“When we first started out, we were just three lads studying at the University of Tartu with €30,000 in start-up capital. Today we employ more than a thousand people all over the world. Our day-to-day turnover is €350,000,” said Priit Alamäe, founder and CEO of Nortal at the Estonian Entrepreneurship Awards 2020 gala.
The journey of conquering the US
Three years ago, Oleg Shvaikovsky, one of the board members of Nortal, began travelling between Estonia and Seattle in the northern part of the US West Coast. The time difference caused some sleeping disturbances and, at the time, he was unaware of how right this move would turn out to be for the company. The IT-centre of Washington state is the mecca of world cloud technology. However, the first steps towards Nortal’s American dream can be traced even further.
Shvaikovsky talks about Elastic Path – a large e-commerce platform provider and a good old partner of Nortal – which has its headquarters in Vancouver, Canada. Vancouver is a mere two-hour drive away from Seattle.
“We have been their long-standing partner in implementation and supporting services in Europe, especially in the Netherlands and Sweden. The company invited us to participate in an exciting procurement. It took us to Miami, Florida and to the largest cruise company in the world – Carnival Cruises,” begins Shvaikovsky. Albeit a subcontract, it was the first contract on the large continent. The practical work was carried out by Nortal employees in Estonia and Lithuania.
The jackpot came in the form of a new client – one of the largest mobile operators in the US, which back then ranked third in the United States but today is closing in as the market leader.
“Using the Elastic Path platform, we began to create a B2B e-commerce system and, later on, a retail customer solution for them. This has been an enormous project and our collaboration is developing and expanding,” says Shvaikovsky.
Nortal’s operations apply the following logic – after being convinced of the relevance of the service for local clients, you enter the market and set up a representation which you will develop whilst simultaneously hiring staff and looking for more clients. Subsequently, you will look for opportunities for organic growth on the road to M&A (mergers & acquisitions). Nortal’s decision-makers understood quickly in the US that one cannot create waves in the same way on a large market. In order to make the developmental leap, you need someone with the local know-how, team and customers. The aim was to acquire a strong and acclaimed player on the local market. After a long process, two companies made it to the final and the deal was made with Dev9. This was the step that put Nortal on the map.
Nortal’s DNA was taken to the US
Today, the Seattle office has grown to nearly a hundred employees. Nortal believes in the synergy that their branches in different states are able to create. Dev9 was one of the leaders in the cloud transformation field in their country and this know-how has been transferred to Nortal’s European offices.
“They are fantastic in that and they’ve always been a step or two ahead of their counterparts in Europe. Therefore, we have brought our US people to our offices in Finland in order to transfer knowledge. We exchange best practices and know-how,” says Shvaikovsky.
Shvaikovsky adds that, in turn, they took Nortal’s way of doing business to the United States. An important principle is that nobody in the company is playing the role of the boss; a general hands-on approach applies to everyone. The second important keyword is ‘entrepreneurship’, which means the ability to improvise and to show initiative. They work on the so-called fast fail principle, meaning you will work from the basis of best knowledge and analysis, but if something is not working, you will find an alternative fast. The aim is always to find the best possible solution. “It does not mean that you are not good enough. It means probably that the approach was not right. What we learn from our attempts and how we move on are what matter,” he says.
Seattle on the way up
Why did they choose Seattle as their landing place? Partially, it was chance because their important partner was active in Vancouver and their first client came from Seattle. At the same time, Seattle is a very exciting location. Shvaikovsky points out that albeit in the context of tech companies people only talk about Silicon Valley, Seattle is where many technology giants and other players are located. Among others, the headquarters of Boeing, Amazon, Microsoft, Starbucks and T-Mobile are based there.
“Seattle attracts cloud topics. It is the second ranking tech hub in the US, but after the current crisis it may turn out to be the main location. The global giants Microsoft, Amazon and Google have chosen Seattle as the place where their cloud solutions are created,” he emphasises.
As an Estonian company in the US
Oleg Shvaikovsky admits that it is not easy for a company from a small and relatively unknown country to make it in the US. Generally, Estonia has a good reputation in certain circles. Those who have dealings with Microsoft know about their connection with Skype. Nevertheless, Nortal has been an unknown name until now. Yet it is not general awareness that matters, but being known in a specific community and, in this field, it is the people, talents and inspiring experts that matter. They are the ones who make big projects happen and attract employees and customers. At first, Nortal’s recruiters needed 30-45 minutes in order to introduce Nortal and Estonia to potential employees.
“Today, we are starting to make a name for ourselves. Estonia’s reputation in e-state projects is strong. In the US, we have a unique market – we do not have a single public project. This is likely to remain so in the near future. But our clients include several Fortune500 companies,” says Shvaikovsky. This is indeed a great thing, considering that Nortal is not offering the cheapest price. The company works on the principle that they are working in accordance with local rules, they offer a top level service and, hence, also charge appropriate prices. This also means that expectations on them are as high as expectations of local companies.
“Our most impressive competitor in this area, which mostly works only in Seattle, has 7000 staff. Nortal, with its 1000 employees, is a small player,” says Shvaikovsky. However, the company is growing organically together with the increase in clients.
Estonian e-state expertise
At the moment, client companies in the US are offered two main solutions. The first is e-commerce solutions and the second is cloud transformation. If a person visits the webpage of our large client in the US and purchases a phone or carries out another kind of transaction, they will do so in the system built by Nortal. The turnover in this field reaches billions of dollars. When you move your service into the cloud, you need to rebuild your applications. “This is where Nortal excels,” says Shvaikovsky.
Although Nortal is also very strong in the field of internet security, they do not offer this service separately in the US. Security is an important part of each project. Nortal designs its system to minimise vulnerability. This is where the Estonian e-state expertise comes in handy.
“A foundation of our e-state is the principle of data distribution. When Estonia suffered cyberattacks in 2007, they reached some sub-segments but could not take down the whole. This is the principle we always work with. I am a firm believer in security by design,” explains Shvaikovsky.
Secret behind the success
It is no secret that Nortal’s first years in the United States have been a real success story. A small company in terms of local market has grown rapidly, found clients and recruited talents. Shvaikovsky makes no secret of the fact that luck has also played its role in their success, but more importantly it has been solid consistency. He says that, from the Estonian point of view, the Seattle area with its 7 million people seems huge. In addition, there are the aforementioned company headquarters.
“In three years, we got the sense that in this sector everyone knows everyone. Just like in Estonia. In terms of GDP, it is equivalent to a larger European country. But the rule that ‘people know people’ is also relevant there. The message spreads that those men and women do quality work,” Shvaikovsky explains that hard work and consistency is the basis for reaching one’s goals.
Nortal is also growing in Germany, which is about two years behind the States in this area. Nortal is large enough to be able to take risks and experiment. More interesting projects in Europe are planned.
Also, in the US, they are not only staying in Seattle. Even during the Corona crisis, a large client was added to the portfolio and more staff was recruited during the most difficult times. In the next few years, they are likely to expand to the East Coast of the States. There are also talks about entering the Canadian market.
Shvaikovsky himself has recently moved back to Estonia from the US in order to get a European project underway. An American remained in the States to lead the troops. After Finland, the US has rapidly become the second largest market for Nortal.
Nortal has built many e-state solutions
Nortal, which gets its name from the words Nordic and Talent, offers the service of data-based simplification of business processes for both public and private sector clients. Nearly a third of the Estonian e-government solutions have been developed by Nortal and its predecessor Webmedia.
For example, in Estonia the company has created the operative system of structural funds for the Ministry of Finance and the employment information system for the Employment Board. Other significant goalposts have been the e-Tax Board and e-Health solutions for the country. The most recent e-state innovation – the proactive services of the Social Security Board – have also been created by Nortal. Since 2005, the company has gradually taken its know-how abroad and, today, already ca 75% of the turnover of Nortal comes from outside Estonia.
In Oman, where Nortal has been active since 2008, the company is helping to reform the state and create an e-state. This is not simply software development, but the application of a best practice from Estonia. Among other things, Nortal has created an e-tax system for the Oman Tax Board and the portal Invest Easy for entrepreneurs.
In Finland, Nortal works with large industrial clients like Neste, Boliden and Outukompu in addition to the public- and healthcare sector. This summer, Nortal launched an e-prescription pilot project in Hessen, Germany together with some partners. Those are just a few examples.
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