LESSON ONE

“The best candidates: morgue vehicle driver and sex shop salesperson”

Heikki Haldre (pictured) is the founder of start-up company Massi Miliano (Fits.me) which has received several awards. This company is developing technology for virtual fitting rooms and robot mannequins, and plans to hire several new employees this year.

“In the autumn we were looking for an employee from Estonia – we were expecting an ability to learn but not expert knowledge of our narrow field. The position was advertised as ‘assistant’. Of course we placed ads on the Estonian CV web portals; we also advertised on Facebook and had a nice big advertisement in the Äripäev newspaper as well.

The job advertisement stated: ‘We are looking for a smart and creative person with a very good command of the English language, and enough confidence to communicate with major clothing brands and research institutions around the world. In your capacity as assistant, you will help prepare for meetings, search for financial figures about various companies, conduct surveys, and manage documents and communication within the organisation”.

Considering the current economic situation, we were expecting a lot of candidates, but this was not the case. We eventually found our employee via the Facebook ad. But the three best candidates said their previous jobs were: a) a morgue vehicle driver – transporting the deceased; b) a sex shop salesperson; and c) a door-to-door book salesperson in the USA.

These were also the three smartest people with the most open minds, and those that took the most care in following the rules for applying. Most of the applicants apparently didn’t read any of the requirements and just sent in their CVs without any of the other paperwork we asked for. At that point, there were only about fifty positions with the same qualification requirements on offer in the job search portals. A thought came to mind: if I was unemployed and my ‘job’ was looking for a job from 7am to 11pm, then I would actively work towards that goal.

No, our requirements were not too high. I have the following recommendations to job seekers in Estonia: please read your CVs through before sending them out. Typing errors will mean immediate rejection. Also read through the job ad carefully. If an accompanying letter is requested there, then write that letter – without typing errors. If a one-page accompanying letter is requested, then don’t write a two-page one.

But as for the foreign labour force, if you want to make a product that will be used by the rest of the world and sold outside Estonia, then you have to have staff who are also outside Estonia. For this, we use head-hunters who are located in the regions where we are looking for staff.

Estonia is actually not a very good place for a technology start-up company. The region lacks a strong mentoring network, so start-ups with a wider scope than just Estonia, Latvia and Finland will remain stuck in their own habits and work culture.”

LESSON TWO:

“Finding the right employee takes six months”

Kristi Hakkaja (pictured) is a board member of the growing company Oskando, and is responsible for its sales and exports. Oskando manufactures GSM and GPS equipment and offers telematics services, like vehicle monitoring, for example.

“A technology company always has difficulty finding engineers and technical support personnel, especially if you want someone with experience in your field. This is why we train many of our staff ourselves.

Over the years, we have regularly employed university students, and in a couple of years we have trained them so that their profile suits our company. On the other hand, if we do have a need for someone with experience, we often spend six months just looking for the right candidate.

It is also difficult to find salespeople. A new member of staff can get fully up to speed with all our products in about six months. Finding a salesperson in the field of technology who also has practical export experience has been one of the hardest tasks, but we have now put together quite a good team already.

One of the most complex tasks has been working with a foreign team. At one point we had a development unit in Lithuania and we went through all the usual issues with remote working and cultural conflicts. However, this experience was very valuable in many ways.

An international company cannot function without international personnel. It is straightforward to have staff who speak the same language, and it is equally straightforward to do business only in Estonia. However, if a company wants to do business outside Estonia, it has to be able to move out of that comfort zone. And this is obviously not easy. Of course, all these people don’t have to be physically located in Estonia – it depends very much on their job; it is better if salespeople are not located here. It gives me great pleasure to see that several Estonian companies now also have foreign employees; for me, this reflects their understanding of international business.

Estonian technology companies are mostly lacking engineers with specific qualifications – not so much in product development, but rather in product design. By product design I mean the final 10-20 percent of the development process when the prototype becomes a scalable and fully-designed sales item. There is very little skill and experience of this kind in Estonia.

Estonia also lacks good export sales staff, but no technology start-up will be able to stand on its own two feet without them.

For our team, we are looking for a technical support manager with experience, who will help us take our current technical support system to a new level with operational support for an international sales network. This role presents an especially big challenge, because the suitable candidate will need to have very good knowledge of both hardware and software, and also be skilled at managing a team, building processes and conducting international technical training in the English language.”

LESSON THREE:

“It’s easy to find staff; it’s much harder to find good staff ”

Alari Aho (pictured) is the founder of Apprise, a software development company. This enterprise seems to be constantly and actively developing the time tracking programme Toggl.com and other products, so there is always a demand for intelligent employees.

“It’s usually not a huge problem to find staff. It’s much harder to find good staff. Our experience in hiring people has been like panning for gold – constantly trying to find the ‘right’ candidate among a large number of people.

Campaigns to find the right people have not had much success; instead, we have tried to be actively on the lookout for staff all the time.

Entrepreneurs who invite people to work in Estonia, especially those in the knowledge industry, deserve much kudos! Alari Aho says: “One example was when we found an American marketing executive via AIESEC, and we’ll keep using that channel in the future.

At present, the problem facing start-ups seems to be finding customers, at least in my circle of acquaintances. Few are engaged in active hiring.

Specifically though, we are looking for someone whose native language is English, for the position of Customer Management Specialist for Toggl.com. During the selection process, we give the candidates simple tasks to conduct on-site within 10 minutes. Mostly they cope, but we have had some funny situations as well.

One job applicant from abroad stared at the task for a long time and in the end just held his head in his hands and said: ‘Oh, my head, my head is aching!’ Before that, this person’s performance and CV had been very persuasive and of excellent quality. A job offer was not made at that time, however.”

Estonian start-up GrabCAD plans to attract if not all, then at least the lion’s share of the world’s engineers to Estonia. This may sound rather utopian, but it’s not entirely impossible.

The company, set up by two young technology specialists and entrepreneurs – Indrek Narusk and Hardi Meybaum – is developing an all-in-one online environment, which the engineers, designers and design artists of the future will find difficult to manage without. It will be both a necessary tool and a key professional discussion space for them.

The enthusiastic founders of GrabCAD want to use their engineering network to eliminate several bottlenecks, as these cause problems for just over seven million of the world’s engineering graduates every day (according to UNESCO figures).

For example, although many companies offer various CAD (Computer-Aided Design) services and products, you would be hard-pressed to find one that offers both of these on a wider scale, rather than limiting itself to one specific production technology (e.g. manufacturing only sheet metal products or utilising only one CAD tool).

The second problem facing engineers today is that they waste between a third and a half of their time designing products and components that someone has already designed – i.e. these drawings already exist. If all these drawings were to be available in a single library, engineers would have more time to spend on developing unique products and components.

Routine task

Thirdly, many engineers and other creatives don’t have the computer programmes they need to prepare drawings. Drawings are also considered too much of a routine task and people think it is not worth wasting precious time on them.

The goal of GrabCAD is to unite millions of engineers and production companies, ensuring that there is always someone available with the necessary resources to complete an order.

And, last but not least, once an engineer has finished a drawing, he or she may spend a great deal of time and energy finding a company that can manufacture the product according to the spec of that drawing and under the appropriate conditions.

GrabCAD will be offering three services, one of which is almost ready. The web order service for CAD drawings was launched last year.

Freehand sketch turns into 3D drawing

The way this service works is very simple – you make a freehand sketch on paper and then scan it into your computer. Then you go to the website GrabCAD.com, upload the sketch, describe what you want, receive a price quote, and then place your order with just a couple of mouse clicks. Your 2D or 3D drawing will be sent to you within three business days, along with an invoice.

What’s also good about this service is that it supports a range of CAD software packages, allowing files to be converted between different CAD formats, etc. A full package (a drawing in electronic format, a 3D model and a design) costs 55 EUR, each individual service ordered costs 25 EUR.

Customers who have placed CAD orders with the company have particularly valued the convenience of placing an order, the speed of completion and the reasonable price. At present, the customer base is growing without any advertising; until now, all orders have come from outside Estonia, from places like Asia and the USA.

Meybaum says: “We’ve received orders from fathers in America, for example, who are under pressure due to the economic decline. They keep inventing all sorts of weird things. One guy sketched a trailer for a quad bike on paper; another drew a picture of his own house.”

“We cannot complete every single order, though,” adds Narusk. “For example, one Asian customer uploaded a picture of a Ford Scorpio engine and then drew an arbitrary arrow somewhere, indicating that he wanted “that component there”.”

Much more to come

However, preparing drawings is just one small element of the services the company has planned.

Currently, all orders are completed with our own resources, whereas in the future GrabCAD wants to offer the option of sub-contracting CAD projects. This would mean that users could share projects among one another – one customer would place an order, then another customer would complete it – and this kind of communication would take place around the clock.

As users would also rate each project, this would create a ranking of the best performers. Those offering better quality would get more orders.

The total volume of CAD sub-contracts is estimated to increase by 10 percent a year.

In the future, the online environment will also include a library of engineering designs where users will be able to share their designs with each other. There is no point in modelling something that has already been modelled by someone else. “For example, you might invent a new kind of bicycle frame. Instead of designing a saddle and handlebars to go with it, you could just select them from a CAD library, saving time in the process. There are at least a million saddle designs in the world already!” says Narusk.

In the far future, this library could even be included as a set to go with CAD software packages.

In the third and final development stage of GrabCAD, a kind of procurement environment would be added to the entire set of services. This would allow engineers to find manufacturers. Having invented a bicycle frame, you could create a tender invitation for it with a single mouse click. Manufacturers would offer their prices, delivery times and other conditions, and the engineer could easily compare them and select the best partner.

Engineers are vain

One of the key factors in the success of GrabCAD will be communication between engineers, i.e. the principle of a social network. “Engineers are very vain people as well, but unlike users of Facebook or Orkut, they would upload pictures not of themselves, but of their inventions,” says Meybaum.

The company has set itself some very ambitious goals. They anticipate 30,000 CAD orders per month and 300,000 active users as early as 2012. By then, the library of engineering designs should already contain 50 million files! And the company should be making a good profit by then.

What would their competitors say about this? Meybaum and Narusk believe that there are no direct competitors with such a complete approach.

Although some companies offer a CAD service, like Pro Draw or Design Presentation, placing orders with them is an inconvenient and time-consuming process. There are also some CAD file libraries, such as 3D Content Central, but this one is focused on machines and tools and is based on a single type of CAD software. There are also separate procurement environments – e.g. MFG – but these don’t have an engineering community.

Meybaum and Narusk do anticipate some risks for this undertaking which are worth mentioning.

The undertaking has to involve engineering agencies and schools, because users add value to the environment. How can this be guaranteed?

There is also the issue of potential liability with GrabCAD. Meybaum explains: “Supposing an engineer from Boeing or Ferrari were to steal the drawings for some new component and upload it via our service? Or what if someone uploads a component for a bridge and the bridge later collapses? How do we avoid liability then?”

The credibility of the environment presents a separate risk all by itself. If GrabCAD gets swamped by DIY inventors uploading makeshift contraptions, then professional engineers would probably steer well clear of it.
But not to worry, Meybaum and Narusk tell us – everything has been taken into account. At the moment, they are actively seeking risk capital for the grand plans they have for GrabCAD.

 

Who are Hardi Meybaum and Indrek Narusk?

Hardi Meybaum (27) and Indrek Narusk (27) are graduates of the Tallinn University of Technology (product development faculty). Hardi also has a Master’s degree in production technologies, incidentally.

In 2007 they established Futeq, a research and development company involved in product development, design and engineering. Its main customers are companies that have no engineering and manufacturing resources of their own, but still need those services. Projects have varied widely, from simple sprockets to complex check-in kiosks. The company determines the customer’s needs, conducts the engineering work and, if necessary, then finds manufacturers too.

Futeq developed into GrabCAD, and joined the Estonian Development Fund, which helps businesses to grow, in 2009.

Meybaum works more on the business management and IT side of the company.

Narusk’s specialist fields are technical services management, engineering and preparing drawings. He has seven years’ experience at various production companies, and also founded the bicycle company Velonia.

Cupoco

Cupoco application platform is aimed for smartphone users, merchants and service providers. The idea is simple: to bring them together.

Service provider, for example a restaurant, hotel or publishing house etc can easily (in five minutes) create e-coupons, bonus cards, recommendations or hot deals that the smartphone owners could use. These are distributed directly to the mobile phones of target customers and redeemed with a virtual barcode. Service provider can easily track the feedback.

Marc Böhret from GEOVoucher says that Cupoco will first be launched in Germany, although the service is developed mostly in Estonia. Talks are ongoing with several different companies, but these are yet to be disclosed. Böhret believes there’s an enormous market potential of e-coupons in Germany and Estonia as well.

Peep, what is Traindom?

Traindom is an online platform for monetizing knowledge. It’s an all-in-one solution for creating e-courses, e-trainings, membership sites – any kind of information products. Once the training product is created, you can sell access to the content and make money.

Traidom is created by a team of 5 top experts in their field.

Whom is it meant for?

Traindom is meant for trainers, experts and consultants who want to monetize their knowledge and start an information marketing business. Anyone who knows a lot about something can teach other people and make money on the way.

What sort of current “bottlenecks” it adresses and how?

Monetizing knowledge online is not new, but until today you needed tech knowledge, like programming, or a big budget to set up your own information marketing business. Traindom makes it easy for anyone without any technical know-how to get going.

How does it work? Please give an example or two.

A seasoned fisherman knows how to catch a lot of fish on Lake Peipus. He decides to put together a course teaching other fishing enthusiasts his tricks of the trade and shoots a bunch of training videos. Now he can upload those videos to Traindom, structure them in a logical way, add texts and additional images, set a price for his course and start selling access to the content.

Fisherman wanna-bes can go to his site and buy access to the training materials.

Who are your competitors and what makes Traindom better than what they can offer?

Most other competitive solutions require either some sort of technical knowledge to set it up or they are too huge and cumbersome. Our advantage is that it is just so easy to set up your e-trainings and all of it requires no tech skills what so ever.

How much money can your clients earn using Traindom? How Traindom monetizes itself?

Essentially Traindom enables people to set up their online businesses. So asking how much money they can earn using Traindom is asking how much money a business can earn. It all depends on their target market size, product and marketing. Sky is the limit.

What are the longer-term goals and ambitions of Traindom team?

Our aim is to become the platform of choice for information marketing businesses all over the world.

Who is Peep Laja?

Peep Laja has 10 years of experience in the fields of web and marketing, having lead and marketed different organizations in Estonia, Dubai, Panama and the United States. Peep is an expert of internet marketing and has been a full-time internet entrepreneur for several years.

Allow me to introduce you to an entrepreneur Noel Guinane.

He has just moved to Estonia from Middle East with his wife and five children to establish a small programming studio of mobile games and apps in Tallinn. 

Here’s my e-mail conversation with Noel from last week. 

Tell me more about your company, what sort of development are you guys planning?

We are newly based in Tallinn and looking to hire an Objective C programmer and graphic designer for mobile games and apps, mainly on iPhone. Before we hired programmers in Russia, but would now prefer to work directly with local talent in Tallinn. I read about Reval Mob in Narva and Indilo Wireless in Tartu on your weblog.

We have a small studio in the Old Town we would like people to work from.

What’s the name of your new start-up?

The company will be called Blood & Treasure.

Why mobile games?

We prefer games because it makes work fun. We have three casual games in the pipeline, all on the iPhone platform. We chose the iPhone platform because we love Apple: we are long-term Mac users and programmers. Objective C in our experience is the most elegant programming language available. It also helps that Apple has made it easy for indie developers to monetize their work through the App Store. This is not to suggest that there are no problems with the App Store, only that Apple has opened opportunities that were not available to small development shops before.

When we compare the App Store to Google’s Android Store or Palm’s Store or any of the mobile carrier stores, they are not really competitors, not yet anyway. Apple wins hands down in all important ways which accounts for Apple’s majority share of all mobile application downloads in 2009.

What are your expectations on human resource availability when starting a new business in Estonia?

We expect to find honest, hard-working people who are clever with
technology. To hire one software developer and one graphic designer
initially. And we are hoping to find good people within one month.

“Our studio is on the 5th floor so Fred, our 6′ 6′” resident office manager, will dangle workers out the window by their bootstraps every 15 minutes to encourage good productivity”

I have very little knowledge of the local Objective C programming market having arrived in Estonia only 3 weeks ago. Most programmers are probably already employed in big companies here, but with the worldwide popularity of Apple’s App Store, I refuse to believe there are no X-coders available in a country as tech savvy as Estonia. I know the founder and former CEO of Delfi and am meeting with a small group of freelance developers in Tallinn who tell me they have experience programming for the Mac.

How do you plan to motivate your new workers in the pre-revenue stage?

Our studio is on the 5th floor so Fred, our 6′ 6′” resident office manager, will dangle them out the window by their bootstraps every 15 minutes to encourage good productivity (Toivo: that was a joke!)

Do you have some candidates already and if yes, what is their general background?

No candidates yet. We are looking for people skilled in Objective C
and Photoshop, Lightwave and ZBrush.

Why do you consider Estonia as a good place to do business from?

Because Estonian people have a reputation for being smart and working hard, your IT infrastructure is excellent, your tax system is tolerable, your bureaucracy minimal and English is widely understood, at least in Tallinn.
Estonia reminds me of Sweden. It has a similar feeling – the people are honest, open and helpful. I have also brought my family (5 kids) with me. It is quite a change from the Middle East where we were previously. They are attending local Tallinn schools and
so far, they love it here.

Finally, when I asked Noel to send his picture for the post, he sent me the one on top!

Last year Estonian venture capital firms joined forces by founding the Estonian Ventur Capital Association (EstVCA). Who are the players on the market today? 

Here’s a short overview which shows that:

• the Estonian venture capital market is expanding, VC culture is developing
• there are several new investors who have transferred from the field of real estate and are now looking for potential growth companies in the Baltic and eastern European countries
• there are no women as VC’s in Estonia, all men
• some of the VC’s are yet to set their pipelines and ways, they have made no significant investments yet
• money is no problem in Estonia, instead there’s lack of ideas and projects

So who are the Estonian VC’s?

Ambient Sound Investments is the investment firm of Toivo Annus, Ahti Heinla, Priit Kasesalu and Jaan Tallinn (three of them pictured, photo by Joi Ito), the co-founders of Skype and today’s business angels. Their firm actively searches for early-stage technology firms with excellent growth potential that operate anywhere in the world.

The firm’s portfolio includes several Estonian businesses – such as MarkIT, United Dogs & Cats, Evikon, Oskando, Celecure etc – as well as Asian and American companies. There have been no new investments in Estonia in recent years, but the company has been active in China and the UK.

Askembla Asset Management is a Swedish private equity firm that invests in growth companies in Central and Eastern Europe. Their portfolio includes such well-known Estonian companies like Tallegg, Aeroc, Microlink, Eesti Eine, Sportland, and more.

In 14 years Askembla has invested more than one hundred million euros (1.5 billion EEK) in the Baltic countries. Presently, the firm is establishing the new Askembla III fund for attractive investments in the Baltic region in the next few years. One of the firm’s key investors is partner Hanno Riismaa.

Astrec Invest is an investment firm founded last year by business angel and former racing driver Marek Kiisa. The firm focuses on investment projects in telecommunications and the media.

To date, the firm has invested in industrial and media firms. Last year Kiisa and his partners purchased the Baltic car portals Motors24 from Alma Media, the Finnish media tycoon.

BaltCap, which has been operating since 1995, is one of the oldest venture capital and private equity investors in the Baltic countries. It provides private equity funding for growth companies.

So far, it has made 38 investments and has exited 24 of the investments. In Estonia, the more well-known investments have been into Quattromed HTI, Tallinna Pesumaja, Neoqi and the e-school project. Investment  banker Peeter Saks is a key partner in the company.

Cresco is an investment banking and venture capital firm established in 1995 and owned by Tõnu Laak and Olev Schults. The firm funds companies operating in fast-growing sectors in Estonia and the other Baltic countries. Cresco’s most well-known investment has been in Estonian Air and the firm prefers not to exit the investment.

The Estonian Development Fund is a national venture capital fund that monitors development and invests in seed-stage and start-up stage Estonian companies with global growth potential.

The organisation’s mission is to develop the Estonian venture capital market; therefore, investments are always made jointly with co-investors. So far, the fund has invested in six projects, with one of the more promising companies in the portfolio being Heikki Haldre’s company Massi Miliano (Fits.me), which is developing a virtual fitting room.

Hanseatic Capital Estonia is one of the few Estonian firms providing mezzanine-type (subordinated debt) funding. It focuses on Baltic and Polish growth companies with positive cash flows.

Among others, the firm has funded such well-known companies as Eskaro, Olerex, Väätsa Agro, Ortodontiakeskus and Sunorek. Hanseatic Capital belongs to the Arco Capital investment group, which has headquarters in Puerto Rico!

MTVP is the investment firm of Allan Martinson (pictured). The company prefers leading companies in the fields of technology, media and telecommunications that operate in Russia, the Baltic countries, and Eastern and Central Europe.

For example, the firm has financed the “invasion” of Rate.ee clones in Europe, and has exited the investment in the MTV Baltic music channel. 

IPC Investment Group is an investment firm that started with property investments in Romania, and has also funded growth companies in Estonia, the Netherlands and Romania. Several of the early property investments in Romania have now been successfully exited.

The firm (and its local partners) tried to launch an information line service in Romania and are now developing a contemporary carwash chain covering entire Romania. IPC is owned by Indrek Elhi and the Romanian Ciprian Lopata. One of the founders, Peep Aaviksoo, is no longer a partner in the firm.

Pioneer Engineering Group is the firm of Andres Soojärv, Ivo Tahk and Urmas Peiker and is dedicated to marketing outsourced production in the metal-working and mechanical engineering industries. The firm looks for growth companies in which to invest. The company also looks for export customers from Germany, Norway, Sweden and Finland for its members (seven at the moment).

Redgate Capital is an investment banking and asset management firm that focuses on the Baltic countries, Russia and the CIS countries. The key executive in the firm is Veikko Maripuu and the investors are Armin Kõomägi, Indrek Prants and Sven Mansberg, and Ambient Sound Investments. 

Unitree Group is an investment firm owned by Aivar Brock and Kaspar Jänes that operates in the Baltic countries and Central and Eastern Europe. Their goal is to help early stage businesses to grow, in order to attract strategic investors. The firm also has business interests in the fields of vehicle auctioning and mystery shopping.

WNB Project is the investment firm of business angels Ivar Siimar and Guido Kundla and has developed from their property development business. The firm invests in technology companies in the early stage. For example, the firm has funded the Goliath Wind, SmartPost and Ilmarine companies, in co-operation with the Estonian Development Fund and other investors. In the past, WNB has also been connected with an online library project for visual advertising, the establishment of a top-class restaurant in Ukraine, and real estate projects in Brazil. 

What is EstVCA?

EstVCA, founded in 2009, is the umbrella organisation for Estonian venture capitalists, private equity funds, business angels, and the providers of related support services.

The mission of the association is to vigorously boost the Estonian private equity and venture capital industry and promote a culture of ambitious enterprise, only just emerging in Estonia. 

In addition to 15 full members, the organisation has 15 supporting members. The latter include larger law firms and auditing firms, Kredex, NASDAX OMX Tallinn, several incubators and technology parks, and companies connected with Yrjö Ojasaar, Endel Siff, Rainer Nõlvak, and others. The head of EstVCA is Kristjan Kalda.

Membership is open to any legal entity or individual whose primary activity (or a significant part of it) is the professional management of an investment portfolio that includes unlisted companies where it has a direct or indirect holding.

The supporting members may be any private and legal entities who are operating in the field of private equity and venture capital, and who wish to contribute to the development of activities related to private equity and venture capital investments.

The blog that I started one and a half year ago has now covered way over 100 Estonian start-ups and tech companies. Last month it had readers from 74 countries (TOP 6: Estonia, US, UK, Germany, Finland, India).

2010 will bring some interesting challenges and opportunities for me and my blog. The work of covering Estonian start-ups and tech market goes on definately, the improvement of the content, as well as appearance of the blog continues. There’s even a Grand Plan for longer period of time for this blog on the table. This will be developed further.

However, there are some evident needs.

1. I have always wondered if anyone really needs my blog. Yes, on the one hand about 500 people are visiting it every day, but on the other hand, there aren’t enough frequent visitors. Would you please give me feedback on this, by writing me an e-mail (toivo@ekspress.ee) or posting a comment  after this story.

2. I wonder if anyone want’s to join TigerPrises team – that’s me - as an Author or contributor? I never have enough time for the blog, it’s my hobby. Märt Ridala used to write with me, but he is too busy now with other things. Anyone interested to join me in this noble (and profitable) mission?

3. TigerPrises needs a new video camera for making higher quality video posts. I am talking about a 1000 Euro investment. I had this crazy idea to organise fundraising among readers, but would you be willing to contribute?  

And last but not least, I’d like to thank the partners and advertisers of TigerPrises – Skype, Tartu Science Park, Estonian Development Fund, Connect Estonia, Invent Baltics, Linxacross and others. I wish them all success.

In fact, I have written stories about Narva-born hackers, but I am not sure if anything prosperous and good have come from Narva’s IT sector. 

But low and behold, an entrepreneur Roman Grigorjev (pictured)  introduced me a new start-up from Narva – Revel Mob (they don’t have a website yet), focusing on development of iPhone and Android applications.

A Golf Scorecard?!

The App Store shows that Revel Mob has done a miniature golf scorecard for example. That was released  two weeks ago.

Grigorjev grew up in Narva-Jõesuu, but has lived in London for years. He claims to be a great fan of smartphones.

“I am incredibly passionate about smartphones. I think third party applications will be the next “internet” and smartphones will be the next laptops, or even bigger industry,” he says.

App for The National Gallery

Revel Mob, he says, is still in quite early stages, so there is not much to show yet, apart from a team of eager programmers in Narva. The idea is to outsourcing for hotels, restaurants, newspapers, art galleries and other potential customers, mostly outside Estonia – in UK for example.

Grigorjev has approached to The National Gallery in London, with an idea of an iPhone app that can be used to go through collections of paintings via  mobile phone. Louvre in France has already something similar, the man has heard.  

Grigorjev is also involved with Rewel.net. The aim is to establish Pan-European discounts (e-coupons) site.

There’s another iPhone and Android developer in Tartu, Indilo Wireless. I have a post on them as well.

 An Estonian company ZEV Motors is striving to develop one of the most efficient electric cars in Europe and to sell at least 50-100 of them in Europe over the next couple of years. The arrival of the so-called “e-cars” is only a matter of time according to the enthusiastic owners of ZEV, Teet Randma and Meelis Merilo.

“It’s difficult to make a breakthrough with electric cars in Estonia, because to Estonians the car is a status symbol, and not the most economical means of transportation,” Randma says. “But in a few years the price of a litre of petrol will be 2 euros – then attitudes will change!”

A pioneer in Estonia

A pioneer in the electric car industry, ZEV has taken the initiative, aiming to become the representative for many internationally known brands, as well as boldly developing its own products – in other words, the Estonian e-car industry!

The first prototype of the Estonian electric sports car, the ZEV Seven, was launched in 2008. In early November this year Randma and his business partner Merilo, who owns the legendary electric Pobeda, presented the Seven at the 2009 Electric Motor Show in Helsinki. Different transportation solutions were presented there, from e-bicycles and e-scooters to the few electric cars currently sold on the European market. The Estonians’ Seven, which is yet to go into production, was (remarkably) one of only three cars to leave the show powered by its own engine. Others, including Tesla Roadster (co-funded by Estonian venture capitalist Steve Jürvetson) and the Norwegians’  Th!nk City were ”pushed” out of there.

While the renowned Tesla Roadster costs upwards of approximately 64 000 Euros (plus taxes), the ZEV Seven basic model comes in at a third of the price.

Not a family car

The Seven is not a family car, but a kit car. The engine of the 5-gear manual two-seater vehicle is manufactured in the USA and the basic model uses eight lead batteries which take about 8 hours to charge, when connected to a standard 220V plug. Depending on the speed at which you drive, the batteries last for 50-90 kilometres and the journey hardly costs a thing (in the city the energy cost is 10 cents/km). It can even reach speeds of 120 km/hr.

So a Seven-trip from Tallinn to Tartu can’t be done yet on a single charge cycle – that would require expensive lithium batteries with a higher energy capacity and a quick recharge – cause it’s unthinkable to recharge the batteries during that journey, as it would take a full 24 hours for that.

An extension cord should always be carried in an electric car – you could ask to plug in the cord when stopping at a cafe, for example. Ok, that does sound a bit stupid though.

Lotus 7 clone

The men from ZEV have done all the electric works, but the bodywork was created by Valter Teppan’s company, Võidusõidutehnika AS. The bodywork is similar to that of the Lotus 7, designed by Colin Chapman in 1957. When designing the chassis of the car, the specifications given in Ron Champion’s book “Build Your Own Sports Car for 250 Pounds” were used to make the car more comfortable for the driver, and more sporty.

Many Russian Lada parts have been used in the Seven prototype, including the tachometer, swivels, steering shafts and brake discs (all new, not from the junk yard!). The yellow leather trim may be flashy, but the assembling  quality is poor, to say the least. All of the comfort fittings have been removed from the basic model to keep the price low.

No orders from Estonia thus far

Randma says that the first model has been deliberately made with certain features as optional extras. “First and foremost, it is a driver’s car, additional accessories will be added according to the client’s wishes.” For example  sun-roof, extra batteries, trunk space, stereo etc can be ordered.

The first order will most likely be delivered to Finland, because in Estonia the number of genuinely interested people can be counted on the fingers of one hand. At the moment, people are more interested in converting internal combustion motor vehicles to electric power. No electric cars are offered in Estonian car dealerships since the market for the Tesla, Th!nk, Reva or other electric cars is too small.

Urmas Roosma, an Estonian farmer who produces and sells electricity from his hydroelectric plant in the district of Halliste, has paid ZEV almost 10 000 euros to convert his Volkswagen Golf to run on electricity. This enables him to commute to his workplace in the town of Viljandi, 25 kilometres away, almost free of charge. “Oil consumption will come to an end,” he claims. “In five years there will be many electric vehicles in Estonia.”

Adaption to EU standards in progress

The adaptation of the ZEV Seven to European standards is in progress: the first step is registration in Estonia, followed by the acquisition of a European certificate.

“Once we obtain this, the European market will be within our reach,” says Randma, who believes that the certificates for sale and production can be realistically acquired during 2010.

This is because the car is classified as a four-wheeled motorcycle, which means the costs of the tests required are significantly lower than those for cars. The empty weight for these vehicles must be below 400 kg for passenger transport, and below 550 kg for cargo. Both vehicle classes are planned for production. Registration of the vehicle with the Estonian Road Administration authority was supposed to happen in 2009. 

Have they lost their touch with reality?

Sceptics agree that the enthusiasts behind ZEV may be part of the “engine of progress”, but with their ambitious plans they may have lost touch with reality. How can they compete with major manufacturers who are investing hundreds of millions of dollars in development? Also, the Estonians are going to have a hard time procuring batteries in an already insufficient market.

Electric cars in Estonia number less than a dozen at the moment. There are believed to be no more than 6 or 7 cars powered 100% by electricity in the country. However, the men from ZEV Motors believe that it’s only a matter of time before e-cars come into mass use.

From the point of view of electronics, some challenges have been overcome but others are yet to be resolved. A personal electric car can be charged at home, in the garage, with a 220V plug, but for longer journeys, so as not to “become stranded”, a recharging network needs to be developed, with equipment that enables fast charging (about 30 minutes).

Countries have Grand Plans regarding networks

Car manufacturers are seeking national support for the development of a recharging network. Sweden is the frontrunner in the field, with many established 400V recharging stations. In Portugal, there are plans to install numerous recharging stations along the Lisbon-Porto highway by 2011.
Lead batteries are slowly being replaced by the more resilient and quicker to recharge lithium batteries, which enable longer journeys to be made. They also cost more (four times as much as lead batteries, though their lifespan is also four times longer) and after 100-150 kilometres, the danger of “becoming stranded” still remains. The possibility to exchange batteries, instead of recharging them, is still quite unlikely for private users because this requires substantial investment. However, this may be possible in industries which use fleets of cars (e.g. taxi companies).

Another serious argument for postponing the purchase of an e-car is the poor selection on offer. New electric cars are not widely available and most have two seats and little trunk space. Older manufacturers like Nissan, Mitsubishi and others are still showing concept cars. The “pioneers” – the Tesla Roadster and Th!nk City, presented at the Helsinki Show, as well as the electric Smart car and the British hit Reva – are not suitable as family cars because they fall into the category of extremely expensive sports cars or “highway-speed vehicles”. Tesla is launching a five-seater family car, the Tesla Model S, which is going into production in 2011. This will be a step forward because the car can cover 480 km in one trip and doesn’t cost over 60 000 euros like the Roadster, but half the prices (about the same as an E-Class Mercedes-Benz).

Current e-cars are too small and expensive

The 450,000 Kroon Th!nk City, which is popular in Scandinavia, is barely big enough to fit a grown man behind the wheel. Rear seats are entirely absent. This vehicle is a city car through and through.

Electric cars are 50-100% more expensive than the average car. Still, Randma claims that the investment in an e-car will pay for itself in six years. This is mainly because it is very cheap to drive – to travel 100 km it costs about 0,6 euros, which “translates” into 0.7 litres of petrol per hundred kilometres.

The propagation of e-cars in Estonia is being held back by the commercial banks, which do not offer lease options for them.

Estonia – probably the worst market for e-cars in Europe?

Teet Randma says that Estonia is probably the worst market for electric cars in Europe.

The only benefits are free parking in Tallinn and permission to drive in the pedestrian areas of the Old Town. And, unfortunately, there is only one recharging station, located at the Tallinn City Council building. The situation is different in other countries like Norway, which offer tax benefits, subsidies, the use of public transport lanes etc.

In addition, the Estonian market is small and lacking in incentive schemes. The sale of new electric car brands in Estonia is an unlikely prospect. The producers of “e-highway speed vehicles” like Th!nk are focusing on Great Britain, France and other bigger markets where the demand is higher.

ZEV Motors already sells electric scooters and ATVs and is trying to break new ground in the European market with both its own models and Chinese electric cars. One of them – a small vehicle called the ZEV Smiley – Randma drives himself. On a single charge it can drive 85 kilometres (35 during winter) and its top speed is only 55 km/hr. It’s likely that, in the near future, such vehicles will be available in Estonia for less than 6000 euros. The new model also has a European certificate in China, enabling unlimited sales in the European market.

ZEV fully supports the ambitious but rather utopian “Electromobile Estonia 2020″ plan developed by the Ministry of Economic Affairs, according to which in 11 years 100,000 electric cars could be “zooming around” Estonia.

“Everyone wants to drive big expensive cars, but oil is running out and the environment is polluted, so what are the alternatives?” asks Randma.

Cars that drive on liquid gas? The price of gas is linked to the price of oil and gas is also a limited resource; it is slightly more environmentally friendly, but still causes CO2 emissions.

There is still a very long way to go before a solar-powered car becomes a reality. A hydrogen car is basically an electric car which runs on hydrogen heating elements instead of batteries. And a car that runs adequately on nuclear power has yet to be invented. What we are left with is electricity…

“It is a question of priorities: it should be a priority for Estonia at present to keep as much money as possible in the country, but highway transport takes billions out of Estonia in fuel costs each year, causing significant damage to the economy on top of the health damage created by pollution,” says Randma.