Mention the names Ahti Heinla, Jaan Tallinn and Priit
Kasesalu and people probably won’t recognise them but say the word “Skype”, the
product they developed in Tallinn in 2003, and you will discover it’s a
household name. Skype is undoubtedly
Estonia’s greatest contribution to the global telecommunication industry; it is
just as significant as Facebook, Google and the Internet itself. Skype has in excess of 663 million registered
users; this amounts to approximately 8% of the world’s entire population and
the number of users continues to grow every day.
Aside from gaining its independence, Skype is one of
Estonia’s greatest achievements. It enables
one user based, for example, in the very far north of Finland to have a video
conference with someone in the south of New Zealand for free. This was unthinkable a mere ten years ago and
the technology for peer to peer communication is improving constantly. In March 2012 Skype announced its latest
feature – the new talk and record Skype Recorder which enables users to record every
single call, instant message or video conference and store it on the Skype
database – for life. This means precious memories and important conversations
can be stored, retrieved and cherished forever.
These three Estonian developers had previously created the successful
Kazaa product which was backed by Danish and Swedish investors Niklas Zennström and Janus
Friis. In 2003 these same investors backed the Estonian developers once
again to create the new product which would later become Skype. This would harness VoIP technology and allow
any internet user to call another and have a voice conversation in real
time. VoIP is a technology which
converts a person’s voice into data packages which are then sent over the
internet and converted back into voice at the other end – all at extraordinary
speed. This enabled any two Skype users
to talk to each other, irrespective of where in the world they happened to be. The only requirements were that both parties each
had Skype accounts, PCs, sets of headphones and a microphone. Within one month of launch Skype software had
been downloaded one million times and now, 9 years later, more than 663 million
people have Skype accounts with around 17 million users being online at any
given time.
The genius of these men was able to flourish because of the
economic and political freedom that has existed in the Republic of Estonia since
restoring independence in 1991. The
political system and lightning reforms implemented by former Prime Minister
Mart Laar and his team have enabled those with ideas, drive and ambition to
pursue their dreams and benefit both themselves and potentially millions of others. The VoIP technology had existed long before
Skype entered the market and its possibilities would have undoubtedly been
harnessed by someone sooner or later.
However, the very hard won political and economic freedom that Estonia
now enjoys meant that this wonderful development could occur there. Skype is Estonia’s best known business
success story but there are other smaller and lesser known ones. Skype’s story and others like it have allowed
many thousands of jobs to be created in Estonia and the effect is an enormous
increase in the country’s living standard during the past 20 years.
Estonia has emerged as one of the world’s most dynamic and
modern free market economies. Its flat tax system and tax exemption rules for
undistributed company profits have attracted vast amounts of foreign investment
capital. The requirement to balance the
country’s annual budget is written into the constitution which means that the
national debt is a mere 6% of GDP.
Estonia has outperformed all of the other 14 former Soviet
republics by a very wide margin. Other
former Soviet countries such as Turkmenistan, Belarus and Tajikistan continue
to languish with very stagnant, state run economies and have failed to embrace
the opportunity of starting over with a clean slate like Estonia did after the
fall of communism. Twenty years ago if you were to ask someone where Estonia
was, they would probably struggle to find it on the map. This is beginning to
change and many free-marketing loving Western economists regard Estonia as an
economic model to follow. Estonia may
have had a dark and traumatising past but the country is now a rising star. In
2011 Estonia achieved more economic growth (8%) than any other country in the
EU, coming out ahead of economic giants Germany, France and the UK.
Estonia has earned itself the reputation of being a “Baltic
Tiger” or “E-stonia” due to its rapid economic advancement. The country has become tech savvy, innovative
and highly ”connected” as a result of the extensive wireless network
that exists through the country, which is free in most public places. Two thirds of Estonia’s population now do
their banking and political voting online and it’s increasingly done through
the use of a smart phone rather than a PC. Estonia has one of the highest rates of mobile
phone ownership per capita in the world; this makes paying bills and other
transactions much easier than ever before.
There are a few instances where names of websites have
entered our everyday vernacular as verbs.
We might “Google” a subject or a person on the Internet or “Facebook”
someone and now “Skype” has become part of our vernacular too. The term “Skype
me” has replaced “call me” or “page me” in many situations and has added new
words to our language. Few companies can
boast this level of branding achievement but Skype has that right. Skype has
not only revolutionised the communication industry but it has also altered the
way in which we speak. Skype has made a profound
impact on the world and it all started in Estonia.
In 2011 American software giant Microsoft acquired Skype for
the massive sum of $8.5 billion. Despite
Skype’s metamorphosis over the past 9 years, 44% of its entire staff are still
based in Estonia and the engineering teams in Tallinn and Tartu continue to
create most of the product’s innovations.
It is a testament to the talent of these people that the world’s most
powerful IT company has seen it fit to keep the operation in Estonia.
Written by Tania Lestal - March 2012