Estonia, birthplace of Skype, teaches Governments how to compete digitally

When I left ReadWriteWeb at the end of 2009, somebody asked me:

“What is the most exciting tech startup that you saw during the last year?”

My answer was a company that was not well known at the time called Faroo that was creating a decentralized search engine in competition to Google.  I was a tad early, as was Faroo. Now decentralization is becoming more real thanks to blockchain technology. This is the big disruption of our time.

The company that proved that decentralization was both technically and commercially feasible was Skype. So I thought it was time to see what was happening today in the birthplace of Skype – Estonia.

First, the Estonia fast facts:

  • Estonia is#103 in global GDP rankingsAs a launchpad for something global like Skype, Estonia is good, but nobody comes here for a big domestic market. Many Estonian entrepreneurs set up shop in other countries in order to accelerate global growth.
  • Estonia is a Eurozone country.

A bit earlier than Skype were the file sharing services Napster and BitTorrent (and Kazaa also with Estonian roots). Skype was more technically complex and the coming wave of blockchain systems is another order of magnitude more complex and will have even greater economic impact.

Here is how we rank Estonia on the 7 attributes for Alternative Fintech Capitals:

  1. Outsider status. Estonia is part of Eurozone so not really an outsider.
  1. Close to big markets. Yes (Eurozone)
  1. Access to talent. Big score here for Estonia and the future looks bright thanks to a nationwide plan to teach programming in school from the age of 7.
  1. Friendly Fintech regulation. Estonia is part of Europe and so does not have an independent Fintech regulatory environment.
  1. Wired population. Yes, one of the highest Internet penetration rates in the world.
  1. Some interesting startups. This is where the Skype alumni story plays out with Transferwiseas the big Fintech success story. Another Estonian Fintech is Fortumo. Other start up success stories with a Skype lineage include PipedriveCloutexClick & GrowGrabcadErplyLingvist.
  1. Low cost electricity. Estonia has nearly 90% energy independence thanks to shale oil (obviously a lot easier to achieve in such a small country).

The big innovation in Estonia relates to e-Citizenship. This makes it as easy to do business with government through digital services as we enjoy with private companies, such as signing documents, launching and managing companies, banking and file encryption. Government officials have to make an electronic declaration of financial interests to reduce the risk of corruption and increase transparency. This is what gives the country the e-stonia name. You can see the details here.

Hopefully representatives of other governments will make the trip to Estonia to study how to do this.

2 thoughts on “Estonia, birthplace of Skype, teaches Governments how to compete digitally

  1. Other interesting FinTech start-ups include Guardtime, Funderbeam, TreasuryView and Union Financial Technologies. A number of software houses also program bespoke solutions for Nordic banks and many global FI’s have had their back offices in the Baltic States for a decade.

    As a FinTech provider here you can barely operate without engaging with E-government solutions – users sign in this way, clients authorise payments this way, data is shared via this medium.


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