Entrepreneurship Is The Way To Go
Dimitris Tsigos, head of the Greek Startup Association, explains how Greece has its very own startup bubble and outlines the Association’s proposals for the future
Dimitris Tsigos, in his mid- 30's, sits in his office ,in downtown Athens, overlooking the Acropolis. He appears to be living the dream of many young Greeks, namely turning the startup he founded during his student years into a profitable business. We started by asking him what exactly the StarTech group of companies does.
DT: We are a group, or better a network, of ICT companies that was founded by a group of undergraduate students in 2000. Initially we founded Virtual Trip, a web development company. VT did fairly well and along the way we set up other companies and, with a number of failures and some successes, we developed into a small network of companies.
Our central offices are in Athens and we also have offices in Crete, where we started. We still do web development but not just that. Our companies employ around 50 people and have a number of specialisations. We make software on demand for the internet and mobile devices, we take on IT projects and also specialise in other fields such as e-learning, games for mobile devices and software for the insurance market. We also provide psychometric test software, used by large companies for recruitment purposes, as well as accounting software.
What share do exports have in all these activities?
Our companies are 100 per cent export-oriented. 100 per cent of the revenues of the e-learning and mobile games come from abroad. We do business in tens of countries. Our e-learning software is available in over 60 and all the big markets, that is the US, Canada, Australia and the whole of the EU. E-learning products are usually bought by large companies with many employees that want to train their staff.
How did you go from web development to this fairly extensive range of products?
Our first company was providing services. But fairly quickly we realised that you can't easily go that far with services. To have a company that will grow beyond your country's borders you need to have products. We decided that each of these products would be a new company. And, apart from our own stake and that of our investors, we made the decision to give a significant stake to the team that was developing the product. It was usually around 30-35 per cent but, in certain cases, it could go up to 50 and 60 per cent. This way they also had a very good reason to take the business seriously. So far it has worked well.
How did your customers find your products?
They now find them online and we have a significant conference presence. But especially regarding e-learning, we also took advantage of open source software. That is, we gave free editions of our software so people that would never buy our products got to know us. In this way you ensure that many people use your software and have a prospective customer base. Then you can provide them with extensions they have to pay for. That is, if someone wants an extra function, they pay for it. In the last couple of years startups are all the rage in Greece. There are meetings, accelerator hubs, seed funding, com- petitions etc. Is this a new dawn for the Greek economy as many seem to think?
At this point you could say that all this is a bubble. Many see just negative things in a bubble. But a bubble has both a negative and a positive side. The reality is that Greece needs startups because they are businesses that aim to grow –this is their basic characteristic– so to create new jobs and, in the case of ICT startups, quality jobs. But the necessary critical mass doesn't exist yet when it comes to startups. Here, we would do well in Greece to keep in mind the difference between mass sports and championship sports. In 1987 the Greek national basketball team won the European Championship for the first time. It has been 27 years since then and Greece remains a small country of around 10 million people as well as an appreciable power in world basketball. Meanwhile, in weightlifting we were also topping world championships for a while but then the national team disappeared. We want startups to follow the example of Greek basketball and not Greek weightlifting. This means that for success to come and then to be maintained, great, consistent effort is needed. You need mass sports. When I was young there were student basketball championships primary as well as high school and they were of a very high calibre, in some cases better than some countries' national championships. The big surprise success came and was followed by more but that was just the tip of the iceberg. Underneath there were great efforts being made to achieve this continuity. This did not happen with weightlifting. Here we are talking about the mass sport of entrepreneurship. Yes, I am happy that we have 2-3 national champions. But if we do not work hard within the next 20-30 years in view, this momentum
will not be maintained.
What could be done to achieve this goal?
To overcome this crisis that Greece is experiencing, the Greek economy needs to be transformed from one that is based on the state and is inward-looking to a dynamic, outward-looking economy. This transformation looks a lot like the efforts many of us make to lose weight. There is no quick and healthy way to lose weight. It will take years. You may lose 15 kilos in a month but you will then put it all back on fairly quickly. To lose weight sustainably, you need to change your habits, feel a little hungry for a while, sweat while running or in the gym, and you have to wait. It is these things that have to happen for Greece's economy to transform. So at the moment we are running a primary surplus but we have achieved this through an extreme diet and not in a healthy way. You'll say: "Is this bad? I lost 15 kilos". It's great, but the point is to keep these kilos off permanently. I am saying all this to clarify that transforming the Greek economy will take time and that we will have to invest first and foremost in training and education. This might be hard but we have to recognise, as a society and as a country, that we have to focus on the kids that are currently between 12 and 15-years-old. It is these kids that in 5-15 years, when they come into the market and the economy, will need to have the traits and skills that entrepreneurship demands and, mainly, the right culture.
Those that are engaging in entrepreneurial activities today, what are they facing?
If we want to be truthful we have to say that there is some improvement in conditions for entrepreneurs. But more bold steps are needed. The horizontal cuts have ruined the economy. At the Greek Startup Association, we have filled a very detailed proposal, a vision, for a Special Economic Zone in the centre of Athens, which will target exclusively innovative, outward-looking startups. We want the city of Athens to come out and say "we want all creative people from all over the world to come and set up business in the centre of Athens, to establish creative startups." And these startups, in our vision, would be given a tax waiver for the first 3-5 years of their life. The move would be largely symbolic as in fact startups are rarely profitable in the first three years and only a handful are profitable in the first five years. So very little tax income would be lost but the symbolism would be great. We have talked about this to the government and the City of Athens and others.
No-one has said it's a bad idea but it necessitates some cooperation between the City and the government if a tax relief regime is to be established. We have also suggested that the Greek government provides incentives for people that have taken money abroad to bring it back to Greece. There are three ways to fund business: through state funds, which are currently unavailable, the banks, which in Greece are facing problems, and through the private sector. These private investors have taken large amounts of money abroad at the height of the crisis, afraid for example that the banks would fail.
We propose that the Greek state encourages them to bring the money back to Greece, imposes a very small levy (say 1-2 per cent) on it and says that this will be it, no questions asked, as long as a share of this money, for example 10 per cent, is invested in startups for a period of time. Such a move would also alleviate the banks' capital needs. But all this requires boldness as well as an understanding that extreme situations demand extreme measures.