I interviewed Jüri Kaljundi about his past and how he sees the startup market from Tallinn. Jüri runs the Open Coffee Tallinn and will share some insight regarding the Estonian startup scene.

Starting off – who are you, and what do you do?
About my background, started with developing commercial web services and Internet marketing in Estonia back in 1994, when I was 19. Then spent a few years doing enterprise data security systems. From 1999-2001 spent 2,5 years as a co-founder expanding the largest Central and Eastern European online recruiter CV-Online (www.cvogroup.com ) from Estonia to 8 countries, living a year in Prague and Budapest. CV-Online in 1999 was also the first Estonian Internet company to raise VC financing. Again switched to enterprise IT for 4 years, working as a Sales and Marketing Director for MicroLink (www.microlink.com), the largest IT services company in the Baltics. Got bored there and in early 2006 with 3 friends started Nagi as a user-generated online media company in Estonia. This is my third startup and next years I will celebrate my 15 years in web development and Internet marketing :)

Today Nagi operates 3 of the larges photo sharing sites for different target groups in Estonia: Nagi, Fotoalbum and Album.ee and a small local video sharing site Toru. In August we also started Keskus, an Estonian social network, which is also an umbrella site for our 4 photo and video sites. Keskus hosts all the user accounts, profiles, friend lists, groups, mailboxes etc for those sub-sites. We have over 100 thousand registered users and over 130 thousand weekly users. Over 30 million photos have been uploaded, so statistically we are doing quite fine.

In business terms we are still small, just a few employees (the founders) and revenues of around 10 thousand EUR per month. Monetizing user-generated content on social sites has not been very easy. Also one of the problems in Estonia and our region in general is that majority of online advertising revenues go through large media agencies. Most of the online banner ad campaigns are distributed via them between top 5-10 largest portals and newspaper sites, so for small and medium sites it is hard to generate any real revenues. 20% of the top sites get 80% of the revenues, that’s how life goes. So for us, the main thing is to get into that 20% :-) Luckily some ad networks (like Klikivabrik) that also cater for smaller websites have emerged. Google for some strange reason does not allow AdSense in Estonia, probably they still us confuse us with Elbonia http://en.wikipedia.org/wiki/Elbonia (any help from Petri Kokko here?).

TNS Metrix gives a good overview of the top Estonian websites and there is also Google Analytics based GMetrix for small and medium sites. Looking at the Estonian top 10, 4 sites (Neti, Rate, Hot, Everyday) are owned by telcos (Elion, EMT, Tele2) and 6 sites (Delfi, Postimees, SLÕleht, Elu24, Auto24, EPL) by large print media groups. We are lucky to be among the 2 startups that follow, together with Kava.ee (a TV guide, like Telkku.com in Finland).

The unfortunate thing for Estonia is that looking even at the top 50 lists of Estonian websites, there have been almost none which were created by startups and have an impact on the local market. 2007 saw the creation of almost no significant local web-based businesses and 2008 has not been any better. There is a lot of stagnation and standing still, like startups have given up to large established media companies. There are many reasons. There is no enterpreneurial culture. Life as an employee has been quite rewarding for many, as companies have done well in our local booming economic situation. Creating business models for startups in small markets has not been easy, so even if you could create popular web services, the money might not always follow. So the problem for Estonia is not as in many countries matching financing with startups, but to have the startups and people with new ideas at all.

You also run OpenCoffee in Tallinn – how has that gone?
We started OpenCoffee Club in Tallinn in December 2007 and have had 20-50 people at each event. My goal there is not just for startups and investors to meet, but also for tech people from established old IT companies or universities to come and chat. The problem we need to solve there is getting people energized and willing to take the plunge into the startup world. It will take time and pushing and educating. Examples of Estonian founders of Skype and Playtech who made hundreds of millions EUR from their shares has not been enough to get people to follow them. At the same time, the 200-300 employee offices of Skype and Playtech in Tartu and Tallinn is a good educational ground for future entrepreneurs. One of the things I always say is that I am waiting for people to start leaving those 2 companies in numbers, so we would have more startups. Those people should join future OpenCoffee events and of course international visitors are more than welcome. We meet each first Thursday of the month 9-11 AM, sometimes with presentations, sometimes just for networking.

Estonia also lacks people with previous international sales, marketing and commercialization skills, even if we have good product development skills. So the key would be to join forces between people in Estonia and those who have done these things already in Western Europe and USA.

Thanks Jüri for taking the time to answer our questions and giving us some interesting insight with regards to the local startup scene in Estonia. Definitely interesting issues as well as obstacles that we also face here in Finland.