1. I ECONOMY AND BUSINESS
Interview with
Mike Gault –
CEO of Guardtime
Be On Guard -
Guardtime Is
Coming... Text: Toivo Tänavsuu
Photos: Atko Januson
In 1988, when the digital world was still in the who was studying quantum transistors. He then In autumn 2007, Ito visited Tallinn in order to
distant future, two young students of cybernet- found common ground with the well-known formalise his personal investment in Guardtime.
ics - Märt Saarepera and Ahto Buldas - met at the Japanese venture capitalist, technology guru, He visited the Skype team led by Toivo Annus,
Tallinn University of Technology. Some years later, DJ and writer Joichi Ito. Ito, the founder of the and in his subsequent blog post he had only
Saarepera travelled to Tokyo as an exchange stu- first ever Japanese website, invited Saarepera to good things to say about Estonians and the free
dent and dived into the world of applied infor- work in his business incubator, Neoteny Labs. wifi network of Tallinn. The quality of the lat-
mation security and cryptography, publishing ter supposedly surpassed the wifi of Frankfurt
in various scientific journals. At the same time, In the second half of the 1990s, Saarepera and Airport but not that of Ito’s own Tokyo office.
Buldas stayed in Tallinn, working on digital signa- Buldas made big plans. They discussed the nit- Guardtime received a new impetus. Ito became
tures, the latest rage all around the world. ty-gritty of the global information security sys- an important person in setting the direction of
tem. They looked for development funds. They the company. On the magic date of 07.07.07
At the Tokyo Institute of Technology, Saarep- attracted the interest of the Estonians who had the clock of the servers was started and the his-
era met two people who later became the key founded Skype and, together with some part- tory of Guardtime began. Now it was possible
figures behind Guardtime. First he struck up ners, Skype invested over 15 million Estonian to check and issue signatures.
a friendship with his course-mate Mike Gault, kroons (about 560,000 euros) in the enterprise.
24 LIFE IN ESTONIA I 2012 / 2013 WINTER

2. a lie detector; afterwards you can prove the What has been your biggest
data was created by a particular entity, when it challenge in China?
was created and that it hasn’t been changed.
The signature can be verified independently, Technology standards are completely differ-
without human involvement, as it is based on ent there. People do business by text mes-
mathematics, which is the core innovation. So saging, which is very different to how we do
verification doesn’t rely on trusting people. We business in the West. E-mail is not as popular
operate an infrastructure and, in every coun- as texting. That’s obviously quite a different
try we operate, we work with local partners approach to business. They have this concept
to allow them to distribute signatures in their of guanxi, which is about long term personal
jurisdiction. Typically those partners are telcos, relationships, and those are more important
such as China Telecom and, in Estonia, Levira. for business than say contracts, as in the US.
They are the distributors of the signatures. Guardtime’s technology helps to remove the
need for trust by providing an independ-
In 2010, Guardtime received a much-awaited ent record of everything that has happened
financial infusion. A group of investors in- on electronic networks. For example, we are
vested eight million dollars in the company. building a solution for SMS so you can have
Besides the founders, Joichi Ito and the Skype proof that you sent an SMS by having its au-
guys, the owners of Guardtime also include thentic content.
Li-Ka-shing’s Horizon Capital, the national in-
vestment company of Singapore, Infocomm The fact that you have
Investments, and FitOne Capital, which is established your company
owned by the Japanese venture capitalist Yuki- in the Chinese market –
hiro Kayama. what does that mean
financially, in the long term?
Let’s begin with the cooperation
between Guardtime and China. Firstly, we hope to list the company within the
What sort of milestone is this next few years in China. In terms of revenue,
for the whole company? a single project or a single customer can mean
millions of dollars a year and we have custom-
It is a very important milestone, but let me ers in the Philippines, Japan and Europe who
put it in context. Two years ago we received are using our service. The business model is
money from the venture capital fund of Mr Li that those partners will generate the revenue
ka-Shing, a Hong Kong financier. One of his and customers, and they will give us a per-
companies operates Skype in China, which is centage of their revenue. If you consider how
why they became aware of Guardtime and our much electronic data there is and how much
technology. They invested in our company and people care about it, you realise that the po-
made introductions for us in China. We are in- tential size of our business is huge.
volved in several projects in China. The biggest
one is still to be announced, but it is with the Do you have different projects
Chinese government. We’ve been building a in the pipeline simultaneously
solution for them for the last two years. for different customers?
The digitalised world screams Are you working directly with That’s right. A few years ago everybody
for technologies that will help to the Chinese government? laughed at us. Who are those crazy guys and
prove the validity of any digital what are they trying to do? That is always the
data. One such infrastructure Correct. Our company recently received an case when you bring a new technology to the
solution is provided by Guardtime, award from the government of China in the market. At first people ignore you because you
a company founded in Estonia. amount of 350,000 dollars, or two million are too small and then they ridicule you be-
What is the technology Guardtime Chinese RMB. That came with a five-year tax cause they see you as a threat. That’s the cycle
provides? break and free office space. We are the only we are going through. Now, for example, we
foreign company to ever have received such have about 17-18 projects ongoing with the
Mike Gault: Conceptually, Guardtime’s tech- an award, which puts us in a unique posi- government of the Philippines. The Philippines
nology is very simple to understand. Take tion in China, with both local investors and have electronic elections, slightly different to
some data, such as an e-mail or a document government support. Last week we also an- the elections in Estonia. Guardtime is involved
or a video — anything electronic. Guardtime nounced our partnership with China Telecom, in putting a tag on every single vote so that
generates an electronic tag or stamp for the which will be a distributor of our technology afterwards everybody can verify the integrity
data called a signature. The signature acts like in China. of the election.
WINTER 2012 / 2013 I LIFE IN ESTONIA 25

3. I ECONOMY AND BUSINESS
Can you give some more Has luck played a significant role? You are now working with
interesting examples? the Estonian government?
You want to be exposed to as much randomness
Another example is the digitisation of physi- as possible. If luck is just a random event with a Yes we are. Estonia is respected as one of the
cal paper: we call it dematerialisation. In the positive outcome, then the more exposure you most advanced e-government societies. We
Philippines, the central land registry authority have to random events, the more chances you are working with the government registries
has 25 million land titles, which are currently have of being lucky. That means getting out that are currently deploying Guardtime. It is an
stored in paper form. They want to digitise it there and meeting as many people as you can. incredible case study for us to take to govern-
all. If you convert from paper to electronic, it is So, two years ago I gave up my apartment and ments around the world. So, if you can get a
very easy to change electronic data. When you I’ve been on the road since then. case-study from the e-government in Estonia,
scan paper, it is a pdf, but anyone can change you can take it anywhere. If you present your
a pdf. You just change it, copy it or produce a You’re not a family guy? company as an Estonian company that builds
new one: there is no way to prove what’s hap- e-government solutions it gets instant credibil-
pened. So Guardtime goes in with a stamp on Not yet. Right now I have no home and eve- ity overseas, ironically more credibility than in
every land title to verify later that it is indeed rything I own fits into one suitcase. It’s not Estonia itself.
an authentic land title. a lifestyle for everyone, but with no ties you
have complete freedom – and nothing to lose. But is the development still here?
Let’s talk about the years
when you didn’t really have What is the main motivator for We have a development centre now in the
the business... you were trying you personally to travel around Philippines because we couldn’t fill the posi-
to validate your products. living out of your suitcase? tions in Estonia. It is very difficult to find talent-
What’s in it for you? ed developers in Estonia for obvious reasons:
How long did it take, how much Skype, Microsoft etc.
money was spent and was there The exciting thing about Guardtime and the
ever a time when you hesitated reason I think that people stay in the company Still, are you planning to maintain
seriously? is because they believe in a vision of the world the status quo in the sense that
where electronic data is more reliable than the headquarters will stay here?
I never personally had any doubts. When physical data. So it is the vision that drives
you have a vision for how the world can be people. For me personally, it is succeeding in Our corporate headquarters is outside Estonia
a better place, then as long as you believe this incredibly difficult challenge and getting but the core research and development is all
in that vision, no matter how many people the recognition for that as an entrepreneur. done here. We have invested about two mil-
tell you you’re an idiot (and it was everyone), lion euros a year in the team in Estonia. We
your conviction can remain strong. Take, for How do you evaluate Estonia as will do our best to hire more people in Estonia.
example, VMWare. They have 350,000 cus- an environment for incubating
tomers, a 30 billion dollar company that in- companies with such sophisti- What sort of challenges are
vented the modern version of virtualisation. cated technology? you facing in the future?
They started in 1998 and everybody back
then said “who wants to virtualise a server?” Estonia has the potential to be the innovation Guardtime started off as an international or-
It was the same way with Guardtime: peo- hub of Europe. It has brilliant engineers and ganisation. Originally we had markets in Ja-
ple said “who wants to sign data?” Almost inventors who are always coming up with new pan and the engineering was in Estonia. Now
all big innovations are ridiculed initially, then ideas. If they can continue and build an eco- we have offices in Manila, Singapore, Beijing,
something gets triggered and all of a sudden system of inventors, entrepreneurs, investors Tokyo and California. All around the world,
it is completely commonplace and everybody and innovators in government and business, communication is always a challenge. But we
accepts it. it would be tremendous for the country. I’ve have an education session for people who join
been fortunate enough to experience how in- the company on the Estonian “long silence”.
During these difficult years how novation is done all around the world – from When they have a conference call with Esto-
many changes in directions have the Silicon Valley to China to the Philippines, nians and the Estonians don’t answer, it is not
there been? Singapore, India, the Middle East and Europe because they’re not paying attention but be-
– and the one thing that I have noticed is that cause they are thinking.
We are running out of mistakes to make so we innovation is done by individuals, not by or-
are having to make the same mistakes twice. ganisations and certainly not by committees. Do you have a specific message
One of the biggest mistakes was to believe if The US is the strongest precisely because it is for the government of Estonia,
we built the technology it would sell itself. For- the culture of the individual. Giving freedom and the innovators of Estonia?
tunately, in the last few years more of a science to individuals in the public and private sectors
has developed around bringing a new technol- to experiment and fail is by far the best recipe Estonia has historically led in technology in-
ogy to the market, so you can basically study for long-term success. The more the bureau- novation. That’s because in 1991, when you
those techniques and then apply them to your cracy tries to lead or legislate, the less likely it is started the country, you had no legacy sys-
own situation. to come up with something original. tems, so you’re bound to be pretty innovative.
26 LIFE IN ESTONIA I 2012 / 2013 WINTER

4. Ahto Buldas and Mike Gault in the Tallinn office of Guardtime in winter 2012
The question is how to keep up that innova- their data in the cloud and run applications on A question about the intellec-
tion, because twenty years later Estonia has it there. The challenges, of course, of doing tual property of the company
its own legacy systems and vested interests. that relate to data security: how do you know – how many patents have you
How do you keep innovating? Otherwise, you you can access the data (Availability), how do registered?
will slowly see Estonia slip down the ranks of you know the data has not been modified (In-
e-government. One way to stay ahead is to tegrity) and how do you know that the data We have an incredible IP portfolio: our IP at-
create a culture of openness and allow people has not been accessed (Confidentiality)? Esto- torney did all the early patent work for VM-
to take risks and fail freely. If everything gets nia has a great track record in data security Ware and successfully defended them from
decided by a committee in a closed room, it is and it is there also that Estonian inventors and Microsoft when they sued the company. We
very hard to innovate. So, allow start-ups to entrepreneurs can thrive, helping solidify Esto- are creating a culture in which when engineers
try different ideas and allow individuals in the nia’s reputation as a technology hub. come up with a new idea, they automatically
government and private sector to try out those start to think about patenting.
ideas and see if they work. My advice would I wonder if a shift in economic
be to give people the freedom to experiment power globally will influence Do you have developers
and see what works. Guardtime. as shareholders?
Recently, President Ilves was I am really excited about all these markets. I Yes, not just developers, but everyone in the com-
invited to chair the Steering am excited about Europe, as this technology pany. We believe that everyone in the company
Board of the new European Cloud was born in Europe. The EU is now starting should have a stake in the company’s success
Partnership, which aims to de- to seriously think about cloud computing. Es-
velop cross-border digital public tonia is a leader in e-government, so there is How much do you pay people
services in the public and private a new technology – cloud computing – and on average, monthly salaries
sectors. What does cloud comput- Guardtime fits perfectly into that. In Asia – in of senior developers
ing mean for Estonia? emerging economies - they don’t have the for example.
legacy systems that the US has, so the compe-
Cloud computing is the biggest paradigm shift tition is very different. There are fewer vested I used to work for Credit Suisse Financial
in computing since the PC. Historically, people interests. In the US, it is about changing the Products, the derivatives arm of Credit Suisse,
have stored their data in-house and run appli- status quo. So each market represents very dif- and at one point they had the highest paid
cations on that data using their own comput- ferent challenges for us, but the end result is workforce in the world; it would be nice to
ing resources. Now they are starting to store the same. reach that level.
WINTER 2012 / 2013 I LIFE IN ESTONIA 27