Sten Tamkivi: Estonian startups are actually very patriotic

Sten Tamkivi. Photo: Sander Ilvest

Sten Tamkivi, an entrepreneur and one of the most significant spokesmen of Estonia’s startup sector, said in his interview that startups are constantly seeking for balance between success and bankruptcy. “It is therefore normal that they are trying to present themselves bigger and better than they actually are. The line between boasting and lying is thin,” he admitted.

You recently changed the name of the club joining startups into Founders’ Association so as to turn more towards the Estonians. Why do you want to be liked by the ordinary Estonian people?

I would point out three reasons. If some smart boy or girl from Elva or Häädemeeste graduates from secondary school and decided to study programming, his or her family need not understand the point of it. We would like to explain that there is actually working economy behind computer sciences, which needs their contribution.

Another example. A car repairman operating in Jõgeva county faces the difficulties of entrepreneurship every day, he has to make ends meet. Then he reads in the news that some startup guys are raising millions without any problems and fail, but no one is responsible. The Jõgeva entrepreneur is confused, he cannot understand it. You have to explain that if someone is doing something highly technological and innovative the need for money is much greater.

Thirdly I would underline the relations with politicians. The whole previous year was characterized by the rotation of ministers of IT and I am not sure that they actually knew what sphere they were heading. The resignation of Kaimar Karu was the most frustrating. He was a professional of the field who had settled down on his post and knew what he was doing. When they dismissed him, there was much sighing – why again?

Have you met with the present IT minister Raul Siem? What is your impression?

I have not met with him, but Martin Villig (co-founder of Bolt) has. I understood that the meeting had been constructive. Economy can be managed rationally – by looking where red tape should be removed to make it easier for the companies. One can manage ideologically and say that outside labor is bad, even if you can see that they contribute to our economic growth. The third option is to manage simply very incompetently so than nobody understands what is going on. It seems to me that the present minister it at least trying to begin with the first option.

Do you feel that startups have begun to irritate people more recently?

I cannot say whether it happens now more than previously. One reason is probably that the startups have grown larger and are more in the news. As far as the list of Estonia’s wealthiest people goes, some 10 – 15 years ago there were respectable gentlemen with neckties who privatized factories, produced food or ran seaports. Now there are more and more young guys in sneakers who write code.

When Bolt asked for loan or guarantee from the state this spring, it did bring along some sort of class hatred in the society.

It was a very interesting case. What actually happened was that the state asked the entrepreneurs what kind of help they would need. Bolt answered calmly that they need to make a loan of 50 million or need a guarantee. And then the enterprise and its managers were beaten up, figuratively speaking. Yet the government grants money to shipping (100 million loan to Tallink) and now to real estate (40 million loan to Porto Franco), which should raise much more questions.

I would not blame the society for that hatred. Unfortunately, there are people at power in today’s Estonia whose methods of operation are provocation and turning back progress. They forbid foreign talents to come to Estonia. They do not support social values.

I can understand that people have different values. But the leaders of the state should also understand that innovations which increase the wealth of Estonia’s residents and GDP are useful to us. Everything new you do not understand should not be labeled and ignored. A politician may think that apps make no sense compared with tractors and factories, but can they understand that we are talking about 500 highly paid jobs which need not be in Estonia?

Are the politicians, the father and son Helme, opposing startups?

I cannot see that they are opposing us systematically. But I can feel that when there is a startup on one side and a representative of the old economy on the other, they will always choose to help that other. This is their ideological position and they have the right to think like that.

How much are the startups inflated? Is cheap money keeping some startups alive which do not deserve to survive?

There is some inflating involved all right. But you have to understand that startups are building products or services which must be ten times better than the ones available in the market. They are skating on very thin ice; they balance on the line between success and bankruptcy.

It is psychologically normal in such a situation that firms are trying to present themselves as being bigger, better and stringer than they actually are. What they are saying is always some steps ahead of reality. I agree that the line between boasting and lying is quite thin.

How homogeneous is the Estonian startup community? Do they all think like you do?

I would say that it is increasingly heterogeneous. We decided in the Founders Association that we shall not be a political organization but will attempt to provide the politicians with some input. We include the voters of Isamaa and Reform party, probably also of the Social Democrats and EKRE. We would not enter the territory where people would have to choose whether to be with us or with the political party.

You keep saying that Estonian technology firms may close up here and move away if they do not like it here. But many have not done so.

I dare say that it is Estonia’s great fortune that very many of our young entrepreneurs are almost irrationally patriotic! I frequently meet founders of Latvian and Lithuanian technology firms, who do not want to stay home, they want to move to London. The dream of a young entrepreneur in St Petersburg is to be in New York. An Estonian founder says that he would like to open an office in San Francisco in a year but it is also very nice in Saaremaa. They are deeply rooted here.

Continuing on the subject of national symbols, I think we should ask whether the Estonian flag is only good for processions with torches or should we seek for moments which join us and make us proud like the Olympic victories in the 1990s. Strictly speaking, our top startups are presently winning Olympics every year in international business and innovation.

Are the investors more careful after the corona crisis and more interested in firms able to earn money rather than just grow?

It began even before the corona. Estonian startups have an international reputation of standing on solid ground. When an Estonian entrepreneur is applying for money, he has already thought about the business model. He knows how to earn money. We have more common sense.

Take Bolt, for example. Although we think in Estonia that they are burning money, it is nothing compared with their competitors Uber, Didi or Lyft. Bolt spends five to ten times less money to earn one euro than its largest competitors.

I therefore believe that the Estonian startups and traditional firms are much more similar than the Estonian startups and foreign startups.

Is your ambition to build up another powerful future startup or will you continue as an investor and a spokesman of the sector?

Starting from the end I would say that we shall rotate spokesmen continuously in the association. I was the president last year, this year it is Martin Villig. Change is important.

My wider philosophy is that I want to bring along changes in the society with my action. Starting from the times of Skype it has been the open and borderless world. The ability of people to move freely across borders and work in places they like. I shall certainly continue on that front, through charity, Topia (a talent mobility platform) or some new enterprise.

Was the managing of Skype the greatest and coolest thing you have done in your life?

So far yes, but I do not consider it final. On the other hand I no longer use Skype in my phone or computer. The connection with the product has gone but ties with the people and experience are still there. And the idea that you do not have to leave Estonia to communicate with the world and do great things still fascinates me.

I attended the funeral of Toivo Annus (one of the founders of Skype) a couple of weeks ago. I mat with dozens of people from the early days of Skype at that tragic occasion. Although much time had passed I immediately had the warm feeling that these are the people I could go to the battle any day.