Tallinn -Estonia may be the original home of the revolutionary internet communication company Skype, but it's hard to find a completely Estonian business among the numerous information technology (IT) companies in the Baltic state. With Skype being its hottest calling card, tiny Estonia has transformed itself into a something of a Silicon Valley of Eastern Europe.
However, the company's two founders are not even Estonian. Niklas Zennstrom is a Swede, and Janus Friis is a Dane. Skype's legal headquarters are now in Luxembourg; its sales and marketing office is in London.
Part of the problem for Estonia's entrepreneurs is the nation's inexperience in capital markets and marketing. The Baltic nation of 1.3 million people regained its independence in 1991, after the collapse of the Soviet Union and joined the European Union in 2004.
Estonia's software development industry employs roughly 3,500 people.
IT entrepreneurs tend to focus on niche products or on business models that, like Skype, can expand from a small base by word of mouth.
Oliver Wihler, 36, a Swiss software developer, moved to Tallinn from London 8 years ago, drawn by the heady professional atmosphere and the aggressive use of Internet technology even in the last years of the previous century.
Local entrepreneurs working in various companies grow out of an energetic, youthful society, which has embraced technology as the fastest way to catch up with the West. This is one of the reasons why Wihler decided to move to Estonia in 1999.
Now he and a business partner, Sander Magi, 31, run a company called Aqris, which offers software development and consulting services on Java technology.
"The demand is huge for IT professionals," Wihler told Deutsche Presse-Agentur dpa. "We don't have enough human resources, good resources." Aqris is employs about 30 people.
Ironically, Estonia owes its internet success to its former occupiers, the Soviet Union. The Soviets constructed and developed several scientific institutes in the Baltic countries in the 1950s. Estonia ended up with the Institute of Cybernetics, a computer sciences centre.
That scientific legacy remains embedded in society, people say. It's probably not surprising that the telecommunication industry estimates internet penetration at 57 per cent of the population.
Eight out of 10 Estonians carry cellphones and even gas stations in Tallinn are equipped with Wi-Fi connections, allowing motorists to check their email after they fill up.
Estonians use mobile phones to pay for parking, among other things. Most conduct their banking online, and more than 70 per cent file their taxes on the Internet.
The state issues a digital identification card, which allows citizens to vote from their laptops.
Members of parliament suggest implementing m-voting, allowing a citizen to vote using mobile phones in combination with a unique SIM card and national ID card. The offer is on the table though it's unlikely to happen before the 2009 elections.
The government considers putting more and more services online. Recently, it announced it would open a virtual embassy in the virtual reality website Second Life.
It pursues innovative technologies with projects like e-health, which would put all personal health histories on a single database, Juhan Parts, minister of economy told Deutsche Presse-Agentur.
Other projects include e-justice that would not only contain a person's criminal record but would be a single source for all law enforcement agencies - from the state police to code inspectors.
"The basic idea is to improve the quality of the function of the government," he said.
Competition for talented recruits is driving up salaries. While Estonia remains cheaper than neighbours Finland or Sweden, the gap is narrowing rapidly.
In the past, Finnish companies were looking for cheaper labour across the Finnish Gulf in Estonia. But soon, Estonian companies will be looking for skilled workers in Finland, according to Oliver Wihler.