Estonia or Silicon Valley – What’s The Difference?

Draper University

Estonia or Silicon Valley – What’s The Difference?

Two months ago, I returned from my 6-week long trip from Estonia to Silicon Valley, where I attended Draper University and peeked into some unicorns (e.g. Uber, Airbnb & Tesla). Coming back, it really opened my eyes towards the pros and cons of both Estonia and Silicon Valley.

Three years ago, I first came across the term: “startup”. Already then, I heard there was this magical place called Silicon Valley and a school teaching how to build startups, named Draper University. After being there this summer, I can say it is a place worth going to, but is it also a place worth staying?

I am no expert, but since it has been an enlightening experience, I wanted to share my thoughts on that with you. For startups, three things matter: people, ideas and resources.

First, the people.

In Estonia, we can contact any other startup person almost any time. It is a small country, where the longest you have to drive to meet anyone is three hours, but normally in 10 mintues. It is also really easy to obtain anyone’s email and mobile number – and they usually answer in a matter of hours.

For example, when I was raising funds for my trip to Silicon Valley, I gathered together all the emails of Estonian startup founders and contacted them personally. Most answered and some of them, like Herty Tammo from Startup Wise Guys, contributed to my cause.

It is not that simple in Silicon Valley though. As I understood, you have to have a reference from a friend before you can reach people you need to contact. And even then, it is usually their secretary that will answer.

At the same time, I do not see much difference between the kinds of people you will meet. Startup people are very friendly everywhere. Both places have lots of great talent. All the mentors still teach similar things – only their examples can be different, as the ones from Valley have experienced more success. This is why the Estonian startup accelerators like Startup Wise Guys and BuildIt fly in mentors from across Europe and the US to mix with the local talent.

In conclusion, the communication is much faster in Estonia, but you might find people with more experience in the Valley.

Second, the ideas.

One thing I felt upon returning to Estonia was that often people are thinking smaller here, hence Estonian startups tend to be made for a niche market.

For two months, I have been teaching entrepreneurship at University of Tartu and its colleges. Thus far it seems that students tend to copy ideas that have become a success in the Valley or try to solve problems that people are not willing to pay for.

There are lots of great companies that founded by Estonians, e.g.Skype, FortumoGrabcad and Transferwise, which is already a lot for a small country like Estonia. But still, I can feel that Silicon Valley is a home for much bigger ideas and companies.

Perhaps Estonian startups need to start doing more free tours in their offices, like the one in the Valley, to help students start thinking bigger.

Third, the resources.

The ecosystem of startups in Estonia is great. Other than being able to ask help from all the other founders really easily, the state is really active in supporting all the new entrepreneurs by providing them with all kinds of help. We have lots of free seminars, networking events and even every university has its own incubator inviting almost anyone to join.

Thanks to e-government and e-residency, it is also unbelievably easy to start a new company in Estonia and one could find free Wi-Fi almost anywhere. Latter being something I really missed in the States. In Estonia, I am plugged in to fast internet 24/7, but in the Valley I had to run around the town looking for any kind of internet.

What we do miss is capital. That is a resource that is much more accessible in the Valley than in Estonia, although this might mean one should move there for some time to gather contacts and pitch, which makes it somewhat costly. In Estonia, there are some angel investors from EstBAN, local accelerators like Startup Wise Guys and BuildIt, and smaller venture capital firms for pre-seed investments but you’ll mostly need to look outside for funding to scale.

Although, life is at least 4x cheaper in Estonia, meaning it is much more cost efficient to build your startup here and we can survive with much less capital here as well, but only until we want to start scaling.

Estonia is much better place resource wise to start a company at – free internet, cheaper costs, but one can find capital much easier in the Valley.

I do think that one day Estonia has a potential to become a home for some great startups and it is already a fantastic place for people with great ideas to come and launch their venture. But today, one should still keep his eyes on the Valley for different mentors and of course capital.