Alex Antonuk:
— Hi there! This is Built in the Digital Republic – a podcast about Estonia, its tech talent, and the country’s place on the global digital map. I’m Alex Antonuk.
Today, we’re talking about a turning point every successful tech company hits: when the local market isn’t enough, and it’s time to go global.
Of course, if it were only about “landing the first deals,” this episode would be very short. But our guest today knows international expansion not from slide decks – and he’s great at bringing founders back to reality when they treat going global like a checkbox. And, of course, he’s here to help with strategic and operational insight, as well as practical advice.
Please welcome Sven Aulik, Member of the Management Board at the Estonian Association of IT and Telecommunications and Director of International Partnerships at FleetGuru.
Sven brings more than 30 years of hands-on experience building international offices and leading sales operations in the automotive, logistics, and IT sectors across 30 countries. He’s also the co-author and editor of the export handbook for Estonian companies, “YES to Export.”
Today’s topic: strategies for scaling Estonian businesses. Let’s get started.
[Musical intro]
— Hi, Sven! Really great to have you with us today!
Sven Aulik:
— Hello Alex, nice to meet you too!
Alex Antonuk:
— Sven, you’ve been at the intersection of business, exports, and technology for years, and you’ve seen a lot. Do you remember the moment when it hit you that Estonia isn’t just a “startup incubator” for the world, but a real exporter of digital solutions in its own right? Or am I romanticizing it a bit?
Sven Aulik:
— No, you are not actually. If I think back a little bit on what has happened in my export career – which, as you mentioned, has been more than 30 years already – I remember two very clear moments.
The first one was when I joined a company that was dealing with the logistics IT platform, and our owners were actually from Skype.
So, when, as everybody knows, Skype was sold to Microsoft – it was actually sold to eBay as well – we started building this platform and quickly realized we had to go abroad. And after realizing that our solution is already scalable to more than 10 countries, I realized that the Estonian startup space has limitations in a way. Yes, it’s a great place to start developing things. The community is great to support it. But it’s the product: when it’s enough, if it’s a good product, and when you have a little bit of finances available, you can go very far.
And we ended up being in more than 25 countries.
And the second moment was when I was working at Enterprise Estonia, which is the export promotion agency in Estonia.
And when we started helping Estonian companies to go abroad to other countries, then at one point – I think it was during one trip to the US, and I had to do a presentation to some potential investors – then it came to my mind a kind of a nice story, which I don’t know exactly where it came from. But it was about the thing that Estonia is known for, its unicorns, but not everybody will become a unicorn.
And then I came up with the example that, if you talk about Estonia, it’s not just about unicorns. Actually, this unicorn has a unique carriage behind it. And this carriage is actually full of very nice stuff, which means that there are lots of other smaller companies with different IT solutions. And not only IT solutions – there are lots of other technologies, and ending up with food and wood and everything else.
So it’s not just about the unicorns, but it’s the carriage, which is 90 percent of the companies that want to go exporting. But the unicorn story and Skype story are still valid and help to open doors.
Alex Antonuk:
— Great! Thanks for sharing your story! But let’s be honest: Estonia is still a pretty challenging market. It’s small, the talent pool is tighter than many would like, and startups often have to expand abroad sooner than they’re ready. In addition, Estonia isn’t well-known everywhere – in the West, its reputation is mostly positive, but in more distant regions, it can be different or simply nonexistent.
So, how should startups and more mature companies approach international scaling? Not just exporting, but building a long-term presence abroad. And what common mistakes do you see companies make along the way?
Sven Aulik:
— Yes, as we already mentioned, Estonia is not a market. Estonia is the ground for piloting. With our 1.3 million people here, it’s definitely not a market.
But that means that whenever you start a company – especially in the IT and technology worlds – you have to start it with export in mind, in a way that it can be expanded and scaled. Unless you are the local bakery or a newspaper stand, it should be at the back of your head immediately from day one.
And we just recently renewed and took the new legislation, which means there is an officially described regulatory sandbox for companies who would like to test different things in real-life conditions. So, Estonia already provides a lot of support from the government for that. You are not doing anything illegal when you drive your autonomous vehicles on the streets or stuff like that.
And one more thing. When you start your company going abroad, I think the best strategy would be to find some local partners in the countries you have decided to go to, either in the form of representatives, distributors, or resellers. So they can help you blend in. They know the local business culture.
The investment doesn’t have to be so big, because many companies that get their first investment hurry up sometimes and open their big, nice, fancy office and hire 10 people on day one. And sometimes it is just burning the investors’ money. But the good thing about this distributors’ thing is that when you see the cooperation works very well, it’s possible to either make a joint venture or, if that suits both parties, you can actually buy it later. And we have done it in a few markets, actually, in one company when we started entering the market via them. And later on, we actually bought them in the end.
And, of course, try to go into a B2B business model first, because B2C is the most expensive thing you can do as a first thing to do.
Alex Antonuk:
— So that sounds constructive. Now let’s get even more specific.
A small startup – say, a B2B SaaS company in a related field – decides it’s time to go beyond Estonia and choose its first market. What should they look at first: regulation, market readiness, or the ability to replicate the model across neighboring countries? And if possible, share a couple of examples – because what’s critical for one niche may be secondary in another.
Sven Aulik:
— Of course, now it depends a little bit on the product or service you are providing. But it definitely applies to every case where the homework must be done. Meaning that you should be able to know, as you mentioned, the regulations first: are there any hurdles or things that will not allow you to provide the service the way you thought it would? So the legislation and regulations are important, definitely.
And then, of course, do the legwork in the market research: how well could this product suit you? And is there pain in this market? Or are you the first one to offer this market? That is a possibility. But that also means you have to be the pioneer, and that’s costly.
And at the same time, if there is some kind of competition in this field, maybe you can find some unique approach to the same problem – a way that will help you enter the market and have the most interesting offer there. That’s definitely one thing to do.
You also asked about replicating the business model. I haven’t seen any markets, basically, where you go in and don’t need to make any adaptations. You have to be ready for that. Every market has its established business culture and way to sell this type of product. You have to know them.
Sometimes you have to add them to your offer if you don’t have it already. And then you will blend in in a way that you cover their basic needs. And then, if you can come up with something extra, that will be, of course, key to your success.
Alex Antonuk:
— Okay, that’s clear. Have you ever had a case in your practice where a market-entry strategy only seemed to fail but, in the end, led to an unexpected positive outcome?
Sven Aulik:
— Yeah, I remember the case where we were going to Eastern European countries, and I was looking for a partner in Hungary. And we met a Hungarian company that, according to our homework, was supposed to be suitable enough.
But what appeared was that the decision-maker in the company was a very poor English speaker. And of course, I don’t speak Hungarian, although Estonian should be related to Hungarian. Anyway, we started a discussion via the translator. Luckily, there was a guy in the company who spoke good English. But he was not the decision maker. He was just a middle-range manager, but he was able to translate our ideas.
And as this company was not working in Budapest – it was working in the very east, at the Romanian border of Hungary – I thought: “Okay, the decision-maker can’t speak good English; we can’t express our ideas clearly, and he can’t express his needs. And the company is not located in Budapest, where the biggest customers are.” So I thought, we would not pursue it very actively.
But they kept asking questions. I don’t know – did they use Google Translate or another way? And then, one day, they said: “You know, Sven, we have opened a side office in Budapest as well, because we understand that from Nyíregyháza,” – what was the city in the east – “we can’t be very successful and we stay as a local player.” So at that moment, I realized that these guys might be worth it.
After one, probably two years, they became our second-largest distributor across our whole distribution network. So you have to be persistent and not, I would say, delete them from your table when you’re looking for partners.
I can also give you one example when everything sounded and even seemed perfect, but in the end, it failed. Because I think these are the failures from which you learn the most.
So that was in Bahrain. We found a good partner who helped us enter the market. That was one big Swiss company that deals worldwide, and they had a local Bahraini office.
And as in Middle Eastern countries, you have to know the decision-makers. And that’s what I mean. In these countries, you have to know the royals, because the royal blood is put into all the biggest businesses. And we had to deal with the customs of the country.
So I did three visits to Bahrain. We had personal meetings with the nephew of the sultan or the sheikh of the country. We did a couple of very good presentations. We had a long row of local guys in white costumes around it. And everybody was nodding and applauding after the presentations.
But what happened was that in the end, when we were about to sign the contract, somehow the signature didn’t appear on the contract. And what we realized was that, on the side, they had shown our presentation to some German guys who knew them probably better. And in the end, the German guys got the contract, and actually, they copied a couple of our ideas from our presentation.
So it might happen also like this – but that’s business.
Alex Antonuk:
— Wow, these are very interesting cases! Both are opposite, but really useful for understanding how things may come up.
So, Sven, I know you’ve scaled fleet management solutions across different regions and also have expertise in B2G. How often did you need to make significant changes to the product itself to meet local requirements, rather than simply adapting the messaging or localization?
Sven Aulik:
— Of course, you mentioned that localization is the keyword first, and you would be very happy if you just managed to translate your application or whatever you’re offering. But in many, many cases, yes, you have to go deeper than just localization. You have to adapt the service because of the different legislative base, for example, or market traditions.
That applies specifically when we work in the EU space – then it’s more or less the same. But even here, we have unexpected things, for example, in Germany.
When we entered Germany, our solution suddenly appeared to have an issue due to the GDPR requirements, which are very, very tight there. They asked us that while we were providing this logistic solution with GPS tracking included, the tracker should disappear from the map between six in the afternoon and eight in the morning. Meaning, the nighttime, when the official working time is over, because that’s against the GDPR.
And we have never seen such a requirement anywhere else, even in other European Union countries. So that was a very specific thing, and we had to do it. Otherwise, they said: “Sorry, no go in Germany, because that’s the GDPR requirement.”
Maybe another example: Poland. With the same solution, when we entered Poland, we realized there was very tough competition in the telematics market, and there were more than 100 companies in this field. And there were a lot of companies that offered, as we call it, a “man and a dog in a garage” – companies that sold at absolutely the lowest possible price on the market. And the locals were used to that price dumping.
And to enter the market and get to the first meeting, we actually had to create a kind of entry-level solution – the simplification of our everything-all-in type of solution, which was, of course, more expensive. We had to do a very, very dumbed-down solution in order to say, “Yes, we have a product for 2 euros as well.”
But when we presented that, the questions started to come: Can you do this? And then we could put on the table the full solution. Of course, the price was 10 times higher.
So you have to be ready for this type of thing.
Alex Antonuk:
— Okay, that’s also interesting. So, sometimes you even need to simplify your proposition as much as you can.
Sven Aulik:
— Just to get to the first meeting, because the meeting is everything. Because yes, nowadays you can have a lot of very good online meetings, but the real success comes when you actually are able to visit them, sit in their office, look into the face of the guy, shake hands at the end, and, if possible, have a beer later.
Alex Antonuk:
— Yeah, that sounds reasonable.
Okay, let’s shift the angle and talk about what’s often called export diplomacy. When do trade shows and international business missions – often supported by initiatives like Enterprise Estonia and ITL – actually help Estonian companies enter global markets? And how can businesses get more out of these events? You know, not just a photo at their booth.
Sven Aulik:
— Yeah, I would actually add one big player to this list of Enterprise Estonia and the ITL Association – the Ministry of Foreign Affairs, meaning our embassies as well. Nowadays, Enterprise Estonia, ITL, and the MFA have created something called Team Estonia, and they all work hand in hand. Sometimes the responsibility lies on one side, and sometimes the responsibility is on the other.
So these are all governmental institutions that help companies enter markets and do some preparatory homework in the beginning. They have lots of interesting tools and opportunities to offer companies. Because you can always go on your own if you have been able to find possible partners, but sometimes your calls are simply not answered, or your emails are not even looked at. To open the doors, you very often need the help of these organizations.
And what I could recommend is that, first of all, you go to trade shows in the target country. That can, of course, be done without local help. But very often, for example, Enterprise Estonia’s local business advisors or expert advisors can join you to help out and give some background on these companies, what they see.
These people are usually not Estonians who are there on a three-year mission. They are local people or Estonians who have been living there for 10 or 20 years. They are almost locals, but the benefit is that they also know Estonia very well.
And then, of course, there is a site in Estonia called visited.ee, where there is a full list of all business missions and trade shows. Official VIP visits and presidential visits are not there, because they keep that a little bit under the surface before it actually starts – that is a bit different.
But there is a big list of these types of business missions that Estonians do in different sectors. And by joining these, they become real door openers from two sides.
The first side is that when there is some kind of VIP – for example, an ambassador, because they gladly join these visits, – if they ask for a meeting or discussion to be opened, nobody usually says no. Usually, people reply, even if they are not from public-sector organizations.
The second thing is that when you are part of this type of delegation, you kind of have a quality sign stamped on your forehead. So to say that if you say, “I’m coming to your country with the Estonian minister of digitalization,” for example, that means you must be a real player and that you are serious. You are not just some lucky fortune seeker, and you are taken seriously as a partner. At the very least, you will get the first meeting.
Then, of course, it’s up to you whether you can provide something they are really interested in. But that very much helps you open the doors. And later on, they can also do some backup things for you. As you know, after the visit, the real work starts. And then, using their help and support, if companies don’t answer after your visit, they can be the ones who push a little bit and say, “Remember, we met – Estonia is waiting for the answer.”
So don’t be shy about using this type of assistance if you are not able to open the required doors on your own.
Alex Antonuk:
— Super useful, thanks! I’ve even made some notes for myself on this.
Okay. And to wrap up the main part, let’s talk about cultural perception and image. What stereotypes about Estonian products and companies – or what real traits they have – tend to hold them back when entering new markets? And on the flip side, which ones actually work in their favor?
Sven Aulik:
— It’s a well-known joke that Estonians are not good salespeople because they are too shy [laughs]. But I can say that, actually, there are people who live further north of us, and they are even shyer, as you know. You understand who I’m talking about.
But at the same time, yes, sometimes the Estonian way of doing business is not the American way – when they put their fist on the table or on your chest and say, “I’m the best in the world, and my product supersedes everybody else.” Estonians never say that. But in very many cultures, that’s even better.
And what is actually working in our favor is that Estonians are quite persistent. We are accurate. We dedicate quite a lot of time to detail – sometimes even too much – because there is always a fight between the development part of the company and the sales team. The sales team wants to get the contract first, but the developers say, “No, we are not ready. It’s not perfect.” So you have to find the balance here.
But we have a good reputation. And I think thanks to this – as I spoke about the company Skype – Estonia still has a good IT reputation in the world that helps us and works to our benefit. And then you simply have to prove that you really keep your word.
In many countries, a signed contract is needed. But at the same time, the handshake and your word also rule. So keep your performances.
And I think Estonians are known for that – if we say something, it actually holds water as well.
Alex Antonuk:
— Yeah, definitely. And of course, you don’t need to try to be too perfect.
Sven Aulik:
— As you know, “fake it till you make it” is one of the ways to go in.
And also, yes, very often that’s what people do. When you do not have the prototype, but a working solution, it can’t be perfect in the first place at all. And as we earlier said, it needs some adaptations in new markets.
But after the first requirement, which is not your standard product, it would be better, of course, when you talk to your development manager or CEO, if you need some more investment into that product to be ready. Then definitely don’t hold it back too much until it’s perfect.
It will never be perfect, as you know. It’s a constant development.
Alex Antonuk:
— Sure.
We are getting close to the end. Before we wrap up, let’s do a quick lightning round: three short questions. And I’ll ask you to answer as concisely and directly as you can. Does it work for you?
Sven Aulik:
— Yeah.
Alex Antonuk:
— Estonia’s digital and legal ecosystem is often cited as a competitive advantage for businesses here. But which elements of it actually help companies enter new markets? Two or three – and why those?
Sven Aulik:
— Well, I think the big important thing for the Estonian digital world is the eID. Very, very many solutions are built on this, so that you can identify yourself via online channels. That’s the big benefit. And it doesn’t include banks. It’s our unique idea, as you know. That’s one thing.
And I think what really helps Estonian and foreign companies do business with each other is the e-residency opportunity. This is a system where you can easily start up a company here as an e-resident and start using the Estonian digital ecosystem – for example, as a company board member.
And that helps you run the business here, where the ecosystem is very good. And then you can either scale it out or start exporting from Estonia. I think that’s what the Estonian background can give you.
Alex Antonuk:
— Yeah, makes sense. Okay, what most often helps Estonian companies stay competitive after their first success abroad? One or two key factors that, in your view, are undeniable.
Sven Aulik:
— I think constant development is the word. As I said, no solution can be perfect at all, at least at the beginning. Actually, it will never be. And the world changes.
So constant development – you have to be ready to develop it further and bring in something new to your thing in order to stay competitive. And then what I will also say is that personal contacts with your partners are very important.
It’s not just about sending emails. It’s personal visits. It is going to their countries and sometimes even to their homes and summer cottages.
And when you have taken a sauna with your partner or helped to build a fireplace in his summer cottage, after that, you know, you will be the first to hear if something is wrong. At the same time, you will also get the first orders in when the need arises.
Alex Antonuk:
— And probably the last question from this list. Which countries should Estonian startups planning to expand pay special attention to in the coming years, and why?
Sven Aulik:
— Oh, that’s always the most difficult question. The natural thing is that we start with the neighboring countries, yes. And if you are an Estonian or a European company, then you work with European countries.
But let’s put it this way. Maybe the biggest star in Europe at the moment is Germany, because of the absolutely huge investments prepared by the government and companies there. And as the German economy is a little bit low at the moment, they are looking for new growth, and new digital solutions can definitely help raise that up. So Germany, definitely.
If we go a little bit outside Europe, the UK is definitely an opportunity, as it’s not in the EU. But at the same time, they have a lot of very old, even colonial systems there that need to be replaced – starting with their healthcare system, for example.
And then, outside of Europe, I would say the Balkan countries. They are eager, young, and they need new technologies. They are ready for that, although the price is lower there than in Europe. But at the same time, you can get a bigger market share.
And then, of course, let’s not forget the Middle East. Saudi Arabia, with its upcoming Vision 2030, is pouring enormous amounts of financial resources into different projects. Digitalization is at the top of their agenda. There are lots of Estonian companies already active there. And what I have heard is that the Estonian Minister of Foreign Affairs is also planning to open some governmental institutions there – maybe even an embassy soon.
And, of course, the neighboring UAE, Qatar, and Oman. All these countries are eager and hungry to find interesting products from Estonia.
Alex Antonuk:
— Fair enough.
Sven, thanks for your examples, honest insights, and for highlighting the operational side of exports that rarely show up in public stories. This was really interesting!
Sven Aulik:
— You’re welcome! Happy to share my experience. And I’m always there to help you as a member of the ITC Association Board. That’s my duty.
Alex Antonuk:
— Thanks a lot for this!