Others are thinking along the same lines.
That was not the case ten years ago. Back then, corporations looked at startups as if they were mosquitoes that mammoths could simply step on. That attitude has changed by today. They realize those tiny mosquitoes have serious growth potential.
You’ve been associated with a lot of startups. What has been your greatest failure?
Things regarding which I’ve wondered why the hell I bothered launching them when it was clear from the first that they would fail. I have had several ventures where I met up with a few people, we drew ideas and schemes on a blackboard, hired a few more people only to realize it won’t work a couple of months later.
Whereas companies like Skype or Starship started the same way. A bunch of people in front of a board. You cannot tell whether a project will work or not on the first day.
How to recognize failure? No one wants to just give it up.
Experience. Unfortunately, there is no rule of thumb for recognizing good projects. The market will usually decide. If investors are not willing to invest, it’s not working.
You’ve said that startups form the backbone of economic development in Estonia. How could the state better support them?
One way is to remove obstacles and red tape startups have to navigate. Politicians have often come up with initiatives for tech campuses and real estate investments. In truth, real estate counts for little.
Everything depends on the people you have. If you have them, they can work out of a garage if necessary. If someone wants to spend money to liven up startup innovation, I believe the best national investment would be funds.
Head of wanted ads portal Jobbatical recently wrote on social media how her American friend was attacked in the street. Have incidents like these not begun to speak against Estonia in the eyes of foreign specialists?
Those kinds of things happen everywhere, and a single incident will not dissuade people from coming here. Foreign specialists generally want to come to Estonia. We are hosting a person from a reputable U.S. university who wants to move here to work at Starship. People have moved here to work with us from Germany, three people have come from Australia. People want to come.
Estonians are afraid we will see masses of people from a different culture come here and smother Estonian culture, but that is not true. We saw slogans against mass immigration on Toompea Hill recently. I believe that all Estonian parties and a lot of people are against 200,000 refugees coming to Estonia.
Elections are coming. Do you already know who you are going to vote for?
I haven’t decided yet. I will make my choice between three parties. I sport a liberal outlook, and that already settles some things.
Kristjan Rahu sold district heating group Utilitas last week and paid every one of his employees €50,000. What is your opinion of that, and would you do the same?
Employees of Starship have share options, meaning that we have already agreed that is roughly what will happen. When a startup is sold, it is made sure everyone who has contributed to its success will get their share. Whereas this practice can be utterly disproportionate at times.