Comistar e-Residency Manifesto
Following Manifesto is written by Mikk Maal, the CEO of Comistar Estonia. It’s an informal document. This document is subject to change whenever and however we see necessary.
I’ve decided to update the manifesto as a lot has changed since I wrote this Manifesto in January 2019. The idea of the Manifesto is still the same – to give an insight into how we think about business, our clients, and to some extent, our competitors.
Our core philosophies haven’t changed, but we’ve been remodelling our business and are investing a lot of money in software solutions. We’ve now seen a Black Swan event in the economy and it’s always a bit scary to invest during uncertain times. Especially, as no one knows how long the recovery will take, and the whole financial system seems to be a wrecking ball.
But I don’t think there’s a better alternative. Investing and working on your business is probably the best thing any entrepreneur can do at this moment.
We have turned to technology to improve our services and business.
The main focus is on Zero to Scale, which MVP is basically ready, and it will help our clients greatly. We built and launched BankApply, which is a banking marketplace for online businesses and high-risk clients like crypto exchanges. The banking issue is still the biggest concern for e-residents.
That’s all for the update. I felt it’s good to add a few new lines to this manifesto. To read more about our philosophy and principles, continue below.
e-Residency program recently launched their e-Residency 2.0 Whitepaper. At Comistar, we’ve decided to do something similar. We decided to publish our Comistar e-Residency Platform Manifesto. It’s an informal document highlighting our goals and plans for the future, our values and principles, an overview of the risks and struggles that we see. We publish this Manifesto because we want to be as open as possible with the people that want to do business with us. After reading this document, our potential clients should have a better idea of us as a company, and are more informed to make a decision whether we are the right fit for them or not.
Comistar was established in 2012 in Finland (HQ is now in Switzerland), and the Estonian office was opened in 2013. From the very beginning, our goal was to help foreign entrepreneurs to do business in Estonia. The core services at the time were accounting and tax advisory. Still are, but we’ve widened our expertise and scope of services considerably since then. A few years later, the e-Residency program was introduced. It was definitely an interesting concept, but I have to confess that we did not make much of it. We made no effort to appeal to the e-Residency community and thought there won’t be a lot of business for support services.
In late 2017, I was attending a few conferences where the e-residency team (coincidentally) was introducing the concept of the e-residency. There were a genuine interest and excitement by the other attendees. And it was clear that service providers working with the e-residents were out-growing us. Watching the presentation on the big screen, I realised that we’ve done a serious error of judgement. When I say “we”, I mean “I”. In the same evening I wrote a letter to the e-Residency team and applied to become a partner. Comistar was accepted in few weeks.
Values, principles and goals.
Today, we have two goals in regards to the e-Residency:
- To deliver a better e-Residency experience for the existing and future e-Residents.
- To promote e-Residency to people looking for a simple way to start a business in Europe.
To reach these goals, we have to have the underlying fundamentals of running the business in place. These are not actionable items, as the actionable items change in time. I am talking about our basic principles of operating the business to provide a better e-Residency experience. In no particular order, here are the ones we follow:
- Make exceptional hires, don’t settle for anything less. People are everything in this business.
- Have good and efficient processes – documented. If someone leaves, which invariably happens, then we can onboard new people in a way that does not harm the company and the level of the service. This has happened to us in the past. It’s better to avoid it.
- Put our clients first. Leave the ego out of the door.
- Improve. We have to get better and better every year, month and a week. And never stop improving.
- Everyone can have a bad (unproductive) day, but never a bad (unproductive) week.
- Constantly develop new products and services to be able to satisfy a wider spectrum of the needs of our clients.
- Price fairly, so everybody wins.
- Doing everything for everybody is not a winning strategy. Focus on the clients who we can serve better than anyone else can.
- Providing a service that the client expects is not the goal. Understanding the client needs better than the client is the goal.
- We don’t compete with the price, we compete by creating better offers, a better service, positioning, and through focusing on concrete client persona and industries.
Values & principles
The following lines are framed in our office:
“Every business process, step, or communication must create a positive customer reaction each and every time. That reaction is the product. Any business, no matter what it is, lives or dies by the customer reactions it creates.”
We are heavily focused on the customer experience. Let’s take the first interaction with the new e-resident as an example. We always try to read carefully and understand what it is that client needs, and answer based on that. Doing so we create positive customer reactions. It may sound like the most logical thing ever, but more often than not, the e-residents receive stamp replies, which do not address their questions or needs. And we try to keep this approach throughout the whole, hopefully a long-lasting, relationship.
We are also very concise of the type of client that we want and can work with. This means that sometimes we have to decline offering services to the clients. Additionally, some questions are complex and can not be answered without further analysis, which means we have to charge for the service. Usually, it’s accepted, but there have been occasions where the potential client requires detailed answers to difficult questions and expects that this sort of consultation is free of charge. This can create a negative customer reaction, if not handled carefully.
Values reflect how someone sees and acts in the world, and the individual values have to align with the values of the group. When we make our hiring decisions, we’re looking for people with similar values as ours, but it’s not easy to determine who is and who isn’t a good fit. It’s not easy to judge a character when the judgement is based on a very few encounters. Principles are based on values. Our principles, in no particular order, are:
- Do your best to create a positive customer reaction and experience every time.
- Be professional – control your emotions, use correct grammar, and leave your ego home.
- Be as helpful as you can, but know the value of your time.
- There are no dumb questions.
- Take responsibility and be accountable for your failures.
- Be honest and don’t lie.
- Be creative and improve the way you work (systems & processes).
- Don’t be too serious. Make jokes, use humour, and try to laugh every day.
We’ve thought about it a lot internally, i.e what type of client is the best client for us. Or more precisely, to what type of client we are the best fit for. If we think about the concept of the e-Residency, then it’s mainly targeted to digital nomads and one-man companies. Most of the companies everywhere in the world are one-man companies, and e-Residency is a great fit for this type of businesses, given that they can be operated remotely. For one-man companies which require a simple standardized service, we feel there are good solutions in the market. LeapIn is the go-to choice for this type of businesses, and if we were to compete with them, this would be a battle we would not win. We have not raised millions of euros and don’t have comparable resources to market our platform. Fortunately, this is not our core clientele. We do have many one-man companies, but these clients have more complex tax situation, work with physical products, require licenses or operate in industries where standardized services usually do not suffice.
Today, we have separated five categories of clients where we can provide distinct expertise. Common denominator could be the need for specific tax or industry consultation, more complex accounting needs or ongoing business advisory and legal support. Industries which we are the most focused on are blockchain, capital markets, licensing (e-money, payment services, investment services, insurance brokers, etc), e-commerce and SaaS companies.
In reality, our clients operate in many different industries and we usually do not decline serving anyone only based on the business activity, though this has happened a few times in the past. If we decline someone, then it’s most often due to our AML policies.
Roadmap and targets
It’s always difficult to set concrete quantitative targets and a roadmap, as there are many factors (political, regulatory and economic) that affect whether the set targets are attainable or not, especially when the business is heavily dependent on the regulation and a political will (e-Residency is a project of the government). Also, there are signals that some sort of economic downturn is to be expected, and if it does happen, then how severe will it be? We don’t know. As Warren Buffet has stated, you can’t predict the future, but you can prepare. So, we have set internal goals for us, as we have to have something we can measure our performance against. The way we operate is as follows:
We set goals/targets for the year and divide them to the 12-week departments. We set the theme and the most important goals for each 12 week period. We plan our weeks in a way that would allow us to move closer to the 12-week goals and achieve them by the end of the 12-week period. Every Sunday, we evaluate what was done and what was not done. Then we give a rating to the week (100 is maximum, 65-70 is the acceptable minimum to have progress).
Each person of our team has to do this individually as well, as people have different responsibilities within the team. I am a big believer of individual responsibility. If each individual of the team performs to the best possible degree they can, then we as a group will be successful.
For the first 12 weeks of 2019, our main targets are:
- Producing content every week. We are testing different things on video, and are planning to publish videos on business-related matters that may be interesting to our clients and e-residents. Our Knowledge Center has to be updated at least once a week. Video blog has to be started within the first 12-week period.
- We are looking to onboard 5-7 clients every month. This means we have to work on our marketing, conversions and our offering. It would take too much space to highlight the concrete things that we’re working on to achieve this number, but we have a step by step plan which we follow.
- One of the main goals for us in the Q1 2019 is to roll-out a workable product for TokenizEU, which is a security token offering platform operated by Comistar Estonia. This is part of the overall theme of Comistar Estonia in moving towards financial & investment services.
- Increase our legal services business by minimum 10% compared to the previous 12-week period.
Business, risks and struggles.
Accounting and legal business have traditionally been a stable business. We believe it will continue to be so, as accounting will be a driving factor for onboarding new clients as an entry-based service which is required by almost every e-Residency company sooner or later. We continue to work with clients who need a flexible service provider, whether it’s companies operating with physical products, regulated markets, cryptocurrencies or just have different needs.
Part of the companies that will onboard with our accounting department sooner or later need some legal help with contracts, licensing, tax advisory or any other legal assistance. Statistically, the more clients we onboard to the accounting services, the more clients it will bring to our legal department. Additionally, together with the development of the security token market, the need for legal expertise in capital markets and regulated offerings will grow. We continue to work with clients in the STO market, just as we provided compliance services for ICO projects in the last year. As we’ve hired a new legal staff from Deloitte Estonia, we’re prepared for the increased demand of the legal services.
Licensing & Blockchain
We think that the demand for licensing services will increase in 2019, partly due to the effect of Brexit. There are UK companies that will need to set up their base in the European Union, and there are non-EU clients who would have gone to the UK to set up their European base, but now decide to take a different path. Additionally, Fintech sector is a continuously attractive industry, and the demand for Fintech solutions in the market will continue to soar as well. As most of such services require licensing, we will keep pushing towards being the go-to provider in this space. The cryptocurrency market has cooled down a bit, but the move towards regulated markets will probably fuel the demand for licensing to provide investment services in the EU.
Additionally, blockchain advisory as a service is and will continue to be a growing and important part of our service structure. We believe that the blockchain technology is a game changer and is here to stay. We will double down on everything related to blockchain in 2019.
Our business advisory department (recently re-branded as “Business Therapist”) is still basically a non-existent part of our business. It’s mostly so as we don’t really market or sell our business consulting services, but also because general business consultancy is not really a sellable product, and I feel we have not sufficiently positioned ourselves. While we have different niches which we focus on, we have to do a better job of communicating our expertise. Historically, it hasn’t been easy to convert leads to paying customers of the business consultancy service. While there are many explanations, like it’s a relatively expensive service, and many e-residents don’t even understand they could get help, at the end of the day, it’s only excuses. We just haven’t done good enough job here.
We see two potential risks with our business: political and macro-economical. The political risk depends on many factors, but they’re definitely are scenarios in Europe which may downgrade the attractiveness of the e-Residency and Estonia as a business environment. As there are so many different factors (in politics) which may or may not have an effect on the business, we won’t be diving into any more details. We also believe the political risk is perhaps more likely in a 10-year horizon, rather than today. The further we go to the future, the more unpredictable events can occur. Future is always uncertain, and we don’t consider the political risk to be big, but we are also not naive. The economic risk is perhaps more imminent, as we’ve had a long run of up years now. However, I am not sure how it will affect e-residents. It can be that there will be fewer because people are more scared to make any investments and try new things. It can also be that there are more because people need to find a way to make a living, and e-Residency can definitely help to save money and open doors when starting a business. And perhaps it won’t be such a deep decline to have an effect.
How do we handle the risks?
I believe every business should have some defence strategy against unwanted events. For the e-Residents, it’s the utmost importance that the service provider they’re working with has a sustainable business. Our strategy consists of three pillars:
We keep a certain amount of capital on a non-operational bank account. It’s an “insurance fund” of the company, and we allocate capital to this account each month.
We invest part of our capital to different assets. To P2P loan platforms, precious metals, and also riskier assets like Bitcoin. It’s the company “Investment account”, and we allocate capital to the investment account every month. We try to stay out of investments if we see potentially better alternatives in the future, for example, opportunities of the stressed economy.
We try to introduce at least one new service every year. We feel it’s important to create different streams of income for the company, and it forces us to keep our eyes open, educate ourselves, and get out of our comfort zone. It’s important to make sure that the new services we bring to the market are relevant to our clients and e-residents.
Probably the most important pillar of them all. We must continue to focus on improving our base services, as this is our core business. Base services have kept us going through the years, and have given us the opportunity to work with a diverse set of e-residents, and will continue to serve us well – as long as we keep demanding the best possible performance from ourselves, and keep improving.
Every business has struggles. Struggles change through the life-cycle of a business. The biggest struggles for us as a company is to find good entrepreneurial people (to join our team) who are experts in their fields and are also capable of moving the needle for the company. I did not realize how important it is to have a good team a few years ago. I think every entrepreneur has a moment in life when it actually hits you in the face -your team makes or breaks your business. Good team and an average idea can still be a good business. Great idea and the average team is not and will not be a good business. Today, I feel that Comistar has the right people to keep growing by providing the best and the most diverse service in the market.
Enjoy the journey
As a final note, I would urge you to enjoy your journey as an e-Resident. We’re so fixated on the destination that we forget to enjoy the process. The possibilities we have today, including the e-Residency program and doing business remotely, are simply exceptional, and we have way more than any generation before us. No one ever had it better.
I will leave you with a paragraph written by Blaise Pascal:
“Let each of us examine his thoughts; he will find them wholly concerned with the past or the future. We almost never think of the present, and if we do think of it, it is only to see what light it throws on our plans for the future. The present is never our end. The past and the present are our means, the future alone our end. Thus we never actually live, but hope to live, and since we are always planning how to be happy, it is inevitable that we should never be so. ”
If you made it through the document, awesome. You can reach out to us at [email protected] and let us know how we can work together!