From selling warm bodies to widgets

Last week Jugo invited me to speak in Ljubljana for an audience of 200 Slovenian entrepreneurs about my experiences from disrupting a huge market in a really lean way with TransferWise. I was intrigued to visit the source of the legendary #slovenianmafia, which has created tech successes like Zemanta,, Flaviar and contributed their brains into building many other startups, including TransferWise.

Thanks to my new friends in Ljubljana we heard what is on the mind of local entrepreneurs and others like Jugo, who are actively creating an ecosystem for fast growing technology businesses of Slovenia. One can draw parallels with a positive movement that I have seen taking place in Estonia recently.

Generation D.I.Y – the post-Soviets

Both of our small countries share a point in history when rather suddenly the entire economy collapsed. One day every soviet factory, shop, collective farm, car repair shop lost its customers, budgets, leaders and purpose.

We had to start from 0 again. People quickly worked out, how to put their skills to use and small co-operatives sprung up servicing the local economy. They soon started outsourcing their work to Scandinavia. We were creating little wooden bits for Ikea, subcontracting software development for Siemens and filling orders from as far as Dubai. It gave us a generation of DIY enterpreneurs.

The “make something” generation

This meant an OK life to this generation, as long as the foreign investment and cheap credit kept flowing in to the country. Now we are seeing a new generation, the sons and daughters of these first starters, who were brought up with the ideals that anything is possible and yet who aspire to do more than just sell their time and skills on the European outsourcing market to the highest bidder. I hope they will be our Product Generation.

Estonia already has this fantastic Skype story, which is inspiring a generation of tech people. And we have the handful of people, who built up the Baltic banking sector and then sold it to bigger Swedish banks. We have more recent examples of product people, who invented a bolt-on viewfinder, which turns a DSLR cameras into an HD video camcorder and has become a worldwide hit. People are inventing high-tech flower pots to grow your own lunch and dinner on the windowsill.

Crossing from service to product

Turning a consulting shop into a product business is notoriously hard. Good development teams often come up with lots of great ideas of products that would be useful, it is just very hard to turn away solid cash flow from development projects and invest the team’s time in unprofitable and super risky product development. But worst – even if you get initial validation on the product idea, then changing the culture in the team from software engineers and project managers to product owners can be incredibly difficult. It may be a better idea to spin-off the product and nurture it in a totally independent team and environment.

37Signals famously made a transition from web development to a super successful Software-as-a-Service business. Much the same way Klika in Slovenia evolved from writing code by spec to developing sports-intelligence products and merged recently into Sportradar. Estonia’s two more successful tech products, mobile payments gateway Fortumo and java deployment tool ZeroTurnaround, were both spun-off from parent companies, who were once successful software development shops.

In order to make the switch from the outsourcing services economy to the product economy, both Estonia and Slovenia need to inspire a generation of product entrepreneurs. The failure rate in building products is 10x higher than in outsourcing, thus is does not hurt to remind ourselves that both the satisfaction and financial outcome of building great products is 100x of that in successful outsourcing.

Half man, half ironman

Seven years ago I heard someone talking about an Ironman triathlon and thought “me too, me too!“. Far from a fixation, this was more like a “wouldn’t it be cool …” thought at the time for a fat bastard like me. It took me the first 2 years to get acquainted with jogging, swimming and cycling. Then I raced my first olympic distance at London Triathlon 2007, felt horrible, did a few more in London but did not really improve a lot. I ended up running a few half-marathons last year and decided to take on a full marathon and a half-ironman this year.

The 5h 34m finish time in Galway, Ireland was by far my best result of all my sportifs this year and placed me 280th out of the 960 people, who crossed the finish line. For me racing often involves seeing lots of people pass me in the second half of the day (l’Etape, marathons), but it was not the case this time.

The 1.9K swim is the scariest part of the race. It did not help at all arriving the night before in a 30kts thunderstorm and the waves were rolling in from the North Atlantic right into the Galway Bay. But the race start at 6:30am next morning into the sunrise over a calmed down sea was full-on romantic. Imagining how thrilled the other 2000 neoprene-men were gathered in the cold water behind the starting line. The swim itself was really cool, after the usual foot grabbing and anxiety of the first few hundred meters I got into a rhythm and totally enjoyed the sunrise and moving through the chill ocean water.

About 45 minutes later coming to shore we met a supporting crowd and the announcer welcoming “This is Kristo Kaarmann from Estoniaaaaa…“. Swimming long distance makes you dizzy even with the smallest of the waves. It is incredibly hard to walk straight, let alone run straight after a 2K swim in open sea. I guess that’s why they build a massive corridor from the beach to the bike area, otherwise people would just genuinely get lost.

Changing between the swim to bike to run is considered the 4th discipline of the triathlon. People go to great lengths to optimise these. For example, I thought it would be good idea to wear socks to the bike and run. It ended up taking me about 2 minutes trying to put them on to my wet feet, which was just impossible given the heart rate after the swim.

It was a great feeling having survived the swim and launching on the spectacular 90K ride through the Irish countryside. One tries to play by the rules and avoid drafting in the bike leg, but … it ain’t easy if you have that number of competitors on the rather small road, trying to overtake each other. Let’s be honest, drafting did happen.


Personally I was afraid of the run more than the swim. I expected to be totally exhausted and barely able to move my feet by the time we get to the 21km run. It was not the case, I was full of energy, getting a lot of support and attention thanks to my Bert & Ernie Sesame Street jersey. I passed a few people, some others passed me, but I enjoyed it quite a lot and even managed to make a couple of friends during the course.

Ironman is a great money-making brand machine. Couple of days after the event they published the new European Ironman league classification, where one is automatically entered even with the half-ironman results. So I first ended up as 172th of M30-34 in my country league table for GBR. Then I pointed out their mistake that I did not compete for GBR and am never planning to. They changed my country affiliation to Estonia and boom, I ended up in the top spot in the country league, still 1879th in the European league.

If I were now, speaking hypothetically of course, ever thinking of attempting the full Ironman (4K swim, 180K bike, 42.3K marathon) – what would the preparation need to be? The body would need to be in a state that it can run a marathon without making a big deal about it. So I guess a couple of more half-ironmans and a few marathons will be needed.

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Invest in them, who bring the most bang

A few weeks ago I bumped into Stanislav and Joonas, who had spent the summer in London interning for RBS and Research Intelligence respectively. Both of them were among the 10 students in 2009, whom I helped to finance the first year of their studies abroad. Every time I meet any of our past grant holders, part of me is happy that my investment is bearing fruit, but the self-conscious me feels a bit uneasy in the company of people with brains the size of ripe watermelons. Just a couple of years ago Stan told me after finishing his first year of Mathematics in Oxford at the top of his class, he had started seriously doubting if this was indeed the right place for him.

We run a university grant programme Young Scholar Grant (Noored Õpetlased) with a couple of friends, which invests one time £3500 cash grants in prospective Estonian boys and girls out of high school, who had the balls to apply to Oxford, Cambridge, Humboldt, etc and the wits to be accepted. We pay out ~10 grants every year where each basically covers the student’s first year living expense abroad. Again they will need the balls and wits to know they can support the next 3 years of the studies themselves. The money comes from private “investors”, who all put in £500-£2000 and every privately invested £ is matched 1:1 by the Estonian government.

We just gave out 11 grants to the 2012 class of ambitious youngsters. This year the government ran out of budget after 10 grants, so the investors stretched themselves to send the 11th person without any government sponsorship and fully privately supported.

Handing out the grants is quite a get-together for all previous years’ grant holders and a great chance for us to hear how they have been getting on. So we learned that Holger from ’06 had recently created some synthetic diamond as part of his PhD research. Kristjan from ’08 turned down two PhD offers from Oxford and moved to London to continue at Imperial. Mihkel from the same class wanted to try in industry and competed against 6000 other wishfuls to win a spot among the evil bankers of UBS. Marek from ’09 who studied with professor Higgs (of the boson) in Edinburgh had spent this summer in Geneva colliding particles and checking the debris for his teacher’s boson.

2011 grant yearbook – in Estonian

So what do we, the investors, get out of it? We get enablers. We get to make sure that the top 0.05% brightest young people of our small country are educated together with the top 0.01% of the brightest people of the world. Our own universities are very good, but they are not the best. And “very good” just does not cut it when you need the “best” people to run the future of your country. There are no strings attached with the grant, the students only commit to complete the studies in the university, after that they can do what they want – go into research, work for a bank, go bank to Estonia, stay abroad – whatever fits the ambition.

“Investment in education pays the best interest” – Benjamin Franklin

This is a no-brainer investment: you have 2x leverage from your government, the value of your underlying asset class (education) only goes up, there is no direct exit to worry about – the only question is in the value of the indirect benefits you get from having super-educated countrymen and -women around you. The annuity will pay back in small indirect benefits over the next 50 years. Of course, you are not the only one benefiting – there are the other 1.3M Estonians who benefit and there is nothing wrong in sharing the proceeds.

Our investors vary from ex-bankers and entrepreneurs to researchers, who are still in postgraduate positions and running on grants themselves. I strongly believe, that every one of us should have and can have a contribution to education. If you don’t like giving cash then why not read a course or a guest-lecture at your university. By now you should have learned something worth teaching others. It would be reckless not to.

Eric Schmidt says this world is not ready yet

BERLIN, GERMANY - FEBRUARY 16:  Eric Schmidt, ...

“This world is not ready yet,”  Eric Schmidt of Google told me and a bunch of London entrepreneurs rhyming with a catchy Dutch beer commercial. He confessed once thinking that all the big ideas were done when he was the CTO at Sun – and a month later the Internet was invented.

An hour strong Q&A session with Eric for London upstarts and selected Campus residents, masterminded by Eze Vidra, was a fantastic success. Short, yet thorough and thoughtful answers to question after question. No fluff, no wasting time.

The session was a good reminder of the Google vision, which has so incredibly – together with the three other pathfinders AAPL FB AMZN changed the way we interact. Through the hour one could pick up words of wisdom for different audiences.

  1. for governments – if you are building shiny technology parks on the outskirts of your capital next to a well connected highway – you have failed your entrepreneurs, this is not where world will be changed.
  2.  for entrepreneurs – put your naíve and arrogance to work, these are awesome assets that generally fade away with age. You have once in a lifetime opportunity to imagine the world differently – the way it should be rather than the way it is.
  3. for talented people – get your maths right for a luck laden scenario. Slave for an investment bank and hope to earn max $500K a year or work 5 years for a startup and vest into $10M of equity. Your choice. Note: Eric made $7B along his journey from software engineer.
  4. for young companies – focus your resources on solving the real and the hard problem versus break even or early profit. Try and cure a disease, invent something that saves people time and helps put food on their table.
  5. for venture capitalists – tough business these days. know your game or watch out for a shake-out.

Someone asked if there is a particular theme or an idea that had particularly excited Eric. He said he is expecting a lot of value propositions in combinations bringing together: mobile access + crowdsourced intelligence + data algorithms + cloud oomph.

Wanted to ask Eric when is Google going to get their banking licence and when do they expect most people be transferring their paycheck directly to Google Wallet. Legend has that Larry and Sergey were thoroughly frustrated with the US banks in 2004 when they started accepting adwords payments at a large scale. They were determined to f** the banks and get a banking license for Google but Eric then convinced them not to.

Given how unexciting the news have been around Google Wallet, I decided not to ruin the perfectly fine session. Instead I asked him, where is Google planning to make the most impact to people’s lives and habits in the next five years. He said “improving search from queries to the depth of understanding”. Remember, this world is not ready yet.


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You can run, but can you win?

People are generally a bit nuts around the year end holidays, slightly out of touch with reality. It was then, when I boldly set my plans for this year’s sporting events. I must have been high on Christmas pudding as I thought I will be so incredibly organised this coming year and super productive with work, so that besides killing the currency transfers space I will have plenty of quality time to spend on exercising and having days of fun with Kriss.

It might have been reading too many @bfeld posts over the holidays, about how he manages 500 emails per day, runs ultra marathons and does not get a bit stressed.

It does not work like this for normal people.

Just back from my 5th l’Etape du Tour – it was hard. I could just about take the first 25km long hors categorie climb to Col de la Madeleine, but already at the bottom of the second of the four monsters I started having too many existential thoughts. It was on the climb to Col du Glandon, when I noticed a  one-legged cyclist passing me uphill among masses of others. Emotionally in pieces as I was taking the last two climbs in the frying sun, the squeaking from my left crank driving me nuts. The limited amount of blood that made it to my brain was enough to reason, against any other part of my body, that I have done it four times – I shall make it this time too.

Lost the will to live

I reached the top of La Toussuire in 11 hours 6 minutes, 3932nd across the finish line. Although 9 000 cyclists signed up, only 4 400 made it to the finish ahead of the broom wagon. Although it was the hardest course of the last 5 years my two friends finished in the top 400 (~7,5 hours). It was also the very same stage where Estonia’s hopeful young rider Taaramäe dropped off the lead a couple of days later in the Tour.

Looked at the results and listened to my body after the finish. It was not about me being exceptionally weak or the course super hard. It was only about lack of exercise – the climbs and miles I did not do this year. Too many days I spent in the office and many weekends behind my laptop. Don’t get me wrong though – riding a stage of the Tour de France with the huge peloton of enthusiasts across the world is an experience I might be up for even the 6th time.

A similar story unfolded at the beginning of May in Kiev, where I ran my first marathon. It was only a few weeks before the event, when I stumbled on the course elevation profile and worked out that it has 700 meters of climbing involved over the 42km. This almost compares to 1500m climbing of the gruesome Jungfrau mountain marathon, which is a totally different category.

This certainly killed my plans of trying to beat Taavet‘s 3:49 time. Somehow I managed to make it to the finish after 4:35 with some of my Ukrainian friends still supporting me across the finish line. The post race totally consumed and empty feeling in my body was a weird experience.

Now there is just one more physical challenge left in September – the half-ironman in Ireland. The reality has caught up with me – there won’t be any time for serious exercise. I’ll just try to tough it out.

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La Grave – mecca of high mountain boarding

Today my old mistress returned my love – for the 7th year in the row I have come to La Grave as the missionary, praying for fresh powder. This year she was kind and considerate – a total whiteout and snowstorms on Friday followed by 1m of fresh snow today from top to bottom.

Morning snow – as viewed from Hotel Castillan balcony

La Grave is a hidden gem and it has all the right characteristics stay never to be discovered:

  • It has only one ski-lift – an archaic pulsating gondola system, which takes about 25 minutes to the 3200m. When the glacier is open (from late Jan) there is a drag-lift to the top of the glacier to 3550m at good days.
  • Not a single snowcat-track. There are literately no “routes” as you are used to in other resorts. You are dropped off at 3200 and then you either take the left or the right valley and follow your imagination.
  • There are 4-5 small hotels in the village, one superb hidden restaurant Au Vieux Guide with signature raclette and 2-3 other eateries. Not your apres-ski and party destination.
  • Most visitors are 30-40 year olds, tanned mountaineers, coming from far as US and Canada. You cannot find the latest Burton boards or jackets on the mountain. However everyone is wearing a rucksack packed with the latest technology of avalanche airbags, icepicks, receivers, shovels, etc. People are here to explore and stay alive, certainly not to show off

In most other resorts I look like a geek with my swallowtail board. Today I think it was almost 50/60 as about half of the snowboards used on the mountain were either full swallowtails or reduced fishtails. But hey, in these conditions you really see the difference – the split tail drops into the fresh powder, the wide nose surfs up while you ride the white wave.

Sportifs of 2012

One thing with the turn of the year is to plan out different aspects of your life. It is like a Monday morning war room for the week. The jog this morning reminded me that I had not yet booked my sports calendar – the 2012 is going to be a huge year for our foreign payments startup and more importantly need to allocate time to stay fit and sane.

Half Ironman2 Sep Ireland

A few years back when I did not do any sports, I secretly admired ultimate endurance guys. On the second day after moving to London I signed up for the London Triathlon – worlds biggest olympic distance (1.5 swim + 40 bike +10 run ) event. Have competed 4 times in London now with 2:38:00 being my personal best.

SANTA ROSA, CA - JULY 19: Athletes exit the wa...

The olympic distance is a sprint. Last time we started 7am in the Thames docks and were done by 9:30, racing mad except the first 20 minutes of the run where my mind is never on the race but rather how to avoid throwing up. Changing from bike to run is hard for me.

I am not ready yet to compete in a full ironman (3.8 swim + 180 bike + 42 run). I would barely survive the swim and the bike, but there is no chance on earth that I would be able to run a marathon.  Sitting on my butt does not get me closer to this goal, so half it is in 2012.

Preparation: cycling and running as usual, morning 40 min swims once or twice in the open air London Fields Lido. Once the summer kicks in then the ponds in Hampsted Heath are fantastic for open air swims. Todo – sign up for a long-distance swimming competition, e.g. to Isle of Wight.

Etape du TourLa Toussuire 8th Jul 2012

Big thanks to the Deloitte cycling activists, who convinced me in 2008 that riding one stage of the Tour de France with 8000 amateurs is a great thing to do. That stage was Col du Tourmalet, followed by Mont Ventoux, Col du Tourmalet again in 2010 and Alpe d’Huez in 2011. In the first year I got two of my fitter cycling buddies to ride the Etape with me, they loved it and got more of their friends involved in 2009, so that last year we had a group of 15 Estonian amateur cyclists camping out near the start line. Some are really good – Indrek finished 452 of 10 000 competitive cyclistas.

The front of the peloton during stage 12 of th...

It is going to be another mental stage this year, including 3 hors-category climbs and one first category climb over 140km.

Preparation: a training week with buddies in Italy in early April, the annual dragon ride of Wales, Rapha’s Hell of the North semi-cyclocross north of London and weekend outings to south downs near Dorking, Edenbridge, Sevenoaks.

Marathon06 May Kiev

Running is my weakest discipline. I get tired, out of breath and I am slow. In 2011 I did two half-marathons, the Semi de Paris and the Windsor Half. I sucked, clocking 1:45 in Paris and 2:04 in Windsor. I blame my size and weight.

Last year I had huge amount of running inspiration from the book Born to Run and started running with Vibrams, as close to barefoot as you can get on the trashy streets of London. My stride has certainly improved a lot since the last 12 months of no cushioned footwear and there have been no injuries or pains.

Preparation: morning runs twice per week 11km before breakfast along the Regent’s canal and once around Victoria park.

Adventure Racing – 29 Apr, 2-3 Jun, 29 Jul Estonia

Our Estonian forefathers did not emerge from the forests a long time ago, therefore no surprise the entire nation is mad for adventure races, where a team of 3 cross the terrain orienteering on foot, bikes, canoes, etc. We attempted the grueling 36-hour adventure challenge in 2008, but had to step off on the 31st hour due to teammate’s blisters.

This year will try the shorter one-day XDream races and hope to put out the full TransferWise team.

Sailing – undecided

In previous years my Deloitte friends planned out the sailing season nicely with the company regatta, the Industry Sailing Challenge that takes you twice around the Isle of White and races on Cowes Week. Give me a shout if you need crew for your club’s spring/summer series!

Olympic spectating – August

I did get hold of tickets for two events in the London 2012. Gotta see this close up and first hand.


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