The ghosts of Skype past: How Estonia's biggest tech export is still powering its startup scene today

The ghosts of Skype past: How Estonia's biggest tech export is still powering its startup scene today

Summary: The Estonian 'Skype mafia' is driving new tech companies in the country, hoping to lay the foundations for the next generation of tech success stories.

SHARE:

The initial release of Skype came around 10-and-a-half years ago. Although the company was founded by Dane Janus Friis and Swede Nicklas Zennström, the software was initially developed by four Estonians — three of whom were also behind the once-popular peer-to-peer sharing application Kazaa.

Just two years later, the company had become the leader in the global VoIP market with 54 million customers – 150,000 customers joining daily — and the startup was later bought by eBay for €2.6bn. Although the exact numbers have not made public, the sale brought hundreds of millions of Estonian kroons (Estonia's currency before joining the Eurozone in 2011, equal to around €0.06) to stakeholders in the country.

Skype has changed hands twice since then: in 2009, eBay decided to sell 65 percent of Skype to Silver Lake, Andreessen Horowitz and Canada Pension Plan Investment Board for $1.9bn and two years later Microsoft bought the company for $8.5bn.

Skype's development centre is still located in Estonia, but its significance has shrunk in recent years — last May, the then-CEO of Skype Estonia, Tiit Paananen, said that only about 20 percent of the company's workforce remains Estonia.

That doesn't mean that Skype isn't important for Estonia; quite the opposite — it's given many former employees and developers invaluable knowledge, experience and tools that they use elsewhere today.

In 2003, the four Estonian developers of Skype — Jaan Tallinn, Priit Kasesalu, Toivo Annus, and Ahti Heinla — created an investment firm called Ambient Sound  Investments (ASI), set up to hold a minority stake in Skype. Since selling its stake to eBay in 2005, ASI has been a private investment vehicle, managing €100m of its partners' assets.

In 2007 they founded a startup, Inkspin1, which develops communication service called Vispel with the goal of bringing video calls to any TV set and TV-connected device.

One of the original Skype developers, Jaan Tallinn, has been backing innovative projects in very different fields. He co-founded the Centre for the Study of Existential Risk at the University of Cambridge, a multidisciplinary research centre dedicated to the study and mitigation of risks that could lead to human extinction. In 2012 he also co-founded a medical consulting firm called MetaMed, which provides personalised medical research services and was backed by entrepreneur Peter Thiel. He also was an early investor and advisor in London-based deep learning startup DeepMind, which was sold to Google in the end of January for about $400m.

In 2011, Skype's first employee, Taavi Hinrikus, went and co-founded peer-to-peer money transfer service TransferWise, which allows users to transfer money between countries and make foreign payments cheaper and faster than through the traditional banking system. TransferWise has received millions of dollars in seed funding and investments from IA Ventures, Index Ventures, Peter Thiel's Valar Ventures, and PayPal's co-founder Max Levchin among others.

The former CEO of Skype Estonia between 2007 and 2012 StenTamkivi joined Andreessen Horowitz last year as an inhouse entrepreneur. Although living in Silicon Valley, he still keeps an eye on his homeland and frequently writes on economic and social topics regarding the future of Estonia. He also keeps an eye on the startup scene, for example, investing in high-end speaker company Estelon.

Tamkivi also coined the term #Skypemafia for the broad group of founders, key employees, investors, advisors, and other notable contributors to Skype. According to his research, there are more than 50 ex-Skype people (many Estonian) who have since gone on to set up a new business or found a startup.

A good example of such a startup is Vitalfields, which is led by an Estonian ex-Skype engineer Martin Rand. The company provides farm management software that already helps over 1,500 farms to forecast plant diseases using field-based weather forecasts and also helps keep records on the fields. In January, it raised €500,000 in follow-on funding – from investors including Ahti Heinla.

After four Estonia former Skype engineers got really frustrated with functionality gaps in Skype's messaging, they decided to found a new communication startup called Fleep, which has been backed by Jaan Tallinn and Priit Kasesalu among others. The iOS application is out already and the Android version will follow any time now.

The founder of Skype's data research team, André Karpištšenko, co-founded a really interesting startup called Marinexplore, which is developing the world's first ocean big data platform.

The company offers repositories of data on the world's oceans, which users can create custom datasets in minutes. While the company, which collected €1.4m in seed funding, operates in Silicon Valley its development team is still situated in the Estonian capital of Tallinn.

Read more from Estonia

Topics: Start-Ups, Emerging Tech, Tech Industry

Kalev Aasmae

About Kalev Aasmae

Kalev Aasmäe is a technology and economics journalist, who also writes for the oldest and largest quality newspaper in Estonia, Postimees.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

3 comments
Log in or register to join the discussion
  • Bandwidth connection

    I wonder if Estonia's extremely fast IP connections to the net have anything to do with their innovation culture (they are near the top, or at the top, and the US, by contrast, is 16th among countries of the world)?
    ClearCreek
  • Estonia fast Internet could have other consequences too

    Namely, it could explain the frustrations that the rest of us mere mortals with middle-class bandwidth connections have with Skype, since it was developed in an environment in which network bandwidth was not as much of a constraint -- and the perception that the quality of the connections was "just fine" was only local to the developers' environment, not the rest of the world !
    ZenCushion
  • another cok and bull story.

    Two estonians in the backyard just start up a company and then sell it for billions. Just like bill gates started windows and made it a success?. Why would IBM give him exclusive rights? Why would a company then worth billions give bill gates that? Anyone who can't smell a rate is a fool. All the fools who believe the story of rags to richs are morons. The computers behind skype are not chicken feed. As usual the lies continue to sell books or magazines. These folk probably ripped off the soviet union and some other soviet technology. It is like the F15 seems to have been designed from information from soviet times stolen. It seems like the biggest vultures on the planet are the USA. Who make no bones about stealing intellectual property but cry when it happens to them.
    johny bizaro