This blog has moved

I took the plunge to Wordpress and moved my English-language blog to kaljundi.com, also replacing my old personal website. The RSS feed stayed the same (feeds.feedburner.com/kaljundi), no need to update that.

See you on the other side!

OpenCoffee Tallinn on June 5th

Once again the OpenCoffee Club Tallinn event takes place in Tallinn, Estonia. We meet on the first Thursday of the month at Scotland Yard Pub, Mere pst 6E, on June 5th, 9-11 AM.

Opencoffee Club Tallinn events are usually attended by 20-50 persons from all areas of startups and technology, a bunch of great people.

Our official event announcements are posted on our Facebook Group (http://www.facebook.com/group.php?gid=6854479626) which as of today has over 130 members. Feel free to join to have the event invitations sent to you each month.

OpenCoffee Tallinn this Thursday

Our second OpenCoffee Tallinn Club event will take place already this Thursday, 9-11 AM, at Scotland Yard Pub, Mere pst 6E, Tallinn. The OpenCoffee Club was started to encourage entrepreneurs, developers and investors to organise real-world informal meetups to chat, network and grow, and the movement is now active in over 78 cities across the world.

Everyone active on the technology scene is welcome, like always, just show up any time between 9-11 AM, grab a cup of coffee, introduce yourself to others and just let it flow from there. The first event in Tallinn was a blast, with around 40 people from various fields (startups, VC's, academia, government etc) showing up.

CV Market jobsites sold for up to 8.9 mEUR

CV Market, a regional network of Baltic and Eastern European online recruitment sites, was sold last week to a group of investors consisting of Digital Sky Technologies Limited, Tiger Global Private Investment Partners IV ja Bexley International Investments Limited, according to news published in Estonia.

The deal size is announced as "up to 8.9 mEUR." 75% of the company is being sold now and the buyers have an option to buy the remaining 25% by January 1st, 2010. "Up to" probably means being dependent on next 3 years results.

CV Market 2007 is forecasting revenues of 1.9 mEUR and a profit (not sure if net profit or EBITDA) of ~0.38-0.45 mEUR. That means a valuation of 4.7 times current year revenue estimates and 20-23 times profit estimates.

The biggest share of revenues for CV Market comes from Estonia, where it operates under the name CV Keskus, followed by the Latvian and Lithuanian subsidiaries.

Earlier this year Tiger Global acquired a 30% share in one of largest Romanian jobboards eJobs.ro, with a valuation of 32 times EBITDA.

The acquiring companies also hold interest in Headhunter.ru, a Russian online recruitment company.

Disclaimer: The author of this post is a co-founder, ex-employee, current small shareholder and supervisory board member of CVO Group, a partially competing regional integrated recruitment services network.

Nagi 9 months after launch & Fotoalbum.ee

AldasK asked in my Nagi launch posting's comments: "Have read the post about the launch of nagi.ee with interest. More than six months have passed since the launch, though. Can we expect an update on how the service is doing? " We have been busy, but here is a quick update.

Back in March we raised 100k EUR in seed financing from Moonfish Media, a Baltic online media group active mostly in the field of real estate and job classifieds as well as online auctions.

9 months after we launched, here are the key stats for Nagi:

• 850 thousand photos and 18 thousand albums have been uploaded
• 10 thousand users have registered
  
• 35-45 thousand visitors come to the site each week
• 25th-30th position in the TNS Metrix official stats for Estonian websites
• 31% of users in age group 18-24 and 29% 25-34

3 weeks ago we also bought the largest youth photo site Fotoalbum.ee, which will be kept separately for younger audience. Here are the numbers for Fotoalbum.ee:

• 2,4 million photos and 58 thousand albums have been uploaded
• 26 thousand users have registered
  
• 45-50 thousand visitors come to the site each week
• ~25th position in the TNS Metrix official stats for Estonian websites
• 40% of users in age group 18-24 and 46% up to 18 years of age
  

Since we launched Nagi we knew, that we want to target more mature (above 20-22) audience and that younger (up to 20-22) people need something different. The quality and content of the photos depend a lot on your age. And the community aspects are different. So we had the option of either to start a special youth site next to Nagi or buy some market share, and we chose the latter.

We are quite happy with the numbers, considering our sites are purely in local language for the Estonian market of 750 thousand Internet users.

While we are happy with the statistics, we have not yet actively started ad sales. Hopefully with an audience of 90 thousand weekly users for the two sites we will be now more attractive for the large advertisers and media agencies (through which most of Internet advertising money in Estonia goes).

Over the next months there is a lot to do to improve Fotoalbum.ee software, transfer it to Nagi back-end and improve the user interface and functionality. That is our focus for coming weeks and months - as well as starting the ad sales, so we can grow our team further and reach break-even as soon as possible.

Estonian Rate Solutions conquers Europe

Social networking company Rate Solutions, which runs the hugely successful MySpace-like Rate.ee in Estonia, has launched their first Western European sites Alfa in Finland, Zamba in Belgium and Limpa in Netherlands. The goal of Rate is very ambitious, to be the leading social networking player across Europe with their local sites, entering a very crowded market. The Polish site will be launched soon according to company officials media statements. The company is saying they will expand to 15 countries during a few years.

The expansion is supported by 1 mEUR investment from Estonian-Finnish VC MTVP, which seems more like an amount for not more than 1-2 new countries. Also the marketing team is very thin for now. The company will put a lot of hope on viral marketing and organic growth, keeping the costs low that way. We will see how far that investment will take them and if they have some results in the new countries during next 6-12 months to support new investment rounds.

The .fi/.nl/.be sites are up and running, with only around hundred or a few hundred users and photos for now (and some latest photos pages giving errors, hopefully to be fixed soon). They must be still in testing mode. Also many of the registered users there are their own people and friends from Estonia.

In Netherlands they compete with existing large players like Hyves, CU2 and Superdudes/Sugababes. Not sure what the situation in Belgium is? None of European markets are empty, so there must be something to outcompete the existing players.

Rate in Estonia is the largest website, having over 330 thousand registered users and 120 thousand daily visitors (out of country's population of 1.35 million) mainly in youth segment. Last year Rate sold 51% of the Estonian site to the largest local mobile operator EMT for around EUR 2.5 million. Still being no 1 in one of the smallest European countries has a lot been based on luck and being in the right place in right time.

Rate also runs Face in Latvia (92 thousand users), Limpa in Russia (88 thousand users, although a lot of the Russians from Estonia and other Baltic countries) and Point in Lithuania (46 thousand users).

Time will tell, how good their people, marketing skills and management expertise will be in going to new uncharted markets. Like all of us know, technology plays only a tiny part in this kind of business, it is all about people and users perception.

Good luck for the founders, investors and management team in making this a success!

Nagi successfully launched - 100.000 photos

As you have noticed, I have not had any time to do any blogging in English during the last 3 months. That's because 2 months ago (although it feels like an eternity) in August we launched Nagi (nagi.ee) - a photo community oriented purely on the Estonian market. Nagi is in some sense similar to being a local version of Flickr and in some sense Orkut. We have photos and albums. There are discussion groups with photo pools and forums. We have friends and user access and rights management based on user groups that you can define. Everything we concentrate on right now is photo oriented, although we have a development roadmap outside that sphere as well, doing other user-generated content services. In a country like Estonia we definitely want to be one of top 5-10 visited sites during next year - we already among top 30-40 after 2 months.

Many people have asked us, why should anyone use a local photo site as opposed to something like Flickr. Many reasons. Localisation does not mean just translation. You also have things like integration with other local services, for example ordering photo prints. Nagi works with 4 local companies in this sphere, while Flickr at best just gives you an error message about being in unspported country. Being in Europe, local is always faster, even with Google's, Yahoo's and other shared data centres. But it is also a local feeling, local places, local people being part of the service. Photo services or communities in general in many European countries have shown they need to be local.

During the first 2 months around 3000 users have registered, we have over 20 thousand unique visitors and about 1 million pageviews per week. This weekend we also exceeded a milestone of having 100 thousand photos uploaded. Again, to compare with Flickr or other international services - there are only a few hundred Estonians on each of them, and that is not a community, while our's already is. Same for things like tagged photos, you can find a lot about local places, nature and people on Nagi, but not in other countries.

We did Nagi as a team of 4 persons: 2 software developers and 1 user interface developer in addition to me. All of us have previously worked on developing what today is known CV-Online / CVO Group, the largest online recruitment company in Central and Eastern Europe. Knowing and trusting each other helps in this phase.

We are bootstrapping for now, using our own finances (mostly for servers, storage, data centre services etc). The biggest investment of course is doing all the work for free. Hopefully we can start generating some advertising revenues soon, to delay external financing as far as possible or not doing it at all for at least our plans in Estonia. Nagi generates some tiny revenues already now from photo prints and pro packages with more disk space, but that is insignificant and probably will be so in a small country also in the future. Still we have big bets put on online advertising market, living and growing off from that. As for talking to angels and VC's, we do that if someone shares our vision and is interested, as there could be advantages in raising some financing now, but we are not actively going out doing that for now.

Since we expanded CV-Online across the region, everyone is asking if we will do that with Nagi as well. And I am really not sure. Nagi can be very successful and profitable even if it stays only in Estonia, and we want to focus on that only for at least 6 months. After that, nobody knows.

Estonia is the least happy country in the world

Actually I lied. Among 178 countries in the world, there are 6 countries which are more unhappy than Estonia: Ukraine, Congo, Burundi, Swasiland and Zimbabwe. This according to the New Economic Foundation study Happy Planet Index (here is the PDF).

And guess what - I believe it is all true! Estonians die young, work too hard, worry too much, spend too little time with their friends and families, drink and smoke too much (and die!), do not care about our beautiful nature and environment etc.

Many people in post-communist countries say that they were happier in soviet times. This is true for many of them, free fast-growing capitalist society does not equal happiness.

This is a good reality check to realign their priorities in life.

Ross Mayfield and Shel Israel on Estonia

One of the big fans of Estonia, Ross Mayfield, had lunch with Shel Israel, who is writing a new book Global Neighborhoods. Shel blogged a bit of how Ross described Estonia and its developments.

Estonia leads in Brainbench certifications

As noted by Jaanus, Estonia is the "most certified nation" per capita according to Brainbench.

Everyone can now print out their Estonia-cert, which says: "This award is in recognition of the nation whose people have shown their dedication to making improvements in business and technology by demonstrating their skills, knowledge and abilities as well as representing the talent that lies within their region. Congratulations to Estonia!"

Back in 2000 or 2001 we promoted BB heavily at CV-Online resume database, integrating the whole BB system into ours, so the certs were linked to people's CV's. The whole BB service, including mailing you nice printed certs, was free, so people used it a lot. Not sure how many use the service nowadays.

Somewhere I have my own certs from that time as well, from areas like Master High IT Aptitude, Master Internet Security Specialist and Unix Adminitrator.

Estonia has the most Hummer's per capita

According to the cover story of Estonian leading daily newspaper Äripäev, Estonia is the world leader in Hummer vehicles per capita. Makes you so proud to be an Estonian. We have a tiny country and we are quite poor, but we have 50 Hummers. And we keep buying more of them. They are just so big and sexy. "Like nothing else," like their tagline says.

Estonians just love big and expensive cars. You see more of them on our streets than in any other European country. We just laugh when we go to France or Italy and see those tiny Fiats, Opels or Seats. In our country you must have a Toyota Land Cruiser, Mercedes S600, Audi A8 or BMW 7-series. F*ck fuel economy. F*ck the price. We use our last drop of money to buy a car, even before our real estate or other everyday needs. We take loans and leasings and take the most expensive car the bank allows us.

Hopefully every Estonian will have a Hummer one day. We need more Skype's and Playtech's for that, but we will get there. Dreams come true.

Estonia lacks IT people

Come change the world
Originally uploaded by JKaljundi.

This morning I found a baloon with Skype jobs ad in front of our office quite near to the centre of Tallinn. Unfortunately it never took off, probably because there was no wind.

It is almost impossible to find any IT people in Estonia nowadays and Skype and some others are spending a lot on recruitment advertising. Full-page ads in newspapers and magazines as well as any other forms of marketing. Basically you have to headhunt quite agressively to get someone good, and pay them some extra. IT people here are not so cheap either.

If someone asks me nowadays, should they come and start an IT development centre in Estonia, I have to say no. The 10000 IT specialists we have in total is a small number and it is hard to grow bigger teams, you run into obstacles very soon. IT is not popular among university enrollments and the lack of people grows bigger and bigger each day. Which is sad considering Estonia's current position on the world's innovative IT solutions market.

Skype founders invest in a radio communications firm Modesat

The core 4-person Estonian technology development team of Skype, via their VC firm Ambient Sound Investments, has made their third investment, this time into a radio communications firm Modesat Communications. The core technology of Modesat is meant for satellite communications and has been developed in Byelorussia, a country with strong Soviet background in military and space technologies.

One of the patent applications of Modesat shows a bit of what they are doing. Searching the web for Leonid Letounov shows some other related stuff.

Google adds RSS reading lists sharing

Recently Google added the possibility to share items in their RSS-based Google Reader. The items starred or labeled can be shared with friends or other readers, creating a feed to which others can the subscribe via any RSS-reader. There is a link Share now next to Edit subscriptions, where you can share either all starred items or just the ones using a certain label. You can also create a clip, an HTML code snippet for your webpage that shows the headlines and links of your latest starred or labeled items.

Sharing what you read via RSS will be an important feature in the future. This means more and more feed readers will need to work on the server side of their solutions. It is easier to do this in web-pages readers and probably harder in Windows-based clients, many of which do not have much intelligence on central servers. It will be interesting how other readers act to this or what they add.

In a way this is del.icio.us or social bookmarking for RSS reading. Way cool in my opinion. It shows the strength of Google also in many other fields in the future, where you share more and more of the stuff you do or how you act.

Skype founders VC firm makes their second investment in Estonia

Ambient Sound Investments, the investment firm of Skype's founding engineers Ahti Heinla, Priit Kasesalu, Jaan Tallinn ja Toivo Annus, made their second VC investment. This time it was Oskando, a 12-person GSM-based telematic solutions firm. For only 200 kEUR they purchased a 42% share, after which they hold 57% of the company.

After the successful exit Toivo Annus left Skype already in November, to concentrate on investing the cash the made from his and the three other founders shares in Skype.

The first investment (1.6 million EUR) for ASI was Clifton, an Estonian gallium arsenide semiconductor crystal research and manufacturing company.

Goodbye iTunes & Napster - allTunes rocks !

For years, people in most countries of the world have been frustrated by the inability to legally buy copyrighted music and videos. Services like iTunes, Napster, Pandora and others are available in a few selected countries only. Anywhere else you just have to go back to pirating, which of course hundreds of millions happily do. There is no guilt, as it is a decision made by the music and video companies themselves. After trying to offer them money and getting a response, that you are not welcome, you just fire up your eMule, eDonkey, Kazaa or FTP client and download the albums and movies for free. Jaanus Kase has written a good post on this as well.

Until I discovered allTunes, a new client for a legal music download service called allofmp3 based in Russia. Available to everyone in the world, using a good pricing mechanism based on downloaded file size and cheaper than Napster or iTunes. Whatever some might say, the company follows all local legal regulations. TechCrunch has a nice story on them as well.

Now should big music companies go after allMusic, and allofmp3 try to shut it down or change the pricing? No, they should learn from this company and try to follow it. This is the first music service with a task to serve their customers and use technology and practises that are right for the medium. You can not sell albums online at the price of plastic CDs, they must be cheaper. You can not cripple your music files with DRM or you will just frustrate your users.

I see no reason why anyone should continue using iTunes or Napster for their music downloads.
Try out the new service and show the big music companies the direction to follow.

Estonia in top of the World Economic Forum IT report

According to the World Economic forum report called The Global Information Technology Report 2005-2006 "Networked Readiness Index," Estonia is ranked no 23, ahead of all other Central and Eastern European countries. USA, Singapore, Denmark, Iceland and Finland took the first 5 positions. Press release here.

Business 2.0 available in US only

Looking at the page of Business 2.0 magazine it seems they offer subscriptions in US only (no link to them provided on purpose). I tried to search everywhere on their page, but everywhere you click you will find only a US price and US subscription number. Or to be true, they mention also a Canadian price, but do not even have a form for the Canadians to subscribe.

Too bad, they lost one more customer. I suggest everyone to subscribe to Red Herring instead, they know, how to serve their international customers well.

edited: I do appreciate Business 2.0 Editor Josh Quittner posting an answer in my comments just hours after my posting. Thanks. Still the reasoning does not sound clear to me. I subscribe to many US magazines, many of them much smaller, many somewhat larger in circulation compared to B20. None of them are oriented at international audiences per se or have official circulation partners abroad, still they are all happy to accept international orders. B20 for me is the first case of a magazine not welcoming international orders. If I remember correctly, I also used to subscribe to B20 years ago, although the magazine was much different then and the Internet boom advertisers probably helped in keeping the worldwide subscriptions possible. Still I wish them good luck in their writing, which is great.

Estonian casino software developer Playtech´s successful IPO

Although one of the world´s leading casino software developers and operators Playtech is not an Estonian company per se, all of their software development and system operation is done by a 200-strong team of Estonians. As such congratulations go to their whole team on their last weeks hugely successful IPO on London AIM, which was 5 times oversubscribed and valued them at 550 million pounds (965 million dollars).

The largest Estonian shareholder and local founder Rain Kivistik had a 6,4% ownership in the company, which means he will make personally around 35 million euros - about the same, as all 4 of the Skype´s Estonian founders each made.

The implications for Estonia are the same as for Skype: having a big part of an internationally successful tech company here brings more know-how and experience about that field to us. As people from Skype and Playtech will move to other companies or found their own startups, they bring that experience with them. There will now be also more financing from the founders cash chest available for other startups.

Largest Baltic IT company sold for 25,5 mEUR

Although MicroLink, the leading Baltic IT services company based in Estonia, Latvia and Lithuania, was sold to local telcos already in the spring, the price of the deal - 25,5 mEUR - came public only now. Some valuation multiples compared to the 2004/2005 financial year results (running from July to June) were:

• 0,7 times revenues (35,5 mEUR)
• 9,8 times EBITDA (2,6 mEUR)
• 19,6 times net profit (1,3 mEUR)

Up to you to decide if the price was right. Comparing to the revenue multiples, you would expect a higher valuation. Then again, the markets for IT services companies are hard, profit margins have been low for years and there is no reason that should change, so based on EBITDA/net profit the price seems about right.

Today, December 31st, is also my last day at MicroLink. The almost 4 years have been a lot of fun, working with the best IT people and most interesting customers in the region. I hope that over the next years MicroLink will keep its leading position on the market, but as we will see continuing consolidation across Europe, the main goal will be breaking outside the Baltic region to serve customers in Scandinavia, Western Europe and why not Russia. If MicroLink will not do that, someone else will.

Having been an enterpreneur already twice in my life, I have for some time wanted to get back in the world of startups. I believe there are a lot of good ideas and smart people here in the Baltics, so I will be incubating and supporting some of these under Customix. And may be developing some services and apps myself as well.