The small Baltic Sea nation of Estonia is emerging as an AI powerhouse. Estonia is pushing an AI-based education integration program and expanding AI-assisted cancer diagnosis technology and automated digital administrative services. The government is also actively exploring applying AI in the judicial sector. ChosunBiz interviews practitioners using AI across fields in Estonia to hear the secrets behind the country's rise as an AI powerhouse. [Editor's note]
"Estonia is putting great effort into fostering startups with active government-level support. Interest in entrepreneurship is spreading rapidly among younger generations, and challenges toward birthing unicorns continue."
A population of about 1.3 million. Estonia, with fewer people than Busan, is regarded as a representative "startup powerhouse." The country has produced as many as 10 unicorn corporations to date. The number of unicorns (unlisted startups valued at 1 trillion won or more) per capita is about 7.7 per 1 million people, the highest level in Europe.
Corporations that many would recognize by name came out of Estonia. The startup cradle that produced global corporations such as the video call platform Skype, the global remittance service Wise, and the ride-hailing app Bolt is Tallinn, Estonia's capital.
How was Estonia able to grow into a startup powerhouse? To find the answer, we met three Estonian entrepreneurs via video and in writing to hear about entrepreneurship in the AI era. The following is a Q&A with the three entrepreneurs.
―What corporations are you currently running?
Alex Kuznetsov (hereafter Alex) founded AdoptoMedia, an AI-based marketing analysis and forecasting platform, in 2017. It provides analysis services that forecast efficiency for marketing portfolios worth several billion dollars annually and automate budget allocation.
Kaspar Korjus (hereafter Kaspar) Pactum is a developer of autonomous AI agents that support corporations' contract negotiations, founded in 2019. Its main clients include Walmart in the United States, Maersk in Denmark, and Siemens in Germany, and through this service corporations can drastically save negotiation time and resources.
Rauno Sigur (hereafter Rauno) has run DriveXTechnologies, an AI vehicle inspection and Insurtech (insurance technology) startup, since 2019. When a vehicle is captured with a smartphone, AI automatically analyzes exterior damage and vehicle condition and provides a report. The report is used in used-car transactions and lease returns.
―Estonia is regarded as one of the most dynamic startup hubs in the world. What is the secret?
Alex "The e-Residency system is the biggest strength. Through this program, Estonia allows you to establish a company online from anywhere in the world in 15 minutes. I am from Russia and have experienced various startup ecosystems in Israel, France, Austria, and the United Kingdom, but this was the decisive reason I ultimately founded a company in Estonia. It's an environment that guarantees scalability in that you can do business freely across Europe."
Kaspar "Estonia's startup boom is the result of a long-term choice rather than a short-term performance. Since the 1990s the government has focused on building digital infrastructure and IT education, and a social atmosphere has formed that tolerates failure while emphasizing personal responsibility. As successful precedents like Skype and Bolt emerged, an optimism that 'a small nation can also produce global corporations' naturally took hold."
―I'm curious how the Estonian government encourages entrepreneurship. Are there support measures for startups?
Alex "The Estonian government provides full support for corporations' overseas expansion. Through the Estonian Investment Agency (EIS), startups can receive export strategy consulting by industry and be matched with local experts to participate in overseas expansion projects. After selection, when a corporation clearly defines target customers and partners, EIS directly brokers local corporations and creates collaboration opportunities. This is how, even as an early-stage corporation, we were able to find partners in Africa, the Middle East, Southeast Asia, and Latin America."
Rauno "Instead of providing direct subsidies, they support startups by creating a pro-entrepreneurship environment. Above all, the advantage is that there is almost no administrative burden. Company formation, taxation, and corporate operations are all digitized, meaning there are almost no unnecessary administrative procedures. In this environment, startups can focus solely on product development and technology advancement without having to cling to unnecessary paperwork."
―Tallinn, which has produced many leading IT corporations such as Skype and Bolt, is called 'Estonia's Silicon Valley.' What is the atmosphere in Tallinn like?
Kaspar "Tallinn is a small but dense startup city. Communication among founders, investors, and tech talent is active, so decisions are fast, and an execution-oriented culture is strong, allowing corporations to grow rapidly. Compared with California, there may be less flashy promotion, but it's an atmosphere where you can focus on product outcomes at low cost. That's why aspiring founders dreaming of becoming the next unicorn are so fired up."
Alex "Networking among founders is active. For example, through Latitude59, a regular event hosted by EIS, startup stakeholders can interact often and collaborate freely in a flexible atmosphere. Following Tallinn's precedents, more young people are throwing their hats into the ring to start companies."
―Are office cultures at Estonian corporations freewheeling? Is remote or flexible work widespread?
Kaspar "Estonian corporate culture is low-hierarchy and results-oriented. Employees are evaluated by performance rather than hours, and autonomy is guaranteed based on mutual trust. In particular, remote and flexible work are already common, especially among IT corporations, and this culture is spreading to traditional corporations as well. From a talent acquisition perspective, the free atmosphere is highly valued."
Rauno "Many corporations foster an atmosphere that respects each other's ways of working. For example, our company basically works three days in the office and two days remotely each week. Fewer than half of all employees live in Tallinn; the rest work from anywhere across Estonia without being bound by location. Performance evaluations are based on OKRs (Objective and Key Results), and unnecessary reporting procedures are kept to a minimum."
―In Korea, a series of leaks of customer personal information by corporations has raised security concerns. What efforts do Estonian corporations make to protect information?
Rauno In Estonia, security is not optional but a basic premise. If you don't thoroughly build a security system from the product design stage, it's hard to gain trust in the market, and ultimately difficult to operate the business stably. That is why even small startups put everything into information protection. DriveX also regularly conducts simulated hacking tests and works to protect information by deleting customer data in accordance with the EU General Data Protection Regulation (GDPR).
Kaspar At the national level, information security issues are handled with particular gravity. Because the government is also building an online-based administrative system, it keenly recognizes the importance of security. Under the leadership of an independent data protection ministry, Estonia sets high security standards for corporations, and the private sector closely keeps pace to build a robust digital infrastructure.