10 years ago today, on April 16th 2010, an egg was laid. The first Garage48 hackathon kicked off at the IT College in Tallinn. The energy was amazing. Seeing the happy participants at the end of the event made us understand: something great has happened.

What we did not know at that time was that it was only a start for a rocket ship ride that will continue for decades. Garage48 turned into a worldwide movement. Over these years we’ve done 138 hackathons in 43 cities of 25 countries. Besides that, we’ve run co-working spaces, week-long student startup camps, idea days, corporate hackathons and various custom events.

We’ve touched tens of thousands of people across the world. Happy birthday, Garage48 – you’re a big girl now! It has been fun.

Digging out our initial project plan from 2010, it clearly defined the three goals Garage48 had:
– Developing the startup culture, promoting the message
– It’s easy to create web services, everyone can do it
– To connect people, network, startups-students-doers

Like it was said then: “The goal is to get in 48 hours from an idea to a working service and show, that to create a new and exciting thing from zero does not have to be time- or resource-intensive.”

It’s all still true today. Garage48 is one of the best ways in tech to network, learn, get out of your comfort zone and find companions to start world-changing companies with. As a founder, I am amazed every month of what the current team is doing.

We wouldn’t be here without you: the participants, mentors, volunteers, our team members, supporters, investors, media, the Estonian Startup Leaders Club we grew out from, all the dogs (hi Riki!) and others. Your love and support has kept us going and developing. There are just too many to mention any names. You’re all rockstars!

Big bow and hugs – thank you all! It truly has been an international community effort to make the world more innovative and people aspire for making something great happen.

Looking into the original Skype chat archives from January 2010, what made it all work from day one was the founders team that we immediately assembled: me, Rain, Ragnar, Martin, Priit and Asko, with initial help from Tarvo. We were a startup ourselves and that mix of characters made us successful. We were also hungry to prove that instead of discussing ideas we and our participants should just f***ing do it. That worked.

The fun part I did not remember from the chats were our ambitions. Like we then wrote internally in chats: we still believe at least 30 people would be interested. So let’s aim higher: at 50 people! Even 30 was a stretch target – initially we said that if 10 of our founders show up, that’s nice too Little did we know then about the interest …

Having a quick look at the participant list of the first hackathon (sorry, in Estonian only) it’s nice to see that around half of the participants are still very active in the tech and startup scene. Around 20% are or have been successful startup founders and leaders. Many others have become top-level designers, developers or marketeers. Markus Villig, who then joined us as a 16-year old schoolkid is now the CEO of Bolt, one of many Estonian unicorns. The connections built then are still strong. That was our goal – to build a community, a strong network. We succeeded.

The icing on our birthday cake has been the global Hack the Crisis movement built on top of our hackathons experience and our mentors and volunteers network. The just finished Global Hack event drew over 10 thousand participants from all over the world to create hundreds of new solutions to solve the crisis. Again, the value of the network we’ve built there is what matters for people to continue making world a better place.

Upwards and onwards, Garage48! Let’s see where you’ll be in 2030. We have no idea. That’s what makes it fun. Forever, stay a startup!

P.S. Our current CEO Mari who has taken Garage48 to new heights did her re-cap already back in January, please read it here.

Used by Google, Twitter, LinkedIn, Sears and many others, it’s the easiest method to have people in a team moving in one direction.

Here is a nice intro:

Also included tons of stats on internal communications.

The top 3

No 1: Transferwise, the currency exchange service that has been taking over the world by storm, is the winner for the 2nd year in a row. Since last year they’ve added $6m round by Peter Thiel’s Valar Ventures, now counting 2 of Paypal’s founders as their backers. The founders Kristo and Taavet were just chosen as businessman of the year in Estonia as well. Most important though has been their great uptake among customers and very high customer satisfaction. You try it once and you fall in love, as easy as that.

No 2: Plumbr Java memory leak detector that can predict and avoid software failures. Closed their $1m round recently. It already boasts paying customers such as HBO, Dell, NATO, TeliaSonera, and Ericsson.

No 3: Weekdone weekly employee status report and visual team dashboard service for managers (disclosure: I’m a co-founder). Weekdone won the startup competition at one of the largest European tech conferences Slush and closed $200k investment round from KIMA Ventures and existing angels. We also won the main Gold Prize at Estonian Design Awards.

Runners-up

4. Marinexplore ocean data analytics and collaboration. Raised their first round late 2012.

5. Cloutex cloud services sync. Raised a local seed round from 11 local participants.

6. Fortumo mobile payments. Raised growth capital and made a small exit at $10m from Intel Capital and Greycroft.

7. Testlio mobile app testing. Graduate of Techstars Austin.

8. Pipedrive sales pipeline and CRM. Raised additional $3.4m led by Rembrandt Venture Partners and Storm Ventures plus others.

9. Erply POS (point-of-sale) and inventory management. Raised additional $2.15m led by Redpoint plus others.

10. Signwise cross-border electronic signatures. Raised local seed round from Mobi Solutions, Linnar Viik and Tavid.

Honorable mention: Cognuse cognitive rehabilitation systems and devices.

You can review the last year’s 2013 list here and compare it to what happened in a year.

From personal standpoint, a year ago Weekdone had just started. So I set a goal then to make this year’s list. Thanks to our kick-ass team we succeeded by having a good year. My co-founders Veli and Janek, as well our new team members Zain, Merilyn and Ott rock! Still a lot remains to be done in helping managers and team leaders make their teams and companies better. We’re just getting started on our mission to make people and teams happier and more successful. Feel free to join us on the ride with using Weekdone in your team. Thanks for all the support!

See you in a year! Someone needs to win the top in 12 months time

Not good. Research shows that multitasking between tasks lowers your productivity by 40% and IQ by tens of points.

Faced with too many tasks, what happens is we start working on small easy tasks just to get the todo list shorter. That’s human. But it’s not very productive.

So what’s the solution? Just kill most of your task list. Keep just 5-7 most important things on it. The less, the better. Some keep just 3. Some 1 or 2. If you can do 5-7 big things per week, you’re amazing.

The main rule is: never do things that are not on your 5-7 big things list. Don’t even think about the other tasks. Sure, you can keep them in a separate file or hidden in your task manager, but get them out of sight and out of mind.

If you take the time to sit back, relax and think, not all of those 100 things are important. You could actually achieve much more by better prioritization and limiting the number of items on you todo list. Here are some of my old blog posts on the topic. First one is more generic, the other two about methods to manage your priorities better:

• Top 10 ways for a productive week
• Focus your plans on what’s important: the Eisenhower Matrix
• Pareto analysis for getting things done

I’m using our own Weekdone team management tool to manage my personal productivity, mostly my big weekly goals, objectives and tasks. What had happened today was I had been human again and listed around 15 items I have to do this week there. Welcome, stress!

So what I did was to leave just 5 items there and moved the others to a “Plans on hold” area. Now the only thing I can do is accomplish one of those 5 goals. As that’s done, I can choose an additional task from plans on hold, but not before.

Luckily one of my tasks was to do more blogging, so I could share this post with you.

How do you as a founder manage your huge todo lists? Do you use any tools or processes? Do you just use a mental task list and trust your gut feeling of what’s important at any moment?

The author, Jüri Kaljundi, is a serial entrepreneur and co-founder of Weekdone weekly employee status reporting service. Try out Weekdone for free and be up to date with your team’s progress, while increasing your productivity.

As a startup entrepreneur, be like a great DJ. You can’t do products that only you as a founder like. Make products your audience likes and then loves. Measure features and react. If a DJ can do that in minutes, so can you, even if it takes days. Keep you startup’s dancefloor full of happy people with hands up in the air.

The author, Jüri Kaljundi, is a serial entrepreneur and co-founder of Weekdone weekly employee status reporting service. Try out Weekdone for free and be up to date with your team’s progress.

1. Transferwise – cheap money transfers. Charges a fraction of the price that banks and others charge for currency conversion. $1.3m seed round from Index Ventures, IA Ventures, Max Levchin (co-founder of PayPal), TAG, Seedcamp and others. Co-founded by Skype’s first employee. Seedcamp alumni.
2. Creative Mobile – mobile games. Hugely profitable. Drag Racing on Android has close to 100 million installs.
3. Erply – POS and ERP tools. In use at close to 100k seats. Largest customers have 10k employees. Seedcamp alumni.
4. ZeroTurnaround – Java productivity tools, loved by developers.
5. Marinexplore – marine data place for the ocean community. Only one in top 10 started in 2012. Raised $1.4m from Intertrust Technologies Corporation, Fredrik Astrup, Lars Erik Baustad, Marek Kiisa (Astrec Invest) and Ivar Siimar (WNB).
6. Grabcad – community of mechanical engineers & engineering workflow tools. $14 million raised from Charles River Ventures, Yammer’s David Sacks, Atlas Venture, Matrix Partners et al. Seedcamp and Techstars alumni.
7. Pipedrive – CRM and pipeline management tool. $1 m raised from TMT Investments, Andy McLoughlin, Christopher Muenchhoff and Angelpad. AngelPad alumni.
8. Vital Fields – farming weather forecasts. $318k from Estonian Development Fund et al. StartupWiseGuys alumni.
9. Flirtic.com – dating service.
10. Click and Grow – a self-watering flower pot. Over 80k units sold.

My personal goal for 2013 is to have my own Weekdone on next year’s list. Launched only 2 months ago, the beginnings for us have been promising, with first happy users from around 100 teams across the world, including some Fortune 500 teams. If you run a team of at least a few people – or even a few hundred – have a look at how we can help you communicate better and you as a manager always know what your team members are doing. Start here.

The author, Jüri Kaljundi, is a serial entrepreneur, micro-angel and co-founder of Weekdone weekly employee status reporting service. To try out Weekdone for free and be up to date with your team’s progress, register here or have a look at the walkthrough here.

This week the CEO of one of the companies I’m involved with came to the board with a question of finalizing the option table of his team. While there is a lot written on options from the US startups perspective, I believe Europe is somewhat different in it’s history, culture, employee mindset and actual earn-outs like exits. Since this question comes up a lot, here are my thoughts specifically for Europe.

Expectations and motivation

Be direct with asking your employees, what motivates them and how options will affect their work. What are their expectations? Does it motivate them at all, does it make a difference? Quite often I’ve seen people accept options, saying “well I can take them” but not being really too positive about that. Stock is expensive to give out. If it does not provide additional motivation, you’d better spend some more money on salaries, new fussball table for the office and some kickass team parties.

What is the value they put on 0.1%, 1% or 5% of stock? It might sound like a trick question, but ask “is there a difference between if I give you 1% or 2% of stock?” Do they value it any differently? As a founder, if your gut feeling is that by raising the option amount there is no difference in how the person will act, choose the lowest possible option amount. [I use percentages here, what you really should do is talk of discrete number of shares.]

Asking “if I give you this amount, would you be willing to take less salary and how much” is another good test to see if they put some value to the equity. Ask them: “If I give you 1% (or 10k shares), how much do you calculate that is in real money for you?”

Besides asking the employees, ask yourself very clearly, why are you giving the options and what are the outcomes? Do you expect people to work longer hours? Take less salary? Feel more energized and have a better team spirit?

What I’ve seen a lot in European startups is the dilution of the option table, while at the same time seeing employees giving no actual value to the stock they get. They do accept it but don’t act any differently. In that case, forget it or limit it to really tiny amounts. Just doing because it works in the US is not a good enough reason.

Fewer exits, lower valuations

Equity has value when you can sell it at the end of the day. European exit market, be it acquisitions, mergers or IPO’s, lags strongly behind the buzzing action in the US. Be honest with both yourself and your employees about the chances of getting money out from the options. It is a lottery, even if a lottery which outcomes they and you can affect.

For whichever country you are in, discuss how many exits there have been let’s say last year and calculate your potential from that.

Talk also about the valuations in your country: not in the US, not the stuff you see on Angellist and Techcrunch. How much cash has been paid for companies in your country in the recent years? It is true that European startup valuations are lower, both at angel, seed and series A levels than in US, especially if you compare yourself to the top US startups that drive the high valuations and get a lot of press.

While as founders and angels we all shoot for the exits, we must be realistic about what our statistical chances are.

We talk a lot about European employees being more motivated by salaries and working conditions. Often the European founders who spend their days reading the US tech press live in an imaginary world, forgetting that the actual market is different in Europe. Don’t lie to yourself. Don’t lie to your employees and co-founders.

Your experience?

Please tell in the comments, what has your experience been as an European founder giving or and employee receiving stock and options? Any pitfalls to avoid or common mistakes? What are the differences to the US that you see in your European country in how people receiving stock take it? What are your suggestions?

edit: Follow comments on Hacker News here.

The author is a serial entrepreneur, micro-angel and co-founder of Weekdone weekly employee status reporting service. To try out Weekdone for free to be up to date with your team’s progress, register here. 

We’ve now launched an early pre-beta preview of Utopic.me: a new service to see the hottest topics among your friends. You can browse the most popular links, videos, music, movies & events, shared and liked by your friends. You’ll get a personalized real-time view of what’s trending today among people who matter to you the most. Kudos to my exceptional team: frontend guy Veli and backend guy Janek, who made all this magic happen!

Please test Utopic out and give some feedback, what you liked and what not, what should be added or changed. Feel free to also like us on Facebook or follow on Twitter.

Some of the problems we try to solve:

• Have one service to unite everything popular amond your social network, not having to go to ten separate vertical websites.
• Group popular items shared by your friends by object categories, be it videos, music, events or movies (others to be added later). We believe there’s currently no good services to see that kind of distribution. Head to Utopic sub-pages to see that in action.
• See only the popular stuff that people interact with daily or weekly. Services like Twitter and Facebook are oveloaded with postings and many of us don’t really have time to go them through.
• Make people tell their friends more, what do they actually like. Still we try to keep manual action to a minimum (see the end of this post).
• Have a beautiful user interface with large photos, not just silly small thumbnails. You’ll be amazed how much visual content you currently miss even in your Facebook newsfeed.
• Be usable across platforms: you can already use Utopic on iPad, Iphone and other mobile platforms just by going to utopic.me. Hopefully we’ll have faster native apps in the future as well.

Utopic is still a baby, so you’ll see a lot of things added over the coming weeks. Everything is not perfect yet, be it the popularity algorithms or general functionality (or the speed of IE, grr). Many things are still on todo list. For now, take it as it is, really a preview of things to come.

Currently we work mostly with Facebook data about you and your friends, but other data sources like Twitter, Youtube etc will be added soon. The goal is to have a quick view of popular topics among your friends across different websites. The preview might be Facebook newsfeed centric (although we process more than that, for example the likes, events & photos of your friends), but as we add more external interfaces, this will be changing.

Here’s how Utopic looks on iPhone:

Back in January 2010 I wrote about issues online I would like to be solved, first one of them being:

“Automatically collected structured recommendations and top lists from friends. How often have you wished to know, what your friends read, listen to, watch? Until we have to manually rate or like stuff, it will not work. More data must be collected and processed automatically, transparently.”

Year later, I still stand by that and would love to see the problem solved, with as little additional workload put on users. It’s so easy to say people have to share & vote, but who likes that? Utopic is one try to do that as smoothly as possible.

Now head to Utopic.me and tell me what you think. Any questions?

Suggestions welcome: what should the January Edition include?

…

Original post from 2010:

With so many Y Combinator style startup / seed / idea incubator & accelerator programs out there, you can lose track of upcoming deadlines. So here is a list of upcoming application deadlines for year 2010 (now outdated) for you (click on date for more information):

LaunchBox (Washington, DC, USA): May 31.

Techstars Seattle (Seattle, WA, USA): June 1

Extreme University (Toronto, Canada): June 12

Startup Bootcamp (Copenhagen, Denmark): June 30

Currently not open, coming up later this year:

Seedcamp (London, UK) – with Mini Seedcamp’s across Europe open until July

The Difference Engine (NE England, UK)

Bootup Labs (Vancouver)

Bizdom U (Detroit, USA)

Seed Accelerator (Australia & Singapore)

Past deadlines:

NYC Seedstart (New York City, USA): February 28

The Openfund (Athens, Greece): February 28

i/o ventures (San Francisco, CA, USA): March 1

Y Combinator (Mountain View, CA, USA): March 3

Morpheus (India): March 10

Startl (Philadelphia, PA, USA): March 15

Tech Wildcatters (Dallas, TX, USA): March 19

Techstars Boulder (Boulder, CO, USA): March 22

DreamIt Ventures (Philadelphia, PA, USA): March 22

Betaspring (Providence, RI, USA): March 22

Tetuan Valley (Madrid & Barcelona, Spain): March 23

SproutBox (Bloomington, IN, USA), March 28

iVentures10 (Champaign, IL, USA): March 31

Capital Factory (Austin, TX, USA): April 2

True Entrepreneur Corps (San Francisco, CA, USA): April 2

Excelerate Labs (Chicago, IL, USA): April 2

NextStart (Greenville, SC, USA): April 5

AlphaLab (Pittsburgh, PA, USA): April 8

Shotput Ventures (Atlanta, GA, USA): April 10

Lightspeed Summer Fellowship (Menlo Park, CA, USA): April 15

Please add any other in comments and I’ll update the list.

UPDATE: Updated list for 2011/2012 available at http://startupin.me/incubators

Automatically collected structured recommendations and top lists from friends. How often have you wished to know, what your friends read, listen to, watch? Until we have to manually rate or like stuff, it will not work. More data must be collected and processed automatically, transparently.

Personalized content selection. How old-fashioned is it to present all readers of a newspaper with the same news and articles?  Time to grow up and present everyone with their own newspaper, TV channel and mobile portal. Static stuff is dying. Google personalized search results is a step in right direction.

Better social grouping. Saying “friends” in paragraphs above might bring disastrous results. Let’s be frank, we all have nutcases and axe murderers hiding in our social network friend lists. Hoping they all read just intellectual stuff and watch arty movies might not work. Instead you might end up with Dan Brown and Steven Seagal. So we need API-accessible lists and grouping based more on similarities of people, akin Twitter lists. Manual lists might not work, so some automation and algorithm based stuff might be needed.

Cutting out the old middlemen. There are still many intermediaries in all sectors of life, that can be cut off. Based on previous, newspapers and schedule-based TV channels are prime examples: in some parts they are replaced with personalized, search and recommendations based solutions. For other content, many other current portals, destination sites can be replaced with people finding bits and pieces of content or functional small services directly. Two clicks are always better than 3 or 4. This will also erode many current business models, so as a start-up, see where you can bring the current price down or make stuff just simpler to use.

TV add-ons and Internet-enabling. TV is great as a screen and entertainment device, but it needs an Internet connection and real-time action possibilities. These might be either built into the TV set, into set-top boxes, USB add-ons, remote devices, mobile or tablets.

Wearables and mobile phone add-ons. As mobile processor power grows, we should put it to better use via add-ons. Might be health and movement related or just for fun. People love fun!

Health & medical 2.0 and life guidance. Not just software, but also hardware. Just have a gut feeling, there is something boiling. As a biomedical engineering & electronics drop-out, I am fascinated what next years will bring. Even if it takes years for good human-computer interfaces and electronic eye display lenses to go mass market. Then you’ll get your augmented reality.

Multi-channel solutions. Part browser, part mobile, part tablet, part TV – stuff hanging somewhere between them. Some new services will be successful if you use at least 2 of those channels in parallel or in succession.

Anything location-based. We have no idea today where Gowalla, Foursquare, Yelp etc will develop. There is a lot of room for others. Be creative.

Social gaming / education. It will be hard to draw a line where entertainment ends and learning begins. It will be a mash of fun, education, socializing, networking, doing business. Just don’t think that business and learning must be serious or that fun and games is a waste of time.

Modern enterprise IT. Let’s be frank, consumer technology is light-years ahead of solutions used in corporate environments. We need more social, more user-generated, more real-time in enterprise.

Saving money. Kind of no-brainer and probably a childish suggestion, but always a good starting point to brainstorm startup ideas. Study what private people and companies spend their money on, list it, analyze it, see if there is something where technology can lower the costs. Also: saving time – analyze, for what we use our personal and employee time.

Please add your ideas, problems, wishes and thoughts in comments. I might be also editing this post as I remember more stuff.

Currently probably over 90% of services and content online is ad-supported, but it can not stay that way. In print, advertising vs subscriptions + newsstand income has varied in different markets and niches, but has been more toward 50/50% or 60/40%. I don’t see a way for online subscription models to grow to cover the gap from 90% to 40-50%, which is now missing. And no, neither smart nor stupid VC’s and angels will cover that, which they unfortunately or fortunately have been doing until now. That’s I believe today the biggest startup opportunity: which business models and processes will be there to cover the revenue gap in business models. At least 40-50% of online business income does not exist yet. What is your solution going to be? Which income sources will there be in addition to current ones?

The latest research regarding subscriptions is not promising. Forrester research says 80% would just find another service and just 20% would pay. PaidContent research showed just 5% of readers would be willing to pay. For most online services, conversion rates fluctuate between 1-5%, making it viable only for services with millions of users. I have been a fan of paid services for quite some time and still believe we will see more of them over the years to come. Still we must agree with the simple fact: most people won’t pay for anything online any time soon.

Mobile will be huge in coming years. We will see better monetization via app and in-app purchases there. Mobile does not mean just small handsets. It means netbooks, tablets, e-readers, special 6-10 inch access screens, car terminals etc – all with wifi and 3G/4G access. We will be sligthly more willing to pay on those devices, just because of habits. Unfortunately the amounts paid per person per month will not be huge, probably around 5-15 EUR. People have their limits. Also still most won’t pay. That means the revenues even compared to current ad revenues will be somewhat marginal. For mobile we will also see even less advertising. The screen space is limited – no space for ads. Our time on mobile will be limited – not full office days, but 1-2 hours per day max. Most people will also opt for only a few top sites and apps on mobile, much less than on PC’s. Mobile should grow to 10-20% of income streams. For startups – both intermediaries and consumer facing businesses – this will be a great sector to focus on from now on, but it does not solve fully the revenue gap problems for most service and content providers.

In advertising we continue to have many problems. Last ad models favor few selected sites (most notably search engines) and neglect the others in earlier stages of the marketing tunnel. Most ad models are oriented on direct response models, forgetting about the attention and interest generation stages of marketing models. Direct response models (like search ads) again work for just a few, but are not a solution for most marketing budgets to come online for branding and awareness generation. Currently no good news on that front, until all sides come back to basic understanding of the larger marketing management process. It will take time.

Sponsored income stream marketplaces

People hate ads. People hate to pay. They still want content and services. Just someone else should pay. But who?

Companies and marketers have budgets online and these will be increasing. The biggest problem today is not the direct response / click & action oriented field, which already works quite well. One of the questions is mass market marketing, reaching a lot of non-customers, just getting the word out, fast and to big audiences. While display ads still work for many – even without the clicks – other marketing models must emerge. New methods like everything around social marketing is also oriented towards the end of marketing process tunnel, and it’s also not the fastest marketing action out there.

Advertising in general is companies paying for services consumers use. Why not make that more clear to the people and have them their action part in it?

How about having companies who do not fit the direct response, social marketing and display advertising models just pay for content and online services of private consumers in exchange for getting their name, brands and products in front of people? The main question is having a very strong connection between getting the service and understanding of it being paid for you by a selected company. Soft sponsorships, logos, display ads just won’t make a difference in comparision with current display ads.

One way to do this is sponsorship markets, where people in a way receive favors, almost like gift cards, from a marketplace of sponsors. It’s not just one company paying for content or services or subscriptions, but consumers having a choice who their sponsor is. Think Facebook fan pages meet offers and affiliates. There are huge problems with scam schemes to work out there and it won’t be easy. Still it’s worth to explore it further. Facebook might do this, but so could smaller startups. Initially it will be more between parties which are well established, so there are less risks for scams. As time advances, more smaller companies can join to receive money from large sponsors to cover their costs in exchange for promotion to their subscribers.

One caveat is, it won’t work purely trying to do it the direct response way, with sponsors being paid on a CPC/CPA basis or getting registration data of the subscribers. There must be a way to bring the marketing tunnel/model first stage dollars, not the last stage money into this.

This has been done in a way of sponsorships in some cases today, but it has been inefficient until now. It’s not automated, transparent or measurable. These are the parts that must be worked into the model.

In addition to that or instead of it, what is your suggestion to cover the current income gaps for startups and media?

For more information join our Facebook group (343 members as of today) and event information.

You can find background information on the international OpenCoffee Club page.

First there was the Mayan Queen IV:

The 92m Blohm + Voss manufactured displaces 4200 tonnes of water. Sure, she’s no 17 on world’s superyachts list. But you know what that means: 16 people in the world laughing at your face when you show up. The front deck is small. Yes you can park your helicopter there, but what about friends ones? And for this trip, someone had ejected a huge lamppost on the front deck, a sure way to break your ‘copter – a practical joke? Don’t get me even started on the back deck, no real room for good size RIB’s. Poor mexican, who owns it. I hope he gets it sold quickly.

Then checked out the P&O Cruises Ventura.

She’s the largest ever British superliner, at 290 meters and 113000 metric tons. Fair enough. Ample room for your 3090 friends and loads of stuff. Then again, to get from your room to go diving takes you ages. And 5 pools, who needs that, for training? For gods sake, you have the sea all around you and you build pools. Argh! I don’t even want to know, what are the circus skills training school, bungee trampolines and rock school listed in the specification. It’s a dive ship, for gods sake!

Had a quick look at Cunard Queen Victoria as well. “Think fireworks, patriotic (British) song and oodles of pageantry — including the former Camilla Parker Bowles, now known as the Duchess of Cornwall, oh-so-royally pushing the button that sent a bottle of Veuve Clicquot champagne crashing toward the ship’s bow, presided over by England’s Prince Charles and his wife, Camilla. Alas, there was one hitch: The bottle didn’t break.” Sure in hell am I gonna buy a boat with such a curse!

Must be the recession. No good stuff on the market, all the junk brought to Baltic waters.

Back to RIB diving.

If someone would like to hear more about Baltic startup web and product development opportunities, feel free to get back to me. Besides our company there are tens of great software development companies, small and large, and hundreds of great private developers available.

Thanks to all participants, it was a great event. Hopefully we will have a Techcrunch event in Estonia soon, keep your fingers crossed!

My Background

I’m a very old man, in Internet years that is. I started with web development and online marketing 15 years ago, back in 94, designing the first commercial websites in Estonia.

Since then, half of the years I have been working focused on the local market of my home country, half regionally either across the 3 Baltic states or 10 countries in Central and Eastern Europe.

Half of the time I have been dealing with boring old enterprise IT services, pure corporate & B2B stuff, half with consumer-oriented online services.

Corporate vs Consumer – not presented at the event

One thing I have learned is that for startups, depending on what type of person you are, this is a choice each founder and startup has to make: what type of business you want to run.

Servicing the corporate clients has its advantages. In many cases the target groups and customers are easier to identify, market and sell to. The business model and revenue side are easier to be defined, and that can turn into significant revenues already from smaller number of customers. Then again, it does not have the sexiness of telling your friends what you do, having each of them use your services, being well-known on the market, having hundreds of thousands or millions of customers.

For those sexy consumer services, the revenue formula can be non-existant – well, may be not in these times anymore – and target groups hard to market to, as they are just too big. At the same time, many founders do have the urge to service consumers and absolutely hate serving the corporate customers.

Trust your inner feelings and act accordingly. You might be married to your startup for 5-10 years and you don’t want to be doing things you don’t enjoy, at least most of the day

While many B2B or corporate tech services can be sustainable in smaller countries – not huge, but profitable – it is not so for most consumer services. The markets and revenue streams are just too small. Which brings us to the Baltics.

The Small Baltics

To describe the Baltic attitude, we have to look at what the Baltics are.

Our total population for 3 countries together is just 7m people, a bit less than Sweden and more than Finland. But each of the countries on its own has a population of just 1-3 million people, which is tiny.

The total GDP of the largest Baltic country, Lithuania, is third of Finland, and even the total GDP for 3 of us is less than in Finland. Besides, the business cultures, nationalities and economies are pretty diverse.

That makes it quite hard for smart people to realise their dreams in our countries, just because of size.

Looking at online advertising markets in Baltic countries, these are near 10 million euros per year per country, 90% of which goes to large stagnant media companies, newspapers, leaving very little in online advertising revenues for the startups. The ad networks market share is tiny as well, most of the money going from top brand advertisers to a few top5 sites.

The Baltic Success

At the same time, looking at the technology startup scene, we have done pretty well, especially if you measure the success by exits.

We have had a few large international exits, where the local founding or very early shareholders have made sums of over 50 million dollars each. Most notably these have been two companies, Skype and one of world’s leading casino and online gambling software developers Playtech. I will talk about their models of success and connection to our countries later.

And we have had a multitude of local exits in the range of 10-50 million euros, mostly to Scandinavian media companies in the field of classifieds, car, real estate and job ads or auctions.

How so?

The Good

The Baltic countries, and that applies to most of Eastern Europe, has a long history of strong real sciences, cybernetics and electronics. Our educational system in these areas has been pretty good, especially in fundamentals like mathematics and physics, which has turned out great for technological problem solving skills.

This is the advantage of the Baltics and Central & Eastern Europe: having IT people and software developers with strong creative skills, coming up with new solutions, innovating. Especially when faced with well defined problems, the Baltic tech people take a very strong role in how to solve any problem. You define the problem or goal – our people find new or uncharted ways to solve them. That’s the key difference with for example many Asian outsourced software developers, where quite often you have to very clearly tell them, how to solve the problem. This is no selling of programmng hours.

Our creative and imaginitive designers, analysts and developers are our greatest asset. So what’s the problem?

The Bad and the Ugly

Let’s say your car engine breaks down. How many of you know, how to fix it? Or you have a piece of land and you have to build a house, stone by stone, wood on wood. How long would it take, until you learn it?

Each one of us can learn to fix car engines or build a house. The problem is, it takes time, you make mistakes and you learn much faster among people who have fixed cars or built houses. Doing it on your own, only learning from mistakes, can take years and not turn out a very good result. And if there is competition with existing skills, you fail.

Baltic and Eastern European missing skills are the international sales and marketing skills. We build great products. Exceptional products, in many cases. The thing is, we have no idea, how to sell or market them outside our home country, especially in US and Western Europe. Learning international sales and marketing is a cultural and emotional thing and can take years to master. Because of Soviet heritage, we have none of those skills. Our Estonian top marketing people who have moved from Estonia to run UK or US to run marketing programs for tech companies say, that they have had to learn everything basically from zero. In sales and marketing, we are in a situation like you would need to build a house or fix a car, but have to start learning only from your own mistakes.

This double’s our problems. Our own countries are too small to do anything significant. And going outside is hard, very hard – especially if you have no sales and marketing culture (in addition to no existing contacts) to do that.

Expansion

One of our topics here today is local markets vs international expansion. We all want to go international, not just from the Baltics, but also from the Nordics. But it is very hard to market outside one’s home country.

Back in 2000 I tried to expand my online recruitment company in Estonia simultaneously to around 10 countries in Central and Eastern Europe. Big mistake! The idea was great, the execution sucked. It is so easy to stretch yourself thin and lose focus. I would have been much better off and actually making something by choosing 2-3 key markets and dealt with them. An European country, either small or big, needs a huge amount of focus for an online startup. In many cases you have to do local marketing, local face to face sales, partnerships, customise the product etc. There are only a few exceptions, which can be managed from a distance with little local physical presence. That’s the reason we have very little regional online service chains in Europe.

There’s also a question, where to expand. In Europe you might be much better off risk wise to choose a few EU countries instead of world dominance. Decreasing risks at the same time decreases rewards.

Cooperation model

How can Baltic and Eastern European startups be successful on world markets? One thing: cooperation with Westerners from day one. We doing product development, people from Western Europe or US handling the sales, marketing and business development side of things.

This has been the model to most success stories in our region: Skype, Playtech, Indextools (acquired by Yahoo), LogMeIn in Hungary, various others. One joint feature for them: East/West partnership from almost day one, both local developers and Western (or Israeli) managers shareholders from very early stage.

For tech startups, remember what I said earlier about the role of developers in our region. This is no outsourced software development. People in our region are the product, in many cases they are the ones defining the product or service with just a little help on defining the customer problem, goals and targets. You all use Skype and I am pretty sure most are happy with an Estonian product.

Here today, I urge all of you to consider this. We need to join forces, taking best bits from each country. Product people go and employ good Nordic sales and marketing people, with internationl experience. Those people at the same time should come to the Baltics to develop their products.

Baltic VC’s and Investors

From financing side, I would say the Baltics are in good shape. Our key tech investor is Ambient Sound Investments, the 4 Estonian Skype founding engineers, now having over 100 million euros of their own money to invest. We also have MTVP/MartinsonTrigon, with 3 exited and 6 existing portfolio companies. Most of this activity is focused in Estonia, with also over 50% of Baltic startups coming from Estonia.

There are also organisations nurturing and connecting startups and entrepreneurs, like Connect Estonia (I am a board member). Both Tallinn and Vilnius have OpenCoffee Club networks.

Baltic Startups

Estonia

Fits.me – biorobotics for fashion, allowing you to take a picture of yourself and a webshop will show a real clothes fit on a biorobot for you – no more ill-fitting clothes! They won the Itechlaw.org pitch contest in Estonia yesterday.

Fortumo – mobile payments, allowing anyone to launch revenue-generating SMS services in 5 minutes in many countries, being also well developed in Scandinavia.

Programeter – analytical information and report automation for controlling and managing software projects.

The whole ASI portfolio.

Please also check out Tigerprises, a blog covering Estonian startups.

Latvia

Relenta – business collaboration Saas or even research chemicals Molport.

Lithuania

GetJar – the world’s most popular mobile application distribution and developer community, funded by Accel Partners.

Conclusion

To sum it up: our product development and financing are well in shape, if we would know how to sell and market, we would be in heaven!

Visit us, talk to us, let’s do things together!

1. In alignment with the Second Annual Tallinn Conference organized by The International Technology Law Association in collaboration with Enterprise Estonia, ArcticStartup is cooperating to organize an Elevator Pitch Business Plan Contest with support from Connect Estonia. The contest is held in Tallinn, Estonia on May 26, 2009.

The deadline for pitch applications is now extended to May 13th, so 2 days to go. Please have a look at the ArcticStartup page.

2. TechCrunch Europe is putting together a round-table event in Stockholm on May 27. TechCrunchTalk Nordic will be an afternoon of panel discussions and presentations followed by a networking reception. We’ll be bringing together the startup, Angel and VC communities together to debate the next phase of the startup world in Scandinavia, Finland and the Baltic countries – which should make for a lively discussion.

More information at the TechCrunch Europe page.

• tube radios and short, medium and long wave broadcasts
• vinyl LP’s
• cassette recorders and reel-to-reel tape decks
• rotary dial and analogue telephones (incl analogue mobiles)
• black and white TV’s
• film cameras
• VHS
• glass milk bottles

Here’s a list of things I will see die or become marginalized rather sooner than later:

• tube displays
• print newspapers
• petrol and diesel car’s and other internal combustion engines
• cassette camcorders
• analogue TV
• scheduled TV except for real-time broadcasts
• CD’s, DVD’s, blue-ray and other discs
• many that currently have a cable attached instead of wireless

The cool thing is, in any of these cases, it is just the form that becomes extinct, not the content or basic human need. We’ll still have journalism and news, music, transport, moving pictures. We’ll even have milk.

In many cases firms die with changes and development in format. Companies are too attached to form. Focus on content and function helps.