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Inventive Estonia : The Most Connected City in Europe

Last Summer, I found myself on a business trip to the most connected city in Europe; a place listed as one of Fast Company magazine's "Fast Cities 2007". I was in Tallinn, capital of the Baltic state of Estonia.

Tallinn, EstoniaTallinn, Estonia

Wandering through the surprisingly beautiful medieval city centre, my guidebook seemed to lack any directions to Internet Cafés. It turned out there are none, because wireless service is ubiquitous and mostly free -universal Net access is actually guaranteed by Parliament, the Riigikogu. In addition, WiFi is free on commuter trains and drivers pay parking fees by text message. This must be a lucrative source of revenue, because the city centre is now full of the highest specification Eisenbahnwagen, competing for tyrespace in the narrow cobbled streets.

I was on the shores of the Baltic as the guest of Connect Estonia, an organisation founded at Tallinn University of Technology to create commercial links with the rest of the world. My mission was to talk about the Bootstrapping approach to developing businesses, since Estonia is teeming with youthful talent but recognises that not all of it is yet on the radar of the venture capital industry.

 

Skype, of course, actually enables some of that international grapevine, via its internet telephony services. It's the big technology success story in Estonia. Hardly surprising, given that it was recently bought by eBay for $2.6 billion.

Skype's chief architect, Ahti Heinla, and other senior developers are Estonian. They've reinvested their kroons in technology plays through seed investment vehicle Ambient Sound Investments. Their holdings range from semiconductor fabrication to remote data collection, sensor-based electronic instruments and e-commerce software.

Generally, there is now an air of economic activity and entrepreneurialism in Estonia which would have been unrecognisable even 20 or so years ago...there was no money around then, smart or otherwise. The whole place was still in the grip of Soviet style bureaucracy; with corruption, poor communications, unreliable infrastructure and ‘eccentric' business etiquette.

The Estonian people only freed themselves from the Soviets in the "Singing Revolution" which ended in 1990. This passive resistance involved singing folksongs as a sign of national identity: a protest in defiance of a ban on such activities.

Tallinn was hosting a world cup qualifier during my visit and the town was full of raucous, but well-behaved, England fans whose choral perfomances would have rated null points even on Eurovision. At that time, there was an ongoing argument about a heroic-genre statue of Soviet soldiers which had been quietly relocated. Some said it commemorated the red army's victory over nazism, others that it was a symbol of Russian domination.

Whichever is the case, there is certainly a lingering tension between the Estonians and the Russians who were left behind when the singing quietened and the tanks rolled back across the border. Even now, ethnic Russians may find it difficult to get certain jobs because of the requirement to be fluent in Estonian. Pretty much everyone I dealt with, though, had studied a variety of languages, including English and German, for a decade or so at school.

It must be odd for the population to be suddenly living in a NATO country (as well as a recent member of the EU). You can still see cyrillic letterforms in peeling paint on the sides of some old buildings. Outside the medieval centre, there are mile after mile of Soviet style blockhouse apartment blocks. Dusty boulevards lined by carpet warehouses and car dealerships are now filling with traffic including battered farm vehicles, and huge articulated buses.

In the many areas which are up-and-coming, the architectural style tends to be a mix of US-corporate and Scandinavian schoolhouse. This is strong evidence that economically, there has been a revolution of a different sort. Some of the strategy documents published by the Estonian government are refreshingly straightforward about this.. There has been a recognition that things had to change drastically to avoid being trapped by agrarian wage rates -wage costs are still typically half western levels. (Between the two world wars the UK was actually Estonia's largest trading partner, to the tune of 30% of Estonian exports: mostly bacon and eggs. According to the Guiness Book of records, the world's strongest alcohol was distilled in Estonia during that period -an illegal 98% proof).

In terms of Research and Development, Estonian academics had already established links with many western universities (historically their Astronomers were known to be amongst the world's best). They have a policy of funding their brightest students to travel abroad and return with enhanced knowledge. Estonians appear, with disproportionate frequency, at business meetings from London to Palo Alto...it's part of their strategy of punching above their weight.

In particular, Estonia has been benchmarking itself against Finland, Ireland and the Asian Tigers from the point of view of raising the competitiveness of their economy by:

- attracting knowledge and technology-intensive foreign direct investments

- focussing on sectors with the highest potential growthrates (IT, bio- and nanotechnology)

- using these technologies to raise the productivity of the traditional industries

- raising the effectiveness of the educational system by investing heavily

Estonia's innovation performance currently ranks it among the "moderate innovators " -alongside the Czech Republic, Slovenia, Italy, Cyprus and Spain and improving, over recent years, compared to the EU average.

Situated just across the Baltic Sea from Finland and Sweden, (ie Nokia and SonyEricsson) Estonia has developed effective business networks throughout Scandinavia and resists any attempt to classify it as a mere satellite state of the new telecoms empire (despite having a population of only 1.3M). Helsinki is 80 km away from Tallinn and they are sometimes called twin cities...but only, I'm sure, by Finns.

I talked, during my visit, to a handful of new startups; each founded by ambitious, multilingual graduates with a keen sense of can-do and a global perspective. Their business plans ranged from novel mobile applications to smart logistics to healthfoods. Canny, but candid, they have a tendency to poke fun at authority, whilst enjoying a strong sense of ironic self-deprecation. Very few places on the planet are more aware of the potential value of their ideas...Estonia seems to have numbers of patent lawyers and attorneys which are hugely disproportionate to the national head count. It's probably a measure of the local determination to make the most of all that creativity which had limited outlets for so long.

I'm told they have long, dark winters in Estonia (not to mention the occasional cyberattack from unknown sources) but there is an air of confidence, a willingness to experiment and to an invest in the talents of young people from which we, in the UK, should perhaps attempt to learn.

A Quick Survey of Estonian Innovation

Some inventors and innovators most closely associated with Estonia include:

Mikhail Tsvet, director of the Botanical Garden of Tartu University, invented chromatography in 1901 during his research on plant pigments. He used liquid-adsorption column chromatography with calcium carbonate as adsorbent and petrol ether / ethanol mixtures as eluent to separate chlorophylls and carotenoids. http://www.123exp-biographies.com/t/00034419619/

Ludvig Puusepp (1875 - 1942) was the world's first officially designated University professor of neurosurgery who developed a number of techniques and devices in support of both diagnosis and brain surgery.

Bernhard Schmidt was an Estonian optician who lived in Germany. In 1930 he invented the Schmidt telescope which automatically corrected many of the aberrations which were then restricting the development of astronomical research. This enabled images to be gathered for the first time using huge, wide-angled reflective cameras with short exposure times.

Much more recently, Karoli Hindriks, Estonian entrepreneur, founder of company GoodMood and MTV executive, has invented, and successfully marketed, a range of soft, fashionable pedestrian safety reflectors.

Women are increasingly successful as innovators in Estonia. University of Tartu Professor Marika Mikelsaar discovered the ME-3 bacterium used in the Dr. Hellus dairy products range and is one of the first Estonian innovators to be recognised as a "European Union Woman Inventor and Innovator."

Inevitably, the list of Estonian innovations contains some 'whackier' items. Amongst these are

a) trucks equipped with aircaft-sized tyres to enable serious ice fishermen to undertake their sport on barely frozen lakes.

b) An update to the traditional approach of birch-twigs used as a warm-up to sauna use in the form of a synthestic 'whisk' designed to be both reusable and hygienic.

The most famous invention from Estonia is, however, Walter Zapp's Minox camera (as shown in the picture). Although primarily a luxury item, the Minox was also used as an espionage tool. Its close-focusing lens and small size made it perfect for covert uses such as surveillance and document imaging. An 18 inch measuring chain was provided with most Minox cameras, especially chosen to allow rapid copying of standard sized documents.

The Minox was used by both Axis and Allied intelligence agencies during World War II. Later versions were used throughout the Cold War. The Soviet spy John A. Walker Jr., who compromised US Navy cryptography development work, used a Minox C to photograph documents and ciphers.

Patrick Andrews
pra@break-step.com
Break-Step.com
Guest Blogger

Patrick Andrews is co-owner of break-step productions, a company dedicated to making money from inventive thinking. You can reach him at www.break-step.com.