Supported by this culture, the Estonian government has built the technology platform that everyone wishes we had here. To explain how they did it, I asked an Estonian and one of our Entrepreneurs in Residence, Sten Tamkivi, to tell the story. His response is below.

— Ben Horowitz, co-founder and partner of the venture capital firm Andreessen Horowitz

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Estonia may not show up on Americans’ radar too often. It is a tiny country in northeastern Europe, just next to Finland. It has the territory of the Netherlands, but 13 times less people—its 1.3 million inhabitants is comparable to Hawaii’s population. As a friend from India recently quipped, “What is there to govern?”

What makes this tiny country interesting in terms of governance is not just that the people can elect their parliament online or get tax overpayments back within two days of filing their returns. It is also that this level of service for citizens is not the result of the government building a few websites. Instead, Estonians started by redesigning their entire information infrastructure from the ground up with openness, privacy, security, and ‘future-proofing’ in mind.

The first building block of e-government is telling citizens apart. This sounds blatantly obvious, but alternating between referring to a person by his social security number, taxpayer number, and other identifiers doesn’t cut it. Estonia uses a simple, unique ID methodology across all systems, from paper passports to bank records to government offices and hospitals. A citizen with the personal ID code 37501011234 is a male born in the 20th century (3) in year ’75 on January 1 as the 123rd baby of that day. The number ends with a computational checksum to easily detect typos.

For these identified citizens to transact with each other, Estonia passed the Digital Signatures Act in 2000. The state standardized a national Public Key Infrastructure (PKI), which binds citizen identities to their cryptographic keys, and now doesn’t care if any Tiit and Toivo (to use common Estonian names) sign a contract in electronic form with certificates or plain ink on paper. A signature is a signature in the eyes of the law.

As a quirky side effect, this foundational law also forced all decentralized government systems to become digital “by market demand.” No part of the Estonian government can turn down a citizen’s digitally signed document and demand a paper copy instead. As citizens opt for convenience, bureaucrats see a higher inflow of digital forms and are self-motivated to invest in systems that will help them manage the process. Yet a social worker in a small village can still provide the same service with no big investment by handling the small number of digitally signed email attachments the office receives.