Life in Estonia (Spring 2014 issue)

SPRING I 2014
SPECIAL!
Government
Leading
Innovation
land & people I state & society I economy & business I technology & innovation I culture & entertainment I tourism
The e-Tiger Continues To Growl
Taavi Kotka:
Estonia Moves Into
The Cloud
Hot
#EstonianMafia
Start-Ups
Arvo Pärt's
Music
Emanates
Love
Cleantech
Innovation Estonia Aims
For Real Time
Economy

COVER
Taavi Kotka
Photo by:
Tiina-Liina Uudam
Executive publisher
Positive Projects
Pärnu mnt 69, 10134 Tallinn, Estonia
think@positive.ee
Editor
Reet Grosberg
reet.grosberg@ambassador.ee
Translation
Ingrid Hübscher
Ambassador Translation Agency
Language editor
Richard Adang
Design & Layout
Positive Design
Partner
SPRING 2014 I LIFE IN ESTONIA 3
In Estonia we can see a version of the in-
terconnected and computerized future
that is inextricably a part of the funda-
mental operations of society: 25% of the
electorate votes online, nearly 100% of
prescriptions and tax returns are done on-
line, as is almost all banking. Estonians have
given 140 million digital signatures, and last
December, Estonian and Finnish PMs signed
the first international treaty digitally. Add-
ing to this near 100% broadband coverage
and countrywide Wi-Fi, Estonia is one of the
most wired countries in the world.
As a country so dependent on digital solu-
tions, the whole of ICT infrastructure must
be regarded as an “ecosystem” in which
everything is interconnected. It functions as
a whole, thus it needs to be defended as a
whole. The more digitized we are, the more
vulnerable we are. It is therefore crucial to un-
derstand that cyber security is not just a matter
of blocking the bad things a cyber attack can
do; it is one of protecting all the good things
that cyber insecurity can prevent us from do-
ing – in other words, cyber security should not
be seen as an additional cost but as an enabler,
guarding our entire digital way of life.
However, even though we cannot take security
issues lightly, they cannot be used as an excuse
to limit freedom of expression. Freedom and
security need not contradict each other: on the
contrary, secure online interactions, enabled by
a secure online identity, is a precondition for full
internet freedom.
The freedoms we value are equally valid online as
well as offline. Those of us, for whom democratic
values are important, want to find a balance be-
tween security, privacy and free flow of informa-
tion. An encouraging example is Estonia, where
all residents are provided with a secure e-services
system while Estonia has also been ranked as the
first or one of the first in Internet freedom for sev-
eral years in a row.
Cooperation has been the guiding principle of our
IT success. As we prepare for the new opportunities
and challenges that will arise in the coming years,
we recognize that cooperation with and among
the Baltic Sea states and in transatlantic and inter-
national forums will be crucial to our success. We
are stronger and our reach is wider when we work
together and combine our efforts in pursuit of our
common goals.
I am glad that the Estonian ICT Week 2014 will
seek to demonstrate the interconnection between
innovation and the culture of start-up companies,
the awareness of net neutrality issues and the ca-
pability to implement IT solutions within states and
over state borders.
Toomas Hendrik Ilves
President of the Republic of Estonia
Estonians are e-believers. We are proud to be pioneers and
leaders in e-government. We have developed and implemented innovative
solutions that improve the lives of millions, and we intend to develop more.

6 Where To Go This Season?
Life In Estonia Recommends
8 News
10 Events
The two most important international events to be hosted in Tallinn
are the international information and communications technology week
“Estonian ICT Week 2014”, from 23-30 April and the FinanceEstonia
International Forum 2014, from 17-18 June.
16 Estonia As A Country Moves
Into The Cloud And Expands
All Over The World!
Taavi Kotka, the Estonian government CIO, talks about taking the al-
ready successful e-state onto a totally new level: Estonia has an ambi-
tious plan of moving the state into a data cloud spread all over the
world. In addition, with the help of ICT, there can well be ten million
Estonians by 2020 instead of the current one million.
20 Estonia: The Little Country
With A Start-Up Mindset
Sten Tamkivi, now an EIR at Andreessen Horowitz, who became known
as the Chief Evangelist of Skype, tells the story of Estonia’s IT success.
23 Estonian Tax Board 2.0
Presents: Real Time
Economy
The famous Estonian e-Tax Board has been admired and set as an ex-
ample all around the world. Where else can you submit your tax return
in just a few clicks and all declarations online without spending days on
end filling out paper forms? Marek Helm, Head of the Estonian Tax and
Customs Board, claims that although our e-Tax Board is admired all over
the world, the time is ripe for some qualitative changes.
26 What To Do With Legacy?
Implement No-legacy Policy
Estonia wants to introduce a no-legacy principle, which would require
us to renew all the state IT systems and technologies after a certain
amount of time, to keep in line with the ever-changing environment
and development of technology. Aet Rahe, Head of State Information
Systems Department, Ministry of Economic Affairs and Communica-
tions, introduces the policy.
28 The Estonian Government
Is About To Boost Seed
Investments In Estonia In
2014
EstBAN is an umbrella organisation for business angels and business
angel groups seeking investment opportunities in Estonia and its neigh-
bouring regions with an aim to grow the quantity and quality of local
seed stage investments. Signe Viimsalu, CEO of EstBAN, gives an over-
view of the main goals in 2014.
30 VitalFields Helps Farmers Be
More Efficient
The Estonian start-up VitalFields, which offers web-based services for
farm management, accurate weather and plant disease forecasting,
challenges the outdated view that farmers are remote from technology
and somewhat wary of it. The CEO of VitalFields, Martin Rand, says that
agricultural enterprises are in fact very open to new solutions.
32 The Success Story Of
ZeroTurnaround
Having to date financed its rapid expansion with sales profits, Zero-
Turnaround announced at the beginning of March that it has attracted
six million dollars of growth capital.
34 Pipedrive – Estonian
Company in Shaq O’Neal’s
Investment Portfolio
The Estonian company Pipedrive has developed valued customer man-
agement software which provides wise and practical help to any sales-
man. Recently, the Silicon Valley technology guru Vivek Ranadive and the
former star basketball player Shaquille O’Neal invested in the company.
36 Estonia Can Change
The World, Will It?
Carl Pucci of Datel Ovela, the subsidiary of Datel AS, acknowledges
Estonian ICT technologies, many of which would be an excellent fit for
the global market.
I CONTENT
SPRING_2014
LIFE IN ESTONIA I 2014 SPRING4

51 Portfolio –
Marko Mäetamm
From the moment he entered the Estonian arts scene, Marko Mäetamm
has amazed audiences with his productivity and overflowing sense of
fun, which may border on the provocative or reach painful integrity. He
never tires of surprising the audience and, quite possibly, himself.
62 Sounds Emanating Love
At the turn of May and June, four concerts of Arvo Pärt’s music will be
performed in Washington D.C. and New York. The Estonian Philhar-
monic Chamber Choir and orchestra will fly over the ocean, the recent
Grammy-winner Tõnu Kaljuste will conduct and the composer himself
has helped to put the programme together. What is the secret behind
the music of the most well-known Estonian? Life in Estonia tries to find
the answer.
68 Jazzkaar – More Than
Just A Festival
The biggest Estonian jazz festival – Jazzkaar - will celebrate its 25th an-
niversary this year, marking an important cultural milestone. Let’s cast a
look at the history of the festival.
70 Estonian
Song And Dance Celebration
Touches Hearts
The Estonian Song and Dance Celebration is a unique event that brings
together a giant choir of 25,000 people every five years for a weekend
in July. More than 100,000 people enjoy the concerts and sing along
with the most popular songs. This summer the theme of the Song and
Dance Celebration on 4-6 July is “Touched by Time. The Time to Touch.”
73 Lottemaa Welcomes Visitors
Beginning In July
There is Walt Disney’s original theme park Disneyland in southern Cali-
fornia in the USA, and in Paris in Europe, and Astrid Lindgren’s World
in Sweden. Finland, our neighbour, has Moomin World. In July, Lotte,
a cartoon character cherished by Estonian children, will spring to life
in the theme park Lottemaa, built at the site of a former Soviet missile
base near Pärnu.
77 Estonia In Brief
78 Practical Information
For Visitors
38 Next Silicon Valleys:
Small Estonia Has Big Ideas
Nigel Cassidy from BBC visited Estonia for innovative start-ups and, among
other things, found the Stigo scooter. He saw it, drove it, and liked it.
41 Nordic Cleantech Open
The third edition of the Nordic Cleantech Open competition saw a re-
cord-breaking 107 cleantech companies applying. An international jury
of more than 50 influential representatives of multinational companies
and venture capital firms selected the top 25. Out of the 11 impressive
Estonian cleantech start-up companies which entered the competition,
Cityntel and Stigo both made it to the top 25.
43 Startup Wise Guys
On The Hunt For B2B Start-ups
The Estonia-based start-up accelerator Startup Wise Guys is about to
commence its new programme, Business Tech. For the first time, they
are looking specifically for B2B start-ups only. Life in Estonia met with
Mike Reiner, the co-founder and managing director of Startup Wise
Guys to find out more about the guys.
46 GameFounders: We Believe
In The Gaming Industry
GameFounders is the first European business accelerator exclusively
working with game studios. The accelerator was started in 2012 and,
in the past two years, it has become a considerable player in the game
industry.
47 How Do We Fix Maths
Education?
“I hated maths”– this is something we often hear from former school
leavers. The problem is not unique to Estonia. The British educational vi-
sionary Conrad Wolfram has developed a programme called Computer-
Based Math, and Estonia is the first country in the world to implement
this programme in schools.
49 ProgeTiger, Lego Robots
And Computer-based Math
Conquer Schools
“We need a smarter workforce,” says Ave Lauringson, ICT skills coordina-
tor at the Ministry of Economic Affairs and Communications. Life in Esto-
nia asked her to give an overview of smart initiatives in Estonian schools.

I WHERE TO GO THIS SEASON
Friday, 4 July 2014
6 p.m. The first performance of the 19th dance celebration
Puudutus (The Touch). Tallinn, Kalev Central Stadium.
Saturday 5th of July 2014
11 a.m. The second performance of the 19th dance
celebration Puudutus (The Touch).
2 p.m. Procession.
8 p.m. The first concert of the 26th song celebration
Aja puudutus (Touched by Time). Tallinn, Song Festival Grounds.
Sunday 6th of July 2014
11 a.m. The third performance of the 19th dance celebration
Puudutus (The Touch).
12 a.m. The second concert of the 26th song celebration
Puudutuse aeg (The Time to Touch).
Tickets are available at Piletilevi for 4 – 50 Euros.
2014.laulupidu.ee/en/
MEDEA / Ballet by Gianluca Schiavoni /
Music: Igor Stravinsky, Alfred Schnittke and Dead Can Dance
Libretto by Marco Gandini
World premiere at the Estonian National Opera
on 13 March 2014
Conductor: Vello Pähn
Choreographer and Stage Director: Gianluca Schiavoni (Italy)
Set Designers: Maria Rossi Franchi (Italy) and Andrea Tocchio (Italy)
Costume Designer: Simona Morresi (Italy)
Medea, a sensual and powerful princess of mythical Colchide (a region
corresponding to present Georgia), is a seductive sorceress, who aban-
dons her country and her family for her love of a strong and beautiful
man called Jason. Yet he is not only interested in Medea’s love, but also
in getting hold of the Golden Fleece, a symbol for power. Medea gains
Jason’s love by giving him this symbol of power. Soon she gives birth to
two boys. Once she realises that Jason is betraying her with the King
of Corinth’s daughter, Glauce, she decides to take revenge by killing
Glauce and her own children.
Medea
Photo:ChrisMännik

L’ELISIR D’AMORE / Opera by Gaetano Donizetti /
Premiere at the Estonian National Opera on 15 May 2014
Conductors: Vello Pähn and Risto Joost
Stage Director: Georg Malvius (Sweden)
Designer: Ellen Cairns (Scotland)
In leading roles: Kristel Pärtna, Kadri Kipper,
Oliver Kuusik, Merūnas Vitulskis (Lithuania)
“L’elisir d’amore” is one of the most frequently performed Donizetti’s
operas together with “Lucia di Lammermoor” and “Don Pasquale”. It
combines a touching love story and a hilarious comedy with lightness,
sparkling wit and beautiful music, including the well-loved tenor aria
“Una furtiva lagrima”. Its premiere in Milan in 1832 was a triumph and
secured Donizetti’s place as one of the leading Italian opera composers
of his day. “L’elisir d’amore” relies on the traditions of the 18th
century
opera buffa and offers an ear-tickling delight for all lovers of 19th
cen-
tury Italian bel canto.
Georg Malvius has directed more that 60 plays, 70 musicals and 20 ope-
ras in Sweden, Finland, Norway, Denmark, Germany, England, Holland,
Italy, Luxembourg Austria, Monaco, Hungary and elsewhere. In Estonia,
Malvius has staged 14 musical and drama productions.
www.opera.ee
May 15 at 7 pm
Estonia Concert Hall
May 16 at 7 pm Jõhvi Concert Hall
Tickets from Eesti Kontsert, Piletimaailm and Piletilevi
In cooperation with Tallinn Philharmonic Society
Akiko
Suwanaiviolin, Japan
Tallinn Chamber Orchestra
Conductor Kristiina Poska
Season Closing Concert
concert.ee
Eesti Kontserdi
suurtoetaja
Ametlik autopartner
hooaja peatoetaja
JULY 20–27 2014
Presenting the Ukrainian
National Opera!
Verdi “DON CARLOS“
Lysenko “NATALKA POLTAVKA“
Bellini “NORMA“
OPRERA GALA
CHILDREN GALA
Artistic director of the festival: Arne Mikk
saaremaaopera.eu
facebook.com/saaremaaopera
Vello Pähn
Photo:SuiradO

aUldrich
The Estonian start-up Cognuse has beaten tough competition
to be included in the reputable US business accelerator DreamIt
Health. Cognuse develops and distributes innovative evaluation
and therapy solutions meant for cognitive rehabilitation patients.
A total of 120 companies applied to be accepted into the DreamIt
Health accelerator and only the nine strongest were selected. “With
the help of DreamIt Health, Cognuse is taking significant steps closer to
health insurance and medical care suppliers in its sector. It also enables
us to get access to research and development institutions and larger
investments which are necessary for growth,” explained Andres Mellik,
one of the founders of Cognuse. Currently the main focus of the com-
pany is product development and implementing business models. “We
are focusing on the US, Scandinavian, Japanese and Estonian markets,
and the training programme developed by us is already being used by
20 hospitals and more than 100 private patients,” added Mellik.
Cognuse was founded in 2010, and in 2013 it participated in Acceler-
ace Life, an accelerator of the Tallinn Tehnopol Science Park targeting
health technology companies. The main activity of Cognuse is the de-
velopment of training programmes for cognitive rehabilitation and the
adjustment of those programmes for various devices, such as iPads and
smart phones. In addition, the company has developed different appli-
ances for the use of rehabilitation programmes. Cognuse products are
meant for medical institutions and private patients.
Enterprise Estonia announced that the Estonian national booth
and Garry Kasparov’s simultaneous chess event attracted
heightened attention at the world’s largest mobile trade fair,
Mobile World Congress 2014, which took place in Barcelona
from 24 – 27 February.
According to Martin Hirvoja, Member of the Management Board of En-
terprise Estonia, the fair in Barcelona clearly demonstrated that partici-
pating in large trade fairs with a national booth is beneficial for Estonian
entrepreneurs in finding useful contacts, as well as for increasing aware-
ness of Estonia as a country.
“It is great news that Regio is the first Estonian company to win a Global
Mobile Award prize, with the Reach-U solution Demograft. This respect-
ed award demonstrates that Estonian exporters need such support,”
added Hirvoja.
Enterprise Estonia also used the fair to hold a networking event, with
Garry Kasparov as its magnet. A few lucky people were chosen to play
chess with the legendary chess player. Kasparov’s simultaneous chess
event turned out to be one of the magnets of the entire fair and at-
tracted representatives from IBM, Tata Consultancy Services, Deutsche
Telekom and many others to the event.
Kasparov has always had good relations with Estonians and he chose
Estonia to be the first country to launch his project of teaching chess
at schools. The Kasparov Chess Foundation Europe programme started
in 2012 and has become very popular. Also, Kasparov announced his
candidacy for the 2014 FIDE Presidential Elections in Tallinn, Estonia.
“Garry Kasparov’s simultaneous chess event with leaders of companies
was an innovative way to introduce Estonia to large international ICT
corporations. The event organised by Enterprise Estonia significantly
helped Estonia to stand out and receive positive attention. It is usually
extremely difficult to stand out from others at large trade fairs, and
therefore we definitely ought to organise similar events in the future,”
said Andrei Korobeinik, President of the Estonian Chess Federation,
who moderated the event.
According to Tony Rivshin, the owner of Topconnect – one of the larg-
est Estonian exporters – the special event with Kasparov was the most
interesting occasion at the entire trade fair.
Nearly 100,000 visitors came to Mobile World Congress this year. Par-
ticipants in the joint Estonian booth included software development
companies and IT service providers.
Garry Kasparov helps
to promote Estonia
Estonian start-up develops training
programmes for cognitive reha-
bilitation at an American business
accelerator
I NEWS
Andrei Korobeinik and Garry Kasparov
Photos:LindaUldrich

Crossing the Estonian border from Russia, an external EU border, was
once a time-consuming, uncertain wrangle lasting days and resulting
in bribery, illegal sales of spots in queues, pollution, traffic safety issues
and losses for freight carriers.
The GoSwift Queue Management Service for motor vehicles allows driv-
ers to book a time to cross the border, thereby creating a more efficient
system, as drivers do not have to wait in long queues. Using the GoSwift
system, trucks and cars can now drive to the border just before the
registered border crossing time. Drivers can wait at designated waiting
areas where toilets, showers, dining areas and free WIFI are available,
proceeding as scheduled to cross the border easily and on time. By al-
locating a specific time and date for the applicant to cross the border
online, GoSwift has created minimum waiting times, cleaner surround-
ings near border crossing points and considerably more movement of
cars and trucks due to online efficiency.
The service has been implemented on the borders of Estonia, Lithuania
and Russia. The system saves Estonian road transportation companies
four million euros a year. According to Hannes Plinte, CEO of GoSwift,
drivers have already got used to the convenience of the online reserva-
tion system for border crossing, which has been in operation for two
and a half years. Nobody has to queue for long hours any more, and the
average border crossing time now is one hour.
In 2013, GoSwift won the World Summit Award (WSA) in the category
of e-Government & Open Data. According to Ken-Marti Vaher, the Es-
tonian Minister of the Interior, it took a bold and demanding client, as
well as a result-oriented developer to create such a good e-solution. “It
is a great honour to see the high standard of e-solutions being created
by Estonia and for one of our projects to receive recognition from inter-
national experts within the UN and the World Summit Award,” he said.
The GoSwift Queue Management Service has been used to queue vehi-
cles at the Estonian-Russian road border since 2011. In 2012 the service
was launched in Russia and in the summer of 2013 was also opened in
Lithuania. Besides border crossings, GoSwift can also be used at tourism
sites and to manage ferry queues: basically wher-
ever there are queues. Since June 2013, GoSwift
service has also been used at the Tallinn TV Tower
pilet.teletorn.ee, where customers can book a
time to enter the tower online instead of having to
queue outside.
Weekdone, an Estonian start-up which
aims to become the #1 app for managers
to monitor and manage their teams, won
the Slush Pitching Competition and raised
$200k in new fundin from a group of in-
vestors led by KIMA Ventures.
Weekdone, launched in 2013, is an easy yet
powerful tool for managers to track what’s
happening in their teams and an opportunity
to give immediate feedback to their employ-
ees. In essence, it is a hassle-free weekly em-
ployee status report, dashboard and feedback
system. In November 2013, the company won
the Slush Pitching Competition in Finland
among 1,300 start-ups, 400 of whom had ap-
plied to pitch. According to the winning pitch,
the best part of this tool is that it is suitable
and easy-to-use for both managers and em-
ployees, making life easier for managers and
teams more productive.
At the end of 2013, Weekdone also closed
their next investment round of $200k. It was
led by Jérémie Berrebi’s and Xavier Niel’s KIMA
Ventures, one of the world’s most active an-
gel investors. The round also included exist-
ing investors: Skype/Kazaa founding engineer
and chief architect Ahti Heinla, the Rubylight
venture fund, and Taavi Lepmets, a former
backer of Odnoklassniki, Russia’s largest social
network. The round brings the total raised by
Weekdone to $290k.
“I have managed and I am still managing many
companies,” said Jérémie Berrebi of KIMA Ven-
tures’ investment in the Estonian company. “I
really think weekly reporting is the most impor-
tant thing a manager needs to request from his
team. It’s not always easy, but with a tool like
Weekdone, it’s becoming fun for everyone.”
Recently, Weekdone grew its team from three
to six people and set up an office in New York
City. These moves follow a recent ramp-up in
sales: almost a third of Weekdone’s paying cus-
tomers started their subscriptions in October.
Weekdone has seen a lot of new uptake on
mobile platforms, with iPhone and iPad be-
ing available for some months. “We believe
that the future of many communication tools
is mobile, moving with you wherever you go.
Both leaders and team members are giving up
PCs and switching to mobiles for many tasks.
We already get many more registrations from
mobile devices than from web browsers and
PCs,” said Kaljundi.
This year Weekdone launched their real-time
Buzz timeline activity feed, which is now used
for internal daily communications among many
users. “Weekdone is not just about manage-
rial reporting, but also about employee-to-em-
ployee communications and making sure your
co-workers know what you are doing and are
able to help you,” said Kaljundi. “Checking
Buzz helps you to keep up to date on the pulse
of your company.”
weekdone.com
GoSwift – online reservation system
for border crossing
Estonian Start-up Weekdone Announces $200K Investment
Photo: Sami Heiskanen

Estonian
ICT Week
2014
LIFE IN ESTONIA I 2014 SPRING
I EVENTS
10
The main idea behind “Change, Quick!”, an international business trans-
formation conference, is well expressed by Gartner, the world´s leading
technology research company, whose Vice President, Stephen Prentice,
will deliver the conference´s keynote presentation. We now live in a world
where “Every budget is an IT budget. Every company is an IT company.
Every business leader is becoming a digital leader.”
ICT is an integral part of virtually everything that we do nowadays; it is
visibly changing how people behave, think and do business. The main
question for more and more entrepreneurs from all walks of life is how to
make use of the opportunities provided by contemporary technology and
not lag behind. This is exactly what “Change, Quick!” is about.
The conference focuses on using ICT to transform business models in
other sectors so that they become more efficient, and meet the needs
of the changing world and increasingly tech-savvy clients. A large part
of the conference day is dedicated to insightful case studies from a wide
range of sectors, particularly “traditional” ones. Although at first sight it´s
maybe not clear what ICT has to do with wooden floors or growing ce-
real, ICT can be the key component. For example, the Estonian company
Bolefloor is the world’s first industrial-scale manufacturer of hardwood
flooring with naturally curved lengths that follow a tree’s natural growth.
This is achieved by combining wood scanning systems, tailor-made CAD/
CAM developments, and innovative optimization algorithms. Before Bole-
floor, such floors could only be produced by an extremely limited number
of dedicated craftsmen. Another company, Trigon Agri, is able to control
virtually everything that goes on in their vast cereal fields in Poland with-
out having to physically leave Estonia: ICT allows them to work smarter
and lower costs considerably.
“If you want to become a big player on a global scale, it is important to
see ICT as an investment not as an expense”, says Jüri Jõema, the CEO of
the Estonian Association of Information Technology and Telecommunica-
tions (ITL), the main organiser of the conference. “On the other hand, ICT
is not something-in-itself and this is precisely why we talk about business
models in this conference. You have to think about your entire business
process before you make an investment.” What “Change, Quick!” aims
for, therefore, is to support better decision-making and, in most cases,
this doesn’t mean buying the most expensive solution available.
The other highlights of the conference day include:
The Gartner keynote offers participants an opportunity to benefit
from the very best in terms of the world´s technology research and to
find out where ICT´s influence on other sectors is likely to take us in
the coming years; An on-stage development takes place throughout
the day, engaging participants in a real change process: a dream team
of business and tech experts, led by Yrjö Ojasaar (Solon Partners) and
Marko Kokla (Virtuaalettevõte), will work on finding a solution to one
company´s real business problem; More case studies offering guests
both inspiration and knowledge, including the Estonian Mafia´s Startup
Superstars: guests can step into Fits.me’s virtual fitting room for online
retailers based on shift-shaping robots, learn how TransferWise has
managed to revolutionise international money transfers and what has
made Fortumo’s mobile payments a huge success in 79 countries. Joni
Lehtonen, Tieto’s Vice President, will focus on state-of-the-art Indus-
trial Internet based-on-use cases in Field Engineering and at the service
level. The conference’s Demo Area is the place for practical demos and
hands-on access to novel technologies and the newest gadgets; The
Executive Evening at the Estonian National Opera will offer some seri-
ous networking, kick-started by an opening discussion by special guests.
The moderators of the event are Jarmo Eskelinen (Forum Virium Hel-
sinki, CEO and Chair of the European Network of Living Labs) and Yrjö
Ojasaar. “Change, Quick!” is co-organised by ITL and the Baltic Innova-
tion Agency.
Nature in combination with leading technology
Bolefloor´s unique hardwood flooring continues to impress the world.
Their floors can be found in the showrooms of noted fashion designers,
as well as in the residences of Apple executives in San Francisco.
CHANGE, QUICK!24 April / 2014 @ Tallinn University
www.ictconfestonia.com
From 23-30 April, Tallinn will host the international
information and communications technology week
“Estonian ICT Week 2014”, held on the initiative
of the Enterprise Estonia Foundation (EAS), which
will focus on entrepreneurship in technology as
well as topics relating to the public sector. Further-
more, the week will be filled with receptions and
meetings designed for guests of ICT Week, aimed
at contributing to cooperation both in Estonia and
worldwide.
Estonian ICT Week aspires to become an annual top
event in the field of ICT in the Baltic and Nordic area
and hopes to attract opinion leaders in the field,
entrepreneurs, risk investors, major foreign officials
and representatives of international organisations.
24.04
ICT Week

The first Nordic Digital Agendas Day – dedicated to innovations and fu-
ture plans in the field of the information society, focusing especially on
e-government – will bring together government CIOs and experts from
all over the Nordics. They will be sharing their main lines of activities and
will introduce ambitious plans for the next 10 years.
Just as Singapore and South Korea are featured at every international
ICT event in Asia, the Nordics have been the main trend-setters in Eu-
rope. Northern European countries are implementing more and more
incredible IT solutions that completely change their citizens’ interactions
with their countries, and Estonia has been showing the way to the rest
of the world. Estonia is known for having the first e-government and
first successful implementation of the digital signature, and Denmark
for its successful e-invoicing system.
At this forum, each country will introduce their crazy yet necessary ide-
as that deal with real challenges of today, ideas which could prove to
be valuable for others. The moderator for the event, Siim Sikkut, ICT
Policy Adviser at the Government Office of Estonia, and Taavi Kotka,
Estonian government CIO, provide previews of what Estonia’s message
is going to be at the event:
Global Information Society Institute (GISI)
Strength lies in cooperation. Technological and human readiness to
adopt new solutions has been the foundation for the GISI, which will
launch in 2014, and which, in addition to addresses by specialists and
politicians, will provide opportunities to offer scientific information and
ideas in the field of information societies.
Digital market across countries
It’s true that success breeds success, and this is why successful and
ground-breaking solutions from Estonia keep on coming. We have al-
ready started cooperation with Finland in cross-border digital signatures
and e-services, i.e., we’ve created an actual unified digital market. The
intention is to extend this cooperation to other countries.
No-legacy principle and Real Time Economy
Estonia has set the goal of replacing many of the existing e-services
with new and improved ones. Estonia wants to introduce a no-legacy
principle, which would require the rebuilding of all state IT systems and
technologies after a certain amount of time, to keep up with the ever-
changing environment and development of technology. Estonians can
already file their taxes in a couple of minutes through a web interface,
but we intend to radically reform and automate the whole tax collection
system. The Real Time Economy is a new trend in the world, with Esto-
nia still leading the way.
Education and healthcare
Two areas of public services have particularly big plans for changes.
In education, the goal is to use technology to make every class more
interesting and personalised for each student.
In the healthcare field, the main objective is to make services more pre-
ventive, accessible and directed towards specific groups. Estonia wants
to introduce remote services, such as telemedicine and care, to reduce
the need for physical interaction and make it possible to use services
from a distance.
Another idea that is being bounced around is how to make the e-
health information system a platform where a person can gather in-
formation about herself with all kinds of devices, apps and solutions,
enabling doctors to use this information for medical, especially preven-
tive, purposes.
What happens to the Internet?
President Toomas Hendrik Ilves was recently appointed by The Internet
Corporation for Assigned Names and Numbers to serve as the chairman
for the group figuring out what Internet governance should look like in
the future. Estonia’s goal is to help create and apply solutions that guar-
antee a free and open Internet, including a better multi-stakeholder
model.
Country without territory
Since most of the crucial services in Estonia can function digitally, there
are talks of a new concept: a country without a territory. This means
that the Estonian services landscape – especially critical public services
and systems – can in emergency cases function in the cloud, without a
physical territory.
An ambitious idea that will be discussed at the ICT Week is the concept
of e-residency. “For the rest of the world to be able to benefit from our
e-solutions, we want to provide the opportunity for all foreigners to
get an ID-card and Estonian e-identity in the near future,” says Kotka.
In addition to the topics mentioned above, Nordic Digital Agendas Day
will bring many more to the table. Which of the ideas are held in com-
mon by several countries and where the best cooperation opportunities
lie will be revealed at the conference.
Nordic
Digital Agendas Day
25 April / 2014 @ Swissôtel Tallinn
Organised by the Ministry of Economic Affairs and Communications
25.04
ICT Week

I EVENTS
eHealth & Wellness
hackathon
25-27 April / 2014 @ Tehnopol Mustamäe
Garage48 is a 48-hour event, with the goal of building technological
prototypes in just two days and nights. The event is organised by the
Garage48 Foundation, launched by six start-up entrepreneurs who met
thanks to the Estonian Start-up Leaders Club. The idea is to give hands-
on experience in how it feels to build a start-up with a team. Garage
48’s main goal is to promote entrepreneurship and inspire more people
to try to create their own start-ups. The aim is to lighten the burden of
turning an idea into a working prototype, and bringing it to the market
for customer feedback.
Founded in 2010, in Estonia, arguably the most tech-savvy country in
the world, Garage48 events provide an opportunity for people with dif-
ferent skills to pitch ideas, gather teams and build working tech product
prototypes during a weekend. So far 33 events have taken place in 12
countries, from South Africa to Finland, with 2,500 participants, more
than 800 ideas pitched and nearly 400 prototypes built. Nine teams
created in those events have successfully raised venture capital while
many more met their future co-founders or partners. One of the most
successful Estonian start-ups born in Garage48 is VitalFields: their prod-
uct vitalfield.com is the modern farmer’s best friend, in a pocket tool for
farm management, and accurate weather and plant disease forecast.
With the backing of 750,000 euros in a venture capital investment, the
VitalFields team now is on the way to making farming more efficient
globally.
With the globally rising importance of technology, more and more peo-
ple are daring to exchange safe jobs with guaranteed pay cheques for
the roller-coaster start-up life, aiming to build corporations of their own.
Garage48 aims to prove that a working prototype is a much better start
for a successful business than 1000 slides.
Garage48 co-founder Priit Salumaa says: “We have been doing Ga-
rage48 hackathons in order to boost local start-up scenes by bringing
the Silicon Valley attitude to Estonia, to Eastern Europe and to other
developing markets. We wanted to show that a small team with a kick-
ass attitude can achieve amazing things on a lean budget in a very short
time: you can start with an idea and its first prototype without waiting
for a white boat with an investor on it!” In recent years, developing
new technologies has become cheaper: what previously took years and
millions of euros can now be done almost for free and in a short time.
“There are millions of apps out there, yet we see that there is still huge
potential for ITC and hardware products that solve big challenges in
particular industries, such as healthcare. Therefore, the 35th Garage48
hackathon is devoted to e-health and wellness solutions,” noted Ga-
rage48 co-founder Ragnar Sass. As Estonia has positioned itself as a
hub for pioneering new technologies for state-wide adoption, including
e-health solutions, such events are definitely worth keeping an eye on
for great ideas that might improve the world.
Does walking around with head-itching ideas for a long time sound familiar to you?
That is where Garage48 hackathons come in.
ICT Week
25.04
26.04
27.04

Blocking and filtering content, passing laws that oppress government
critics and deliberately making Internet or mobile access slower, are just
a few scary examples of censorship on the Net. How to keep such dark
scenarios from happening and how to ensure the future of a free and
secure Internet will be the main topics of the Freedom Online Coalition’s
high-level conference in Estonia’s capital Tallinn.
In regard to Internet freedom, Estonia continues to enjoy one of the top
positions in the world. According to the Freedom House Freedom on
the Net report, it is in second place just after Iceland.
Supporting and protecting freedom online is a stance that Estonia
strives to promote worldwide and is dedicated to working closely with
all partners that stand for the same values. Estonia believes that virtual
freedom of expression is an inseparable part of human rights – sup-
porting and promoting freedom of expression on the Internet is just as
important as protecting all fundamental human rights. Unfortunately,
all countries do not share this view. According to the Freedom on the
Net report, 34 countries out of 60 that were evaluated experienced a
decline in Internet freedom. This shows that freedom online is not a
self-evident phenomenon, but rather a sphere that needs constant sup-
port and maintenance.
Estonia is a founding member and the current chairman of the Freedom
Online Coalition – a group of governments committed to advancing
Internet freedom worldwide. That is to say free expression, association,
assembly, and privacy online.
The only way to ensure these freedoms is to have close cooperation be-
tween governments, civil society organisations and private sector. This is
precisely what the coalition’s meeting in Tallinn will focus on. It is one of
the year’s most relevant milestones in the discussion of Internet freedom
worldwide, bringing together foreign ministers, representatives of civil so-
ciety and business, as well as distinguished experts from all over the globe.
The outcome of the conference will be ”Recommendations for Free-
dom Online” – concrete solutions on how to keep the Internet free and
secure based on the multi-stakeholder model. The 22 Freedom Online
Coalition states have already shown their commitment to ensuring that
the development of the Internet will stay on a free, open and undivided
course. In addition, there is always room for new members, who value
the same principles.
For more information:
www.freedomonline.ee
The Freedom Online Coalition’s
4th annual high-level conference
”Free and Secure Internet for All”
28-29 April / 2014 @ Swissôtel Tallinn
28.04
29.04
ICT Week
Members of the Freedom Online Coalition: the 22 member states
are Austria, Canada, the Czech Republic, Costa Rica, Estonia,
Finland, France, Georgia, Germany, Ghana, Ireland, Kenya, Latvia,
the Republic of Maldives, Mexico, Moldova, Mongolia, the Neth-
erlands, Sweden, Tunisia, the United Kingdom, the United States
of America.
Who will participate? More than 200 leading Internet freedom
experts from all over the world, including foreign ministers, civil
society representatives and top entrepreneurs.
Key speakers include the President of Estonia Toomas Hendrik
Ilves, Vint Cerf of Google, the foreign ministers of the Nether-
lands, Sweden, Kenya and Mongolia, the Secretary General of
the Council of Europe Thorbjørn Jagland, and many others.

* This conference is a continuation of the annual conference organised by
EE and the International Technology Law Association, held for the first time in 2008.
Latitude59 conference
“Welcome the Light!“
28-29 April / 2014 @ MEKTORY
latitude59.ee
I EVENTS
The Latitude59 conference, in its seventh year*, brings together in-
novators, entrepreneurs, venture capital partners, angel investors and
those who support the global expansion of innovative companies origi-
nating in countries three hundred kilometres either side of Latitude 59,
to understand and address the challenges of expansion into global mar-
kets. The speakers and panellists are all leaders in their respective fields,
with long experience and insight into the chasm facing young compa-
nies, which must look beyond their local markets if they are to fulfil
their dreams and ambitions of providing sustainable solutions to busi-
ness “pain points” and consumer demands. There will also be demo
rooms for Cleantech, IOT (Internet of Things), gaming and an authentic
sauna by Startupsauna.
The Latitude59 conference is held at the new Innovation and Busi-
ness Centre Mektory (founded in 2013), which is a part of the Tallinn
Tech University campus: a perfect place for meet-ups. Mektory was cre-
ated for scientists, students and entrepreneurs to solve practical product
development problems and generate new innovative ideas.
Meet the people
The two days of Latitude59 consist of a number of panel discussions
featuring the challenges of start-up growth & going global, term
sheets & valuations, talent acquisition strategies, finding follow-
on investors and preparing for Exits, and discussions on how ac-
celerators and angel investors have supported the rapid globalisation of
the start-up community by removing the barriers to entry and providing
access to capital to start-ups not located in Silicon Valley.
The speakers include Vint Cerf, Vice President of Google, one of the “Fa-
thers of the Internet” California), Tim Draper, Founder & MD at Draper
Fisher Jurvetson & Founder of Draper University (Silicon Valley), Micke
Paqvalén, Founder and Operational Chairman at Kiosked (Finland), Da-
vid Bizer, Partner at Talent Fountain, ex-Google & ex-Netscape recruiter
(Paris), Taavet Hinrikus, Co-founder of TransferWise (London), Deborah
Magid, IBM Venture Capital Group (Silicon Valley), and many others.
We expect around 300 participants, with a strong focus on invited ven-
ture capital and angel investors, as well as accelerator managers from
Europe and the USA.
Pitch Contest Silicon Valley style
A highlight is the Latitude59 pitch contest, Silicon Valley style, powered
by the accelerator Startup WiseGuys, introducing the most promising
start-ups in the Nordic and Baltic region.
Twenty preselected start-ups get dedicated workshops with VCs, a free
demo stand and can win 5,000 EUR cash from one of the pillars of the
Estonian start-up scene, Skype, plus 5,000 EUR worth of services from
the ReedSmith Law Firm.
In recent history, the Latitude59 pitch contest has boosted such start-
ups as Fabulonia and VitalFields.
Baltic-Nordic start-up ecosystem
It has become a tradition that the investors and start-up community of
the Nordic Region get together in Tallinn in spring for Latitude59, and
every autumn they meet again in Helsinki during Slush.
“The strength of the Baltic-Nordic start-up ecosystem lies not in single
countries, but in co-operation. United we are strong. Most top Estonian
start-ups visit the Slush conference, as Weekdone did when we won the
pitching competition. It’s a unique learning experience to hang out with
the best from the whole region. There are always plenty of Finnish start-
ups and investors at Latitude59, and this year we hope to see even more
of them in Estonia,” said Jüri Kaljundi, the co-founder of Weekdone
and the Garage48 Foundation.
The go-to place for the Nordic
and Baltic start-up scene in the spring!
28.04
29.04
ICT Week

The FinanceEstonia International Forum 2014 will be hosted on
17-18 June in Tallinn, Estonia. It will gather international senior
financial decision makers for a dialogue on flexible and efficient
finance support systems and tools, and the Nordic finance land-
scape as a source of exciting new opportunities.
The event elaborates on the Estonian financial environment and pre-
sents aspects that lead to higher efficiency in Fund Administration,
Treasury and Shared Services, and in International Private Banking.
Companies showcase their best practices and guests get a chance to
meet and greet top level executives from business and politics. Besides
offering business contacts, the programme assists in getting acquainted
with Tallinn and Estonia.
The audience of the forum consists of senior level decision makers, who
consider outsourcing financial functions or fund administration make
investment or wealth management decisions (including private equity)
are looking for VC and Angel investment opportunities are interested
in understanding other business opportunities in Estonia, as altogether
nearly 300 participants will gather in Tallinn.
FinanceEstonia is a public-private cluster initiative formed in July 2011
with the aim of establishing Estonia as a vibrant and innovative location
for financial services. FinanceEstonia’s key activities encompass ensuring
an attractive and competitive environment, as well as creating and of-
fering opportunities for our members. The forum will be organised in a
joint effort with EstVCA and EstBAN.
The first day of the forum introduces the latest news in Estonian and
European economics and finance. Fund Administration, Treasury and
Shared Services, FinTech and Private Banking will be covered in lively,
detailed discussions with experts and practitioners. Among the speakers
and panellists, high-level European financial institution representatives,
and Estonian and European business leaders who have experience in
Estonia will be present.
The FinanceEstonia International Forum Gala Dinner will take place be-
tween the forum days on 17 June. Last year’s dinner was considered a
great success by the attendees. The location, programme and
dining all supported new business relationships. The Gala Dinner will
be memorable in terms of entertainment and business opportunities.
The second day encompasses best-practice presenta-
tions by Estonian and international leading vendors in
finance. It provides excellent opportunities for busi-
ness match-making and networking.
Additional information about
the forum can be found at
www.financeestonia.eu
Finance Estonia

Estonia As A Country
Moves Into The Cloud
And Expands All Over
The World!
Taavi Kotka
Work:
• Government CIO since 2013
• AS Webmedia (now Nortal)
Partner and CEO (2005-2012):
the largest software development
company in the Baltic region
• Angel investor or founder
in many start-up companies:
ZeroTurnaround, Plumbr, etc.

Education:
• software engineer,
University of Tartu

Honors:
• 2009 – 2013 President of
the Estonian Association of
Information Technology and
Telecommunications (ITL):
ITL unites all major ICT players
in the Estonian market
• 2011 Entrepreneur of
the Year in Estonia
By Toivo Tänavsuu
Photos by TIINA-LIINA UUDAM and HELE-MAI ALAMAA
16 LIFE IN ESTONIA I 2014 SPRING
I COVER STORY

Taavi Kotka, the Estonian government
CIO, talks about taking the already suc-
cessful e-state onto a totally new level.
Namely, Estonia has an ambitious plan
of moving the state into a data cloud
spread all over the world, which will,
in a sense, make occupying the country
pointless. In addition, with the help of
ICT, there can well be ten million Es-
tonians by 2020 instead of the current
one million.
What is the essence
of the cloud initiative?
The development of the e-government in
Estonia has reached a point where sever-
al vital registries of the state only exist in
digital form without any paper copies. For
example, the Land Register has become a
database of critical importance and the Es-
tonian state cannot afford to lose it or have
its data tampered.

In order to mitigate risks and ensure the pres-
ervation and integrity of data, relying on data
centres located in Estonia is not sufficient. That
is why we have maintained copies of Estonian
registries at our embassies abroad for years.
However, embassies are not really meant for
preserving large volumes of data and running
applications. In addition, Estonian legislation,
similar to that in other countries, establishes
that data vital for the functioning of the state
is to be maintained exclusively in the Estonian
territory.
With this in mind, we developed the concept
of the “Data Embassy”, whose principal idea is
that, in addition to its network of physical em-
bassies, Estonia needs to develop a network of
data embassies. In simple terms, data embas-
sies would be server rooms in the territories of
friendly partner states.
So, in addition to the physical
embassy, would Estonia open
a Data Embassy in Germany,
for example?
Germany could be joined by other countries:
Canada, Australia, Sweden, Holland etc. We
would, in fact, sign a bilateral agreement with
a friendly state that would allocate to Estonia
a special physical or virtual room in the gov-
ernment cloud of that country, in some data
centre. In this room, the same rules would ap-
ply as in real embassies, meaning that the spe-
cific space would be the territory of Estonia,
with Estonian legislation in force. The part-
nering state would provide us with electricity,
cooling and an Internet connection, but other-
wise it would respect the diplomatic immunity
of the embassy.
What would be stored
in such data embassies?
As the network of data embassies involves
a cyber security aspect, we plan to move
all data and information systems critical for
the functioning of the state to such private
clouds. As a result, there would be an addi-
tional global dimension to the government
cloud currently physically located in Estonia,
dispersing data and information systems all
over the world.
In principle, such a cloud should contain every-
thing necessary to run a state: from the Popu-
lation Register, Land Register and Business
Register to e-government, e-health, judicial
systems and so on.
What would be the impact
of such a system?
Above all, there would be improved cyber se-
curity. Should Estonia become a target of a
massive cyber attack, it would be much more
difficult to “switch us off” as a state than, for
example, Georgia in August 2008. The state
would be able to provide e-services from Ger-
many, Sweden or Holland.
But let’s aim higher! Estonia could become
the first country in the world completely in a
cloud! In other words, the state together with
its citizens and services do not have to be tied
to a specific territory.
Estonians could live in Finland or London, be
deported to Siberia or whatever: we could
still elect our parliament, collect taxes etc.
Businesses would continue to operate, docu-
ments would be exchanged, addresses could
continually be changed in registers and new
citizens would be born. We could even send
our athletes to the Olympics, even if they did
their trial competitions in some other country.
This may sound like abstract bragging, but we
would actually be able to ensure the function-
ing of the state from the cloud!
What does that mean
in the light of events in
the Crimea?
The capacity to support the existence of our
state from the cloud would lead to a situa-
tion where—considering the recent events in
Crimea—it would be much more complicated
(i.e. expensive) to occupy Estonia. There would
be no point in conquering the country with
tanks, as the state would continue to function
from the cloud. In addition, considering that
Estonians have been voting over the Internet
for nearly ten years, it would be impossible to
organise a fake referendum. People would be
able to legitimately express their free will, us-
ing tested solutions. This means that in order
to occupy the state, all of our data embas-
sies all over the world would also have to be
occupied.
Can we say that investments
in the army, cannons and tanks
would become pointless?
No, Estonia should definitely maintain its ca-
pacity for physical and virtual defence and keep
fulfilling its tasks as a NATO member state. Be-
ing able to function from the cloud would just
offer us an additional security guarantee.
How was the idea of
Cloud Estonia born?
The need for a data embassy was born about a
year ago. The follow-up idea of a country with-
out a territory, i.e. a state functioning from the
cloud, was born in the process of drafting the
Estonian Digital Society Strategy 2020.
President Toomas Hendrik Ilves read the draft
of the strategy and said it lacked ambition. I
then added this revolutionary idea to the doc-
ument’s foreword and asked: “Is it ambitious
enough now, Mr. President?”
What kind of reaction has
the cloud idea provoked?
At first it usually creates the wow effect. In the
context of cyber security, the topic of virtual
embassies is a hot one. Our approach is often
considered too futuristic, because even Inter-
net elections, so ordinary for Estonians, are
regarded as too revolutionary in many other
countries. Silicon Valley has also dreamt of a
similar cloud state.

There is another wild idea in
relation to the state in the cloud:
start issuing Estonian e-identity
to foreigners.
This idea came about when we were looking
at how to allow foreigners working in Estonia
on a temporary basis – for example university
professors and entrepreneurs – to benefit from
our digital society. In order to use Estonian e-
services, such as digital prescription, e-bank-
ing, digital signature etc., one needs digital
identity. Thus, we need to issue non-resident
ID cards and mobile-IDs to those working or
studying here temporarily.
At a certain point, we realised that the need
for such a card is much wider. For example,
the card could be used by businessmen who
do not reside in Estonia but who want to be in-
volved in daily business development as board
members. E-identities together with digital sig-
natures would make this possible.
So you can be from New Zealand,
but do business in Europe
without ever leaving home?
Precisely. You just need to get a non-resident
ID-card. In only 18 minutes over the Internet,
you can start a company in Estonia, open a
bank account and sign all necessary docu-
ments with a digital signature. In less than a
day, you have the capability of doing business
not just in Estonia, but in the whole European
Union. And you can do all that without leaving
your home.
“An operational company with a bank account
in the European Union in less than a day” is a
much-needed service for many EU citizens, as
well as people from other countries.
The non-resident ID-card is not the key issue.
There are more and more private businesses
all over the world offering e-identity services.
Estonia’s goal is, after all, to make its e-services
accessible to other countries. People having Es-
tonian e-identity would become “satellite citi-
zens”, who would develop some connection
with Estonia through those processes. In addi-
tion, having 10 million satellite citizens on top
of our 1.3 million permanent residents would
also serve as an additional security guarantee.
In reality we will not reach such numbers, but
dreaming is important. Virtual residence also
confirms the viability of our “state without ter-
ritory” concept.
What other innovations await
the Estonian e-state?
I am personally most interested in the Real
Time Economy. Estonia is the most effective tax
collector in the whole world. This means that
per euro collected we spend much less in tax
collection in comparison to other states. We
have developed a fully automated system of
tax declarations and refunds. But there is still
room for improvement. The handling of taxes,
e.g. declaring and refunding taxes, has delays
and those delays, in fact, “hold up money”.
In the worst cases, businesses receive their
overpaid VAT back in two months, and citizens
receive their income tax returns once a year.
These periods could be shortened significantly.
The goal is to reach a situation in which the
economy, including taxes, and recalculations
thereof, function in real time. We are very
close to this in Estonia, and if we succeed in
strengthening the tax control systems, we will
be able to take another step closer to our aim.
The tax system is not the only
field where such improvements
in systems and services are
happening, right?
Indeed. For the next seven years, substantial
resources have been allocated for ICT invest-
ments. The aim is not only to create new solu-
tions, but to improve the functioning of the
existing system. Many systems, including es-
pecially the ones that are more than a decade
old, need to be re-engineered, since work pro-
cesses, legislation and especially technology
change significantly. Voice recognition, touch-
screen technology, cyber-security, big data etc.
– a decade ago we lived in another world and
there is no point in remaining stuck there. ICT
systems need to be modernised on a regular
basis. Thus, we have established a rule that no
vital information system in the Estonian public
sector can be more than 13 years old. We call
this the no-legacy policy.
Isn’t the no-legacy policy
too expensive?
This is a very good question. It turns out that
the opposite is true. Our research and com-
parison with Scandinavian countries prove
that the continuous renewal and updating of
systems will be cheaper in the end than main-
taining legacy.
In addition, there has been a revolution in the
production and management of software and
the start-up culture has proven to the world
that huge ICT enterprises have been nourished
for no reason for decades. ICT is not as compli-
cated and costly as some believe.
The UK government’s ICT budget is 16 billion
pounds. The Estonian Government ICT budget
is about 40 million pounds: 400 times smaller.
ESTONIAN DATA EMBASSIES
I COVER STORY

But the United Kingdom is also
a much larger state…
Yes, but not by four hundred times! Moreo-
ver, in the digital world the size of states does
not matter: the services that countries have
to provide to their citizens are similar in big
and small countries alike. Hospitals, banks, the
police: these are the same services. The differ-
ences are only in scale, but in the cloud age
this is no longer an issue.
In praise of the UK, it has to be said that they
have a great CTO, who has significantly man-
aged to cut ICT costs and continues to do
good work.
What is the main lesson that
the rest of the world can learn
from Estonia?
I would like it to be the no-legacy policy. I wish
that those coming to learn from our experi-
ence would get rid of their outdated systems
and pseudo-fears and start from scratch. Un-
fortunately this is just a dream.
Many people visit to learn from us and see
how we do things. Over 350 government-
level delegations come here to learn about our
e-government annually. Hence the e-Estonia
showroom (ICT Demo Center) has a special
role in telling e-stories.
This also points to a significant problem. Un-
til now we have focussed on developing new
solutions and approaches without having car-
ried out any research or impact analyses. What
are the real benefits of a whole society using
digital signatures? How do e-elections change
people’s understanding of elections and voting
procedures? Improving evidence-based policy-
making is another funding priority for us in the
coming years. This will be done in cooperation
with the world’s leading universities.
In addition, we have started negotiations with
Finland and the UK on the joint development
of basic ICT infrastructure: for example, e-elec-
tions, e-identity and the middleware X-road. In
some situations, it makes more sense to put
our brains and money together with other
states in order to together develop the corner-
stones of state ICT.
So, the Estonian e-tiger is not
dead and continues to growl?
It’s very much alive. The economic crisis dem-
onstrated clearly that ICT can make public ad-
ministration, as well as the functioning of the
whole society, more cost-effective and user-
friendly. Furthermore, the image of Estonia as
an e-country continues to be an inseparable
part of Estonia’s identity, and our president,
who has a background in programming, con-
tinues to change the world through ICT.
Finding motivation is easy. Everything we do
today, and everything we do not manage to
complete, will affect future generations. I have
three children myself.

Estonia:
The Little Country
With A Start-Up
Mindset
Sten Tamkivi
I LAND AND PEOPLE

Ben Horowitz, co-founder and a partner of the venture
capital firm Andreessen Horowitz: Being someone reasonably
well-known in technology, I have been getting a lot of questions lately
about healthcare.gov. People want to know why it cost between two
and four times as much money to create a broken website as to build
the original iPhone. This is an excellent question. However, in my
experience, understanding why a project went wrong tends to be far
less valuable than understanding why a project went right. So, rather
than explaining why paying anywhere between $300M and $600M to
build the first iteration of healthcare.gov was a bad idea, I would like
to focus attention on a model for software-enabled government that
works. In doing so, perhaps this will be a step toward a better under-
standing of how technology might make the US government better
and not worse.
Early in my career as a venture capitalist, we invested in a company
called Skype and I went on the board. One of the many interesting as-
pects of Skype was that it was based in Estonia, a small country with a
difficult history. Over the centuries, Estonia had been invaded and taken
over many times by many countries, including Denmark, Sweden, Ger-
many, and most recently the Soviet Union. Now independent, but well
aware of their history, the Estonian people were humble, pragmatic,
proud of their freedom, but dubious of overly optimistic forecasts. In
some ways, they had the ideal culture for technology adoption: hope-
ful, yet appropriately sceptical.
Supported by this culture, Estonia built the technology platform to serve
its citizens that everyone wishes we had here. Estonia developed an in-
frastructure that enabled its government to serve its people so well that
Estonians would like to see more, not fewer, government technology
projects. To explain how they did it, I’ve asked one of our Entrepreneurs
in Residence, the Estonian Sten Tamkivi, to tell the story.
Sten Tamkivi, EIR at Andreessen Horowitz: Estonia might not
show up on the US radar very often. It is a tiny country in north-eastern
Europe, just next to Finland. It has the territory of the Netherlands, but
only a tenth of the population: 1.3 million inhabitants, comparable to
Hawaii. Estonia belongs to the European Union, Eurozone and NATO.
A friend from India recently quipped: “what is there to govern?”
What makes this tiny country interesting as a governance benchmark is
not just that the people can elect their parliament online or get their tax
returns in two days. It is also that this level of service for citizens did not
start with their government building a few web sites. Instead, Estonians
started by redesigning their entire information infrastructure from the
ground up, with openness, privacy, security and future-proofing in mind.
As the first building block of e-government, you need to be able to
tell your citizens apart. Sounds obvious, but sometimes referring to a
person by a social security number, then by a taxpayer number and at
other times by something else doesn’t cut it. Estonia uses a very simple,
unique ID methodology across all systems, from paper passport to bank
records to access to any government office or hospital. A citizen with
personal ID code 37501011234 is a male born in the 20th century (3),
on January 1st of year 1975, as baby #123 of that day. The number ends
with a computational checksum to easily detect typos.
For these identified citizens to transact with each other, Estonia passed
the Digital Signatures Act back in 2000. The state standardized
through a national Public-key Infrastructure (PKI), which binds citizen
identities to their cryptographic keys, and now it doesn’t matter if some
Tiit and Toivo (to use common Estonian names) sign a contract between
them in electronic form with certificates, or with plain ink on paper.
A signature is a signature in the eyes of the law.
As a quirky side-effect, that foundational law also forced all decen-
tralized government systems to become digital “by market demand”.
Namely, no part of the Estonian government can turn down a citizen’s
digitally signed request and ask for a paper copy. As citizens opt for con-
venience, bureaucrats see a higher inflow of digital forms and are self-
motivated to invest in systems that will help them manage the process.
Yet a social worker in a small village can still provide the same service
with no big investment by handling the small number of digitally signed
email attachments the office receives.
For future-proofing, the law did not lock in the technical nuances of
digital signatures. In fact, the implementation has changed over time.
Initially, Estonia equipped all traditional ID cards issued to all citizens
for identification and domestic travel inside the EU with microchips.
The chip carries two certificates: one for full legal signatures and one
for authenticating on any trusting web site or service (used widely,
from government services to Internet banks). As every person over 15
is required to have one, there are now over 1.2M cards active, close to
100% penetration of the population.
As mobile use in Estonia rapidly approached the current 144% (#3 in
Europe), the digital signatures adapted too. Instead of using smartcard
readers with their computers, users can now get Mobile ID enabled
SIM cards from their telecom operators. Without installing any addition-
al hardware or software, they can access systems and give signatures by
just typing PIN codes into their mobile phones.
As of this writing, between ID cards and mobile phones, 1.3M Estonians
have authenticated 230M times and given 140M legally binding signa-
tures. Besides the now daily usage for commercial contracts and bank
transactions, the most high profile use case has been for elections: since be-
coming the first country in the world to allow e-voting for local elections
in 2005, the system has been used for both Estonian and European Parlia-
ment Elections, and in 2011 accounted for 24% of all votes. (Interestingly,
the citizens voted from 105 countries in total, where they just happened
to be physically at the time - like my own vote submitted from California).
Follow the leader is a title, theme, task
Now you know, you don’t have to ask
- Rakim, “Follow the Leader”

To further speed up this sort of innovation, the state tendered the build-
ing and securing of digital signature certificate systems to private parties,
namely a consortium led by local banks and telcos. And that’s not where
the public-private partnerships end: the way the data interchange in the
country works is that both public & private players can access the same
data exchange bus (dubbed X-Road), enabling truly integrated e-services.
A prime example is the income tax declarations Estonians “fill in”. In-
verted commas are appropriate, because when an average Estonian
opens the form for submission once a year, it usually looks more like a
review wizard: “next -> next -> next -> submit”. This is because data
has been moving throughout the year: when employers report employ-
ment taxes every month, all the data entries are already linked into a
particular person’s tax records too. Non-profit reported charitable dona-
tions are recorded as deductions for the giver the same way. Tax deduc-
tions on mortgages come directly from data interchange with commer-
cial banks. And so forth. Not only is the income tax rate in the country
a flat 21%, after submitting this pre-populated form citizens actually
get any overpayment deposited into their bank accounts (digitally trans-
ferred, of course) on the second day!
This liquid movement of data between systems relies on a fundamental
principle to protect the privacy of citizens: without any question, it is al-
ways the citizen who owns their data. People have the right to control
access to their data. For example, in the case of fully digital health re-
cords and prescriptions, people can granularly assign access rights to
the general practitioners and specialized doctors of their choosing. And
in scenarios where the rule of law can’t allow them to block the state
from seeing their information, as with Estonian e-policemen using their
real time terminals in police cars or offices, they at least get a record of
who accessed their data and when. If an honest citizen finds any official
checking on their stuff without valid reason, they can file an inquiry and
get them fired.
Having everything online does generate security risks on not just the
personal, but also on the systematic and national levels. Estonia was
the target of the Cyberwar of 2007, when well-coordinated botnet
attacks following some political street riots targeted government, media
and finance sites and effectively cut the country off from the Internet
abroad for several hours. But, as a result, Estonia has since become the
home of the NATO Cyber Defence Center, and Estonian President
Toomas Hendrik Ilves has risen internationally to be one of the most
vocal advocates for cyber security among the world’s heads of states.
Even more interestingly, there is a flip-side to the fully digitized nature
of the Republic of Estonia: taken to the max, having the bureaucratic
machinery of a country humming in the cloud increases the cost of any
potential physical assault on the state. Imagine if a physical invasion of
this piece of Nordic land by anyone could not stop the government from
operating, but booted up a backup replica of the digital state, hosted
in some other friendly European territory. A democratic government
would be quickly re-elected, important decisions made, documents is-
sued, business & property records maintained, births and deaths regis-
tered and even taxes would flow for those citizens who still had access
to the Internet. This may sound futuristic, but this is exactly the kind of
world Estonia’s energetic CIO Taavi Kotka not only dreams about but is
actually beginning to implement, on the e-foundations the country has
already established.
Estonia is a start-up country —
not just as a life stage, but as a mindset
The circumstances of the Estonian story are special in many ways. The
country restored its independence after 50 unfortunate years of Soviet
occupation in 1991, having missed a lot of the technological legacy the
Western world had built up from the ‘60s to the ‘80s, such as cheque
books and mainframe computers, and jumped right into the mid-nine-
ties bandwagon of TCP-IP enabled web apps. During this social reset,
Estonians also decided to throw their former communist leaders over-
board and elected new leadership, with ministers in their late twenties
from whom the world could expect disruptive thinking.
But then again, all this was 20 years ago. Estonia has by many macro-
economic and political notions become more of “a boring European
state,” stable and predictable, although somewhat faster growing in
an attempt to close the gap with Old Europe from the time they were
behind the Iron Curtain. Twenty years, but you can still think of Estonia
as a start-up country, not just as a life stage, but as a mindset.
And this is what the United States, along with many other countries
struggling to develop the Internet and get their increasingly more mo-
bile citizens on it, could learn from Estonia: the mindset. The willingness
to ask fundamental questions and get the key infrastructure right, and
to continuously re-invent them. States can either build healthcare insur-
ance brokerage sites for innovation, or really look at what key compo-
nents need to exist for any service to be built: signatures, transactions,
legal frameworks etc.
Ultimately, the states that create pleasant environments will be those
where mobile citizens flock to live their lives. And by many measures,
tiny Estonia in 2014 is no worse positioned to be the destination than
New England was in 1814.
I LAND AND PEOPLE

Marek Helm, Head of the Estonian Tax and Customs Board
Estonian Tax Board 2.0 Presents:
Real Time
EconomyThe famous Estonian e-Tax Board has been admired and set as an
example all around the world. Where else can you submit your
tax return in just a few clicks? Where else can entrepreneurs sub-
mit all declarations online without spending days on end filling
out paper forms? Marek Helm, Head of the Estonian Tax and
Customs Board, claims that although our e-Tax Board is admired
all over the world, the time is ripe for some qualitative changes.
By Holger Roonemaa / Photos by Albert Truuväärt

I ECONOMY AND BUSINESS
What is a Real Time Economy and
what does it mean in the Estonian
context?
We and our counterparts have not defined it
completely. Hence, the specific definition of
the term is still floating, in a good sense. The
way my colleagues and I see it, and how we re-
fer to it in our conversations with enthusiasts,
it denotes real-time information exchange in
a significantly higher quantity than we expe-
rience today. Despite the fact that currently
95-100% of tax declarations are filled in elec-
tronically, it is still not a Real Time Economy
(RTE). RTE means not only more comfortable
and faster services, but totally new services
from the point of view of the state and en-
trepreneurs, which would increase economic
competitiveness. New services help to man-
age cash-flow faster, and help companies and
private individuals make quicker and better
decisions.
Specifically, in terms of our field of activity, col-
lecting taxes, RTE means implementing elec-
tronic controls. I do not mean moving PDF files
and tables, but data acquisition, and cross and
automatic controls. For example, if we look
at value-added tax returns, the current logic
is linked with the submission dates of decla-
rations and the submission dates of returns.
Those dates are fixed. We could get rid of this
principle and say that if a company meets cer-
tain preconditions the state and the company
could make decisions immediately. Conditions
allowing for faster information exchange could
create motivation for law-abiding activity. This
could enliven the economy, and increase cash-
flow, data quality and economic safety. Inter-
actions with suspicious companies would de-
crease or be noticed much more quickly.
This would also mean that ab-
solutely all entrepreneurs could
work on equal conditions. It would
be more complicated to cheat,
wouldn’t it?
The way I see it, people would have more mo-
tivation to be honest. At the moment, the RTE
concept does not work and we offer the same
service for very many entrepreneurs: the same
deadlines for submitting declarations and for
returns. But if we implement the RTE concept,
companies will have a real motivation to be
honest, as honesty will be observable in real-
time and automatically detected. In this way,
we can offer certain advantages.
Like what?
It is our “problem” in Estonia that most dec-
larations are already electronic and we don’t
have the opportunity to develop them further.
Some people say that the appendix contain-
ing data of transactions in the value-added tax
return would be quickly supported by busi-
nesses if the Tax Board paid back the value-
added tax faster. But we already do that: 95%
of all returns go on the prepayment accounts
of companies within three days and from there
to banks. If today we paid this back within a
month, as prescribed by law, and said that with
the automated control of the value-added tax
we would start to do it within three days, this
automatic control system would exist already!
We have had the E-Tax Board for a
while and people submit declara-
tions digitally. Is the implementa-
tion of RTE the next logical step?
Definitely. According to statistics, we are the
most effective tax collector among all OECD
states. We took a giant step in 2005-2008,
when most declarations became electronic.
There was no similar leap between 2008-
2014. We are still in first place but, in terms
of efficiency or costs, there hasn’t been much
change. RTE would certainly decrease the
share of the shadow economy. If we bring
some of the money in the shadow economy
into the “real” economy, it would significantly
improve the revenue and expenditure relation-
ship. The assumption underlying our new ap-
proach is that our organisation will not grow.
Some say that we should just employ more
inspectors, but this would not be right! In that
way, we would just have more people doing
things the same old way, but what we really
need is to do things differently and, in the
longer term, probably with fewer people.
Let’s talk more specifically about
the RTE projects of the Tax and
Customs Board. One of the bigger
ones involves declaring VAT and
providing data for the Tax Board
on transactions exceeding 1,000
euros. This is not liked by busi-
nesses. What is the status of this
project?
We are ready to start. When the parliament
approves the draft act and the president pro-
claims the act, we can start on development.
We foresee six months for development work.
We have submitted a very strong concept and
it does actually have support among many en-
trepreneurs. Just a few weeks ago, the differ-
ent parliamentary fractions discussed this issue
and one prominent representative of entrepre-
neurs said that it is a much-needed act which
should be implemented.
What would it involve
for entrepreneurs?
Businesses have to consider that, if there are
invoices on their books which exceed 1,000
euros as single invoices or the sum of invoices
for a transaction partner, they need to submit
the registry code of the partner, the sum of
the transaction and the share of VAT of that
transaction as a separate appendix to the Tax
and Customs Board. The duty itself looks like
this: when the VAT declaration is submitted
on the 20th
day of the month, there is an elec-
tronic appendix which is filled in on the basis
of data in the accounting system. In other
words, we receive data on the transaction
partner, the sum of the transaction and the
share of VAT in this sum. We receive no infor-
mation about the contents of the goods, unit
price or amount. Companies add this data to
their declarations and the new information
system of the Tax and Customs Board will
receive and compare this information. Our
systems compare the transactions declared by
buyers with the declarations made by sellers.
The system will cross-check the data and de-
tect any discrepancies.
Unlike the current situation, where we receive
the VAT declaration without transaction data
(just three figures in fact), we will be able to
contact companies straight away and ask why
the data does not add up. Currently, we start
by asking for information, then we receive
the data in some weeks and only then can
we check it thoroughly. The new situation will
allow us to receive data automatically and we
can decide immediately which companies to
check.
Yet there has been resistance
to this idea by Estonian
entrepreneurs.
I can understand that. After all, the Tax and
Customs Board will be controlling more. We
receive 35,000-40,000 VAT claims monthly,
and we pay 95-100 million euros in VAT
back each month to companies on the ba-
sis of minimal controls. Under the new sys-
tem, we would have an overview of who is

Tax declaration in
Estonia is online
actually justified in receiving money back.
In other words, if a company sells goods, it
needs to consider that the buyer will submit
information on the transaction to the Tax and
Customs Board, having the right to deduct in-
put value-added tax. Hence, there is no way
to not account for the sales of the goods in
the company’s turnover. When a buyer wants
to receive value-added tax from the purchase
of goods and provides us with the data of the
seller, but the seller is not aware of the trans-
action, we will see immediately that there is a
problem with this specific transaction and that
it needs to be checked. Currently, companies
often ask for money back without transactions
ever having taken place, and we are only able
to check 3% of claims for refunds.
The resistance from companies results from
the fact that, instead of the ability to check
3% today, we will be able to check 100%. I to-
tally understand their concerns because trans-
ferring onto the new system will entail one-off
costs, including for those who are totally law-
abiding tax-payers.
According to your calculations,
the VAT gap is currently 200
million euros per year. How much
of this sum could you recover by
implementing the new system?
It is difficult to accurately predict it, but we
have calculated that the state could receive
at least 30 million additional euros each year.
The gap will never be totally eliminated, but
we could significantly improve the culture of
the VAT environment. Our current checking
logic dates back to 2003. We cannot continue
like this; although almost 100% of tax decla-
rations today are electronic, we are still doing
the actual checking on paper.
Another new idea of yours is
the project of employment
registration. What is that?
From July onwards, the duty to register em-
ployees before they start to work will come
into effect. Currently, companies have to reg-
ister new employees within seven days at the
Health Insurance Board, but from July it has to
be done either at the e-Tax Board, via a text
message or in our call centre, before the em-
ployee starts working. For example, you are
about to start working for a building company.
Your supervisor will send the Tax and Customs
Board a text message and it will immediately be
registered that you are working. If on the first
day you pick up a rake and there is a Tax Board
inspection ten minutes later, we already know
that you are officially working. Within the last
few years, we have carried out regular checks
during which it often turns out that every third
builder is “working for the first day” and the
company has not managed to register them
yet. This is a typical kind of fraud.
There is also a social side to it. At the moment,
when an employee goes to work, he is una-
ware of whether he is officially registered or
not. From July, the employee will be able to
check this on the e-Tax Board and see whether
s/he has social insurance. For employers, this
means sending data once; they will not have
to send separate bits of information to the
Health Insurance, Work Inspection, Unemploy-
ment Office, Police and Border Guard.
Is it really true that during your
checks every third builder is
working “for the first day”?
We cannot generalise, but we often discover
that during our inspections. For example, we
went to check the construction of a health spa
last week and every third employee was not
registered at all. From July, it will also be the
case that when an employee is no longer em-
ployed, we will see within two months that s/
he is not marked on any income or social tax
declarations and we will then contact the em-
ployer and delete the employee from our reg-
ister and inform the Health Insurance Board,
who, in turn, will delete the entry from their
register. Today there are many people regis-
tered as insured by the Health Insurance Board
but they have not worked for a long time. In
future, the data exchange between the Tax
and Customs Board and the Health Insurance
Board will take place automatically, and peo-
ple themselves will be interested in monitoring
whether they are registered as working or not.
Currently they might find out at their GP that
they have no health insurance at all.
We haven’t talked about how
these innovations would change
economic predictions. Would RTE
make it possible to understand
every day or every minute what is
happening in the economy?
We do not know the complete impact it will
have. It is obvious that RTE will enable us to
react to change more quickly, and to assess the
current situation more accurately. It could help
raise the growth in added value of companies.
This will be more and more visible from our
data. Prevention is always cheaper and more
effective than dealing with consequences.

The term “legacy system” came into use in
the 1990s when it started to denote comput-
ers (technology) and software which were out
of date. Later on, the definition was narrowed
down and stood for all systems which were
not dependent on the Internet. Today this
more explicit meaning has been rejected and
the “pet-name” legacy continues to refer to
all IT solutions which are out-of-date in terms
of content and/or technology, but which con-
tinue to be used on a daily basis.
On the Estonian IT landscape, legacy is a rel-
atively new concept. The country began to
invest in IT only after Estonia had regained
independence and, therefore, we were able
to start from scratch. There were no earlier
information systems from 1960-1980, the
“legacy” period. Starting from scratch al-
lowed us to use the newest technologies, to
learn from best practices in the world and
to develop information systems specifically
targeted to individual needs. It was clearly
much cheaper (more efficient) to learn from
the mistakes made by others than to make
our own.
Today the Estonian IT landscape is at a cross-
roads. According to an e-health report by the
OECD, Estonia has the best e-health solutions
in the world: all our hospitals use information
systems which interact and exchange data with
each other and across hospitals; a common
digital image bank has been created; health
insurance systems have been developed; ef-
fective communication with the National
Health Insurance Fund has been ensured, etc.
The IT systems of all doctors, pharmacies and
the Estonian Health Insurance Fund function
as a whole and, in order to receive a prescrip-
tion, one just has to call one’s GP, take along
one’s ID card and go buy the medication at any
pharmacy. It took half a year for the society to
give up paper prescriptions and take up digital
ones. Today, 98% of prescriptions are issued
digitally and nobody would change the system
back: it just makes sense, considering how
easy and user friendly the service is.
Despite this, the recent National Audit Office’s
report pointed out a number of shortcomings in
the Estonian e-health solution. One could sum-
marise the audit with the following idea: “Con-
sidering the technologies available today, it is
possible (and imperative) to offer citizens even
better services.” So, on one hand, based on the
OECD report, everything seems fine and most
countries can only dream of reaching the same
level of healthcare solutions that Estonia has.
But on the other hand, there is internal pressure
to still considerably improve these services.
This is where the dilemma comes in. It is not a
question of resting on our laurels or improving
existing services: surely we have to improve the
quality of services. But the real question has to
do with legacy. Is it enough to make small im-
provements in existing systems or should we
just bulldoze the solutions which have been
called the best in the world and start over?
The latter (using heavy machinery) seems radi-
cal but, once we analyse the pros and cons, it
does not seem such a bad idea after all.
What To Do
With Legacy?
Implement
No-legacy PolicyBy Aet Rahe / Head of State Information Systems
Department, Ministry of Economic Affairs and
Communications.

Most of our world-leading e-health solu-
tions were created 10-13 years ago. The ar-
guments for radically changing the solutions
are the following:
Development of new technologies.
Doctors could be more effective in their work,
if they could use not only the keyboards, but
also benefit from touch-screens, speech rec-
ognition, teleworking, telemedicine etc.
New user habits. Along with the intro-
duction of new technologies, the user
habits and skills have changed. The tools
used by doctors in their work should
evolve in a similar fashion as the tools
used in everyday life and they should pro-
vide a similar user experience.
New work processes. All organisations
develop and grow in ten years. To maintain
progress, fundamental changes are often
needed instead of minor improvements.
Changed environment, including legis-
lation, both on the national and EU levels.
For example, cross-border medical services
have been possible in Europe since last year,
but most Estonian health information sys-
tems continue to be in Estonian and have
therefore no export potential.
Cyber security. Guaranteeing cyber secu-
rity is much more of a challenge today than
it was ten years ago.
Development of Open Data, Big Data, e-
identity, digital signatures etc. technolo-
gies, has an impact on how information sys-
tems are built, how data is stored and tagged
etc., which influences what parts of systems
should be custom built and which parts
should not. For example, with new technolo-
gies, new standardized and reusable compo-
nents and solutions are being developed, so
we don’t need to re-invent the wheel in every
information system.
Maintenance of legacy systems is costly,
as demonstrated clearly by the Swedish and
Finnish experiences. For instance, in Finland
there are still around 5,000 Cobol program-
mers. This is one of the oldest programming
languages in the world and, throughout the
years, continuous development of systems
has resulted in an expensive spaghetti archi-
tecture that is very difficult to maintain.
OECD 2012 eHealth Availability & Use indicator by country
The world is in constant flux and, in order to
offer the best services to customers, it is neces-
sary to keep up with the changes. The points
listed above speak volumes and Estonia’s pri-
vate sector practice to date demonstrates that
every now and then one needs to wipe off and
rebuild. In the long run, this will be cheaper and
more efficient than trying to maintain legacy.
As a result, a new umbrella term has been tak-
en into use by Estonian ICT policy makers: the
no-legacy policy. According to this idea, the
Estonian public sector should not have
any important information systems in use
which are over 13 years old. This means that
at least in every thirteen years the most im-
portant information systems should be rebuilt
from scratch or significantly re-engineered.
Why thirteen years? Estonia’s experience has
proven that the quality lifespan of a large na-
tional information system is approximately 10
years. Considering that the planning, develop-
ment and implementation of a new solution
is about a three-year process, we reached the
number 13.
Because the public sector has a monopoly on
the provision of public services to citizens, it
risks falling into the comfort zone. If customers
do not like the food in a restaurant, or experi-
ence bad service in a hotel, they can always
choose not to return and can find alternative
service providers. However, in the case of pub-
lic services there is rarely an alternative. Thus,
from time to time, impetus is needed to make
civil servants generate new ideas and ap-
proaches. The no-legacy policy with its obliga-
tion to renew, will provide a great opportunity
in this regard. Rebuilding the system makes it
possible to learn from previous mistakes and,
as a result, to create better solutions.
This public sector approach is also important
for the private sector, as companies providing
hardware and software services need to keep
up with the latest technologies and develop-
ments in order to stay competitive in internal
and export markets.
In conclusion, if you want to continuously de-
velop e-government solutions and keep it ef-
ficient: Do not deal with legacy, kill it!
Estonia (7)
Finland (25)
Sweden (24)
Denmark (10)
Luxembourg (3)
Iceland (7)
Netherlands (20)
Spain (112)
Croatia (7)
Hungary (42)
Norway (4)
Austria (35)
Belgium (43)
Portugal (34)
Czech Rep. (34)
Slovakia (32)
France (269)
Italy (182)
Germany (168)
UK (51)
Malta (1)
Romania (78)
Greece (59)
Latvia (15)
Slovenia (6)
Ireland (19)
Bulgaria (59)
Cyprus (9)
Poland (146)
Lithuania (32)
Benchmarking Information and Communication Technologies in Health System
Joint EC-OECD WORKSHOP Brussels, Aprill 18-19, 2013
Input Decision Exchange Tele
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7

“It doesn’t happen every day that twenty-five businessmen join forces
and establish an NGO in order to develop an early stage ecosystem
for Estonian start-ups and seed investors,” Signe Viimsalu, CEO of
EstBAN (Estonian Business Angels Network), explains how the associa-
tion was born. “In other countries, the initiator or founder has usu-
ally been the state, a public entity or some arm of such an entity. In
Estonia, it was the serial entrepreneur Ivar Siimar who said ‘let’s do
it ourselves.’ Super!”
EstBAN is an umbrella organisation for business angels and business
angel groups seeking investment opportunities in Estonia and its neigh-
bouring regions with an aim to grow the quantity and quality of
local seed stage investments. The year 2013, the first year of activity,
was incredibly successful for EstBAN. Firstly, the goals set at the outset
were surpassed. The number of members of EstBAN has grown from 25
to 59. Secondly, the business angels have invested over 4.6 million euros
in 66 companies. The initial goals foresaw support to 10 start-ups and
one million euros in total. Thirdly, two-thirds of EstBAN members found
suitable investment opportunities in start-ups in the first year of activ-
ity. Another significant number is 56,112 euros, which is the average
investment of EstBAN per deal in 2013. A retrospective of the first year
can be found at www.estban.ee/about/2013-review.
It is quality not quantity that matters
Signe Viimsalu explains that it was a conscious decision not to publicise
the statistics on the average investment per member. The reason is that
this figure is very high in comparison with the members of similar as-
sociations in other countries. “It is understandable that the best practice
of angel investments is still developing in Estonia. There are not that
many business angels in Estonia, the investment need is enormous and
invested sums per deal are high for seed investors in order to have a real
impact on start-ups,” explains Viimsalu. The Chairman of the Manage-
ment Board of EstBAN, Ivar Siimar, states that the sums invested show a
real interest by members in angel investing.
The main goals of EstBAN in 2014 are to increase collaboration with
business angels in neighbouring countries in order to have more cross-
border syndication and to initiate a co-investment scheme with the Es-
tonian government. Another aim is to increase the number of business
angels to 80 and to have about 30 investments in the amount of four
million euros by the end of the year, without leverage from the Estonian
government. With a co-investment scheme the numbers will be differ-
ent. Both Siimar and Viimsalu confirm that EstBAN’s priority is to finalise
negotiations with the Estonian government to launch a co- investment
scheme as soon as possible, but what really matters is the quality of
investment projects in the pipeline, not the quantity.
The Estonian Government
Is About To Boost Seed
Investments In Estonia
In 2014 By Ann-Marii Nergi

Life in Estonia (Spring 2014 issue)

Life in Estonia (Spring 2014 issue)

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