Adam Rang’s Estonia digest, 2 May 2019: A new government

Estonian news, investment analysis and events for e-residents living around the world.

Welcome to our very first Estonia Digest, published by Rangi maja. This is a new series of weekly articles for e-residents around the world who want to keep informed about the country they are investing in.

My name’s Adam Rang. I’m a former journalist turned entrepreneur who helped Estonia develop e-Residency as the programme’s Chief Evangelist. I’ve now left to focus on my own businesses again with my partner, Anni Oviir. That includes developing Rangi maja, a digital home in Estonia for e-resident companies around the world. I’ll tell you more about that another time.

We know Estonia well and we understand the challenges of building companies in Estonia’s digital business environment. We also know it can be a little tricky for people to get an insight into our country behind the glowing international headlines and also tricky to get to know other Estonian company owners offline. So that’s why we’re publishing a weekly Estonia Digest on the Rangi maja blog based on news, analysis and events that are most relevent to e-residents. Is it arrogant of me to put my own name in the title of these? Yes, but I also want to make it clear that this is now my own independent analysis in my own (hopefully) straight talking style.

Here’s what we’re covering in this first edition:

  • A new government, the same e-Residency policy
  • E-Residency is in fashion
  • Estonian and Russian leaders meet in Moscow
  • Estonia is the 13th best place to build a startup
  • E-residents prepare to declare their independence

Plus, our regular features:

  • Recommended viewing
  • Upcoming events

We’d love your thoughts on what else you want to read about here in future so please do your post your comments afterwards and I’ll respond to every one.

A new government, the same e-Residency policy

Estonia finally has a new government following elections that took place in March (with a world record online voter turnout of 44%). Jüri Ratas from the Centre Party remains Prime Minister and his party is now joined by conservative coalition partners from Isamaa and EKRE, a controversial party that represents the most sceptical views in Estonia towards digitisation and foreigners. This controversy has sparked a counter movement in Estonia called Kõigi Eesti (‘everyone’s Estonia’).

The party that earned the most votes, Reform, was unexpectedly left out of coalition negotiations despite the fact that Reform and Centre are both broadly liberal and both vowed during the election not to enter into a coalition with EKRE. EKRE received a modest rise in support during the election, but these wider political changes are mainly the result of Jüri Ratas’ own decision to choose partners that keep him in the post of Prime Minister. He said that he rejected Reform’s invitation to begin coalition talks on the grounds that they made a confusing offer, somehow. Estonians are known for being straight talking, but this was sadly not one of those occasions.

The first days of the new government have been marked by unnecessary arguments and the resignation of the new Minister of IT and Foreign Trade after just one day, both of which have generated plenty of negative news stories around the world, such as these articles in the BBC and New York Times. This will be very disappointing to Estonians who have worked hard to build up the country’s reputation globally, which is essential for us to conduct foreign trade. Until now, Estonia has built up its well deserved reputation by shining a light on how Estonia’s citizens and companies operate in our dynamic digital nation, instead of letting politicians get in the way of good stories. We will expect the next Minister of IT and Foreign Trade to understand that role and listen to everyone contributing to Estonia, including among citizens, residents and e-residents. I hope to be able to write more about entrepreneurs and less about party politics in future editions of this Estonia Digest.

Despite the negative headlines, I want to add a bit of perspective though.

This is a coalition government with a broad and ambitious agreement about what it aims to deliver in government with plenty of worthy aims, which includes the continued development of e-Residency 2.0 as well as other continued commitments to Estonia’s future as an economically liberal EU and NATO member state. Here’s the Prime Minister explaining that point himself too:

This government is also obviously committed to the Constitution of Estonia, which underpins our free society and reminds Ministers that they serve all the people of Estonia.

To underline this point, Estonian President Kersti Kaljulaid attended the swearing in ceremony of the new government wearing a sweatshirt emblazoned with the words, ‘Sõna on vaba’ (speech is free), as you can see in the cover image.

In fact, this is the first time that e-Residency has been specifically included in any Estonian government’s coalition agreement. This shouldn’t be surprising because e-Residency has already returned a significant profit to Estonian taxpayers, while demonstrating that it provides increased prosperity, security and opportunities to Estonians, as well as helping our e-residents around the world. Since the programme was launched, the team there has worked hard to engage with all stakeholders across the public and private sector about how to develop the programme in the best interests of everyone. As a result, e-Residency is neither liberal nor conservative, it’s neither left wing nor right wing, it’s not for any one demographic, such as old or young, rural or urban. It’s for everyone.

And that’s why all political parties represented in Estonia’s Parliament are committed to its future. Yes, even EKRE has taken time to explore why the e-Residency programme is a good thing for Estonians because it aligns with their promises to increase our prosperity as a nation and strengthen the security of our Republic. The success of our digital nation depends on listening to everyone in it, including those who are sceptical of digitisation itself.

As it happens, many people also wondered if the last change of Government and Head of State (both of which happened around the same time in 2016) would change Estonia’s trajectory away from being an open digital nation. Instead, President Kaljulaid and Prime Minister Ratas recognised the necessity of continuing on the same path and have been excellent supporters of these objectives. The realities of governing are likely to steer new members of the government in this way too.

Regardless of whether we support or oppose this government, it is good for everyone if we all keep this government accountable for how they deliver their own commitments, including those to e-residents. This government has a lot of work to do to continue building Estonia’s international reputation.

E-Residency is in fashion

The sweatshirt worn by President Kaljulaid during the Parliamentary ceremony was made by an Estonian fashion brand called Muhoov. You can actually buy one for yourself here.

Muhoov are popular in Estonia for their wide range of sweatshirts mentioning different Estonian place names in this same sleek style.

In addition to the President’s sweatshirt, this week they also revealed a new range with ‘E-RESIDENCY’ and ‘E-RESIDENT’ on them in a variety of colours:

In addition to being seriously cool sweatshirts, this is an indicator of how e-Residency is entering popular culture with the support of Estonians and that is a very good thing for the future of the programme.

You can buy an e-Residency sweatshirt from Muhoov here.

Estonian and Russian leaders meet in Moscow

President Kaljulaid travelled to Moscow last month to attend the reopening of Estonia’s oldest Embassy following its renovation. She also used the opportunity to propose a meeting with Russian President Vladimir Putin, which was met with some surprise and criticism by politicians in Estonia.

Relations between Estonia and Russia are frosty, to put it diplomatically, and engagements like this are rare. Putin accepted the meeting, which was supposed to last 30 minutes, but instead continued for more than two hours. Both sides acknowledged that lack of contact between neighbours should not be normal and there were positive indications of increased co-operation in future.

“It is necessary to talk to neighbours,” President Kaljulaid explained. “even if we have certain differences.” In an interview that she gave afterwards, the Estonian President gave more details about why she thought the meeting was successful and that hard issues shouldn’t simply be left to bigger countries.

There is plenty of progress to be made. Estonia and Russia have still not even ratified a border agreement and have instead respected a de facto border since the break up of the Soviet Union. This is located a few kilometers into Estonian territory based on the de jure border previously agreed between Estonia and Russia in 1920 as part of the Treaty of Tartu.

During the meeting, President Kaljulaid also invited Putin to Tartu next year for the next World Congress of Finno-Ugric peoples. Estonians are among three Finno-Ugric peoples to have their own state, along with the Finns and Hungarians, although several other nation groups live with varying levels of autonomy across Russia and the Nordic-Baltic region.

Estonia is the 13th best place to build a startup

The 2019 Startup Ecosystem Rankings has placed Estonia as the 13th best place in the world to build a startup. The comprehensive report summarises very well why a vibrant business ecosystem like ours is essential for a country’s prosperity and security. Government has a key role in stimulating this, they write, but also has to encourage the private sector to take the lead and build its own ecosystem.

The report specifically praises Estonia for offering e-Residency, although also raises concerns that the programme is attracting “lifestyle businesses” rather than startups.

I read through the report and want to share a few thoughts.

Firstly, Estonia is never going to be the best place in the world overall to start any business, including a startup. But it is the best place for many people because there will never be one right solution for everyone. So instead of trying to please everyone, we can focus on the more important goal, which is to be the best place to start a business for as many people as possible. That could mean that Estonia makes progress even if we slip lower in these overall rankings. At Rangi maja, we love the fact that Estonia is the most Estonian place to build a company so we’ll tell people why it’s good to build a business the Estonian way.

Secondly, no one really knows what a ‘startup’ is. Most people use the word quite broadly to refer to a new business, perhaps with some technology involved or the potential to scale up rapidly. This report uses a very narrow definition though that isn’t even interested in services-based companies. Estonia is, though. That’s a problem if you use a report like this to make broad conclusions about Estonia’s business environment and what needs to change — without realising that it dismisses the contributions of so many companies in our economy. Is e-Residency attracting too many ‘lifestyle businesses’? Well, Estonia is offering real value to its e-residents around the world while they are offering real value back to us in return. These people might not be building businesses as big as startups, but they are more likely to be making money — and there’s a lot of them. There are currently about 8,000 new Estonian companies created by e-residents and they make a significant contribution to our economy because they are growing successfully. (Their additional direct taxation is a small proportion of their contribution to Estonia, but that is already much higher than the cost of the e-Residency programme to Estonian taxpayers). That’s happening because Estonia’s digitised business environment has unique strengths that are particularly well suited to people who sell services online, such as small businesses or freelancers. There is a rapidly growing number of these people around the world and Estonia is already the best place to start a company for a significant proportion of them. While others look down on small businesses or “lifestyle businesses”, we think Estonia should do even more to tell them why they are welcome to start their company here in Estonia. That’s what we’ll do at Rangi maja — and we are proud to be a lifestyle business!

Finally, the trend is towards greater location-independence in business. Less companies require a fixed location and more companies value distributed teams and employees who work remotely. This report doesn’t really recognise the significance of that and has to define companies as being based in one location then judges each country based on it being the sole fixed location. Again, Estonia is using e-Residency to focus on trends that are being overlooked by this report and other countries. People no longer need to live in a country in order to operate within its business environment. And it’s not a bad thing for entrepreneurs to consider Estonia as a great place to have part of your business instead of just trying to be the best place for an entire business.

E-residents prepare to declare their independence

A group of e-residents have revealed that they are planning to launch their own business chamber to represent the e-resident community and help them do more business with Estonia and each other.

The Estonian e-Residents International Chamber Association (EERICA) is a non-profit organisation preparing to launch this month on the eve of Latitude59, Estonia’s flagship annual technology conference. According to the group, the e-Residency programme does a great job but neither them nor the private services providers for e-residents can independently represent the interests of e-residents themselves.

As someone who used to work at the programme and is preparing to work in the private services sector around the programme, I can confidently say that this kind of initiative will be welcomed by both sides as it is in everyone’s interests to support the growth of the e-resident community and the development of a thriving e-Residency ecosystem with its own dynamic economy. The programme has always understood that its task is not to control e-Residency, but to encourage e-Residency to flourish in its own wonderful way with members of the ecosystem using their own initiative and investments.

“Even in a stable democracy like Estonia,” the organisation points out, “this explicit support for location independent business people should not be taken for granted. As e-Residency is gaining traction, we are coming together to form an organization to represent the e-Residents of Estonia, before any hot issues come up.”

Good luck to them. You can read more about EERICA on their website here.

Recommended viewing

Here are some of the most interesting articles and videos about Estonia and e-Residency in English.

  • Forbes caught up with e-Residency Managing Director Ott Vatter and discussed the future of the programme with him. Check out the report here: Estonia’s E-Residency Contributed €14M To Its Economy — ‘E-Residency 2.0 Will Be A True Forerunner’.
  • The New York Times has explored the rise of Estonian startup Taxify in article that gives a fascinating insight into the war of attrition between taxi apps around the world, which are subsidising your journeys in the hope of dominating the industry. Read why ‘This Estonian Start-Up Has Become a Thorn in Uber’s Side’.
  • British travel show Travelman has just broadcast their latest episode ‘48 hours in Tallinn’ in which comedian Richard Ayoade is joined by DJ Alice Levine to explore the Estonian capital. They give some good ideas, although the episode is filmed during winter when there wasn’t any snow here so Tallinn doesn’t look its prettiest. If the first link doesn’t work for you, you can also watch the full episode here.
  • If you want more ideas then the Guardian has also just published ‘10 of the best things to do in Tallinn’s Kalamaja district’. A short stroll from Tallinn’s Old Town, Kalamaja is a former fishing community that was industrialised under Tsarist and later Soviet rule. It now makes the headlines for being a vibrant creative hub and one of Europe’s hippest (and most instagrammable) neighbourhoods, exemplifying Estonia’s rapid development in recent years.
  • I noticed one problem with that Guardian article above though. They didn’t mention any of the saunas in Kalamaja, which is a shame because there are few better ways to understand Estonia than breathing in some leil (sauna steam) and some of the most interesting ones are located in that area. So here’s my own follow-up article, ‘the best saunas to visit in Tallinn’s Kalamaja district’.
  • Speaking of Kalamaja, the popular creative hub there called Telliskivi has just celebrated its tenth birthday. These once abandoned factories have been a powerful driving force behind the area’s regeneration. You can learn more about Telliskivi at 10 years old here and also watch this discussion about living in Estonia as an expat, which was organised by Estonishing Evenings as part of the celebrations.
  • Estonishing Evenings is a series of events provided by Estonian World, an English online magazine about Estonia with a liberal and international outlook. They have raised their concerns about the new political climate in Estonia and doubled down on their commitment to press freedom. They’ve just published ‘Estonian World is not for turning’.
  • For an alternative perspective on the debate around freedom of speech in Estonia (and some thoughts on people like me who comment about the country in English), Estonia’s public service broadcaster ERR has published this opinion article on its English online portal arguing that the freedom of the press isn’t under attack.
  • This one is a little older, but in case you missed it, TL:DR News published this mini-documentary below in March about e-Residency. It’s created from a UK perspective, but it does a great and balanced job of exploring the main issues around the programme. You’ll also see me in it!

Finally, something off the topic of Estonia:

  • I’m a big fan of the Planet Money podcast from America’s National Public Radio (NPR). Their latest episode explores why Coke remained 5 cents per bottle for a staggering 70 years, despite inflation, competition, recessions and global turmoil. It’s a fascinating story that involves bad contracts and Coke going into battle against its own distributors. Amazingly, these business mishaps played a huge role in helping Coke achieve world domination in the soda market. Listen to the full episode by subscribing to Planet Money wherever you get your podcasts.

Upcoming events

Here’s a selection of events for people visiting Estonia or tuning in online where possible. All events are in English and relevant to e-residents who want to learn more about location-independent business or understand Estonia more deeply.

  • How to sauna the Estonian way’ is a weekly exploration of Estonian sauna culture as it has developed through the ages — followed by the opportunity to enjoy a good sauna and try Estonian food and drink. The event takes place every Saturday in Tallinn (starting this weekend), including a special one coming up in partnership with Latitude59. It’ll start with a discussion of ancient sweat culture and its earliest origins here among Finno-Ugric peoples and finally look at why the sauna is still revered to this day in modern Estonia. In between, it will also feature old beliefs, new science, and interesting traditions. Oh, and this is a totally shameless plug because these events are hosted by me and Anni. Learn more at estoniansaunas.com.
  • The next ‘Getting started with e-Residency’ webinar offered by the e-Residency programme takes place on 7 May at 11am GMT (which is 2pm in Estonia). It’s a great opportunity to learn the basics and ask your questions directly to members of the programme. Sign up here.
  • Ever wondered how Slack uses Slack? Their team is coming to Tallinn to discuss their company and how to make better use of their tools. The event takes place on 8 May from 1830 at Lift99, a vibrant coworking space in Telliskivi. Sign up here.
  • Tallinn Technopol, a science park and startup incubator that is home to Skype, is hosting ‘How to find and hire the best international employees’ on Thursday 9 May from 1600 to 1800. The guests will include representatives of the International House of Estonia (a government-funded help centre for new arrivals), LeapIN (a business services provider for e-residents and one of Estonia’s fastest growing startups), and Jobbatical (another Estonian startup that connects employers with international job seekers).
  • The launch party (and e-resident networking session) for the independent e-resident group EERICA that we mentioned is taking place the night before Latitude59 on Wednesday 15 May at Restaurant PULL in Tallinn. Here are the details.
  • Lift99 has also just announced it is hosting a discussion with LeapIN CEO Allan Martinson, also on 15 May. Martinson was previously the COO of Starship Technologies so it should be very interesting. You can get tickets here.
  • There will be plenty more events around Latitude59 to talk about in the next Estonia Digest, but for now I just want to highlight the one that looks the most interesting for e-residents. LeapIN is hosting ‘Soloentrepreneurs Anonymous’ at the Palo Alto Club in Tallinn from 1730 to 2000 on Thursday 16 May, which is after the first day of the conference. You can get tickets from EventBrite here, but if you also want to share your soloentrepreneur story in 3 minutes with the attendees then you need to apply here.

Since your here…

Thanks for reading. Let us know what you think of this Estonia Digest (and what we could do better next time) in the comments. Also, if you found this useful then please do follow Rangi maja on Facebook, Instragram and Twitter.

Saunapreneur at EstonianSaunas.com. Previously Chief Evangelist at Estonia’s e-Residency programme.