Some Slovak ideas spread worldwide. (source: Courtesy of Sygic)
Paul Graham, a founder of one of the first start-up incubators, characterised the term start-up as a ‘company designed to grow fast’. Everything else associated with start-ups arises from growth. Similarly, Peter Gažík of Neulogy, a business consulting firm, stressed that a start-up begins with an idea that targets a particular problem or a need of the customer.
“However, a good business idea is just the first step,” Gažík told The Slovak Spectator, encouraging the young entrepreneurs to seek contacts at various conferences or mentors and start-up incubators. “You should build your business model, which requires stating the goals clearly and the means towards their achievement.”
In the last four years, Slovakia has experienced growth of start-up accelerators, such as The Spot, Connect and Brainhouse.sk, while many start-ups have benefited from the success of the Startup Awards competition started in 2011 by Neulogy.
InHiro, one of the winners of Startup Awards 2013, received mentoring from Neulogy Ventures in the form of finances as well as contacts.
That the beginnings are difficult was also confirmed by Lucia Kubinská, designer and co-founder of InHiro.
“The real struggle is figuring out which of the ideas they have to shape, in other words, which problem to solve first,” Kubinská told The Slovak Spectator, adding that those planning to launch a start-up should find the best mentors and teammates as they can, test ideas with real consumers and then focus on delivering.
InHiro started as an internal tool for their parent company, WebSupport. After some time, they needed a simple online tool to help them manage applicants, and this is one of the key features InHiro offers today. It also offers an easy way to create attractive job descriptions and share them via social networks, colleagues and friends, according to Kubinská.
Participation in competitions itself is also a good method for moving forward, which was confirmed by Veronika Štrbáková from Speekle.sk, one of the winners of the 2013 Startup Awards. A group of four students developed a logopaedic tool that helps children with communication disorders.
“Watch the competition and do not focus only on the product, but also on its marketing and sales as it takes up 70 percent of the overall work,” said Štrbáková adding that the young start-ups should not be afraid to enter competitions because “apart from the chance to win, it is a great way to obtain feedback for your ideas”.
Think globally
Because of globalisation, the market of today is much larger than Slovakia.
“When we look at what are the most relevant metrics of the successful start-up considered early on by the investors, we end up with three key components: a good team, global market opportunity and an innovative product or idea,” Ivan Debnár, one of the founders of start-up facilitator The Spot, told The Slovak Spectator, adding that instead of traditional businesses that serve a limited number of clients, a start-up should be something that attracts masses.
In order to achieve long-term success, a start-up has to think globally and expand; the experience of Sygic confirms this.
“I was fascinated by the idea to create a product that could be used by any person in the world and that would improve the life of people,” said Michal Štencl, CEO of Sygic, when recalling his way to a successful business, which in the end does not focus on operating systems as originally planned but on navigation, after he met with producers of industrial devices looking for somebody who would develop navigation for devices with a GPS inside.
“It was a challenge for me,” Štencl said. “I also see here prospects for mobile phones… It was not an inner need, but the need of the market.”
Sygic, a successful Slovak company, which began as a start-up, was launched in 2004 by three young men, developing navigation systems for GSM and GPRS applications. Today, Sygic navigation has about 75 million users and according to Technology Fast 50, it belongs to the top 15 start-ups in central Europe, together with the online bookshop Martinus.sk and Eset, while the latter has also developed into a globally recognised firm.
Recently, Sygic introduced the application Job Dispatch that enables managers to delegate tasks and control their employees via a similar connection. Similarly, Sygic is working on a system that will monitor people at home, useful with the elderly and small children. It is an example of how an idea can develop and penetrate into different spheres in order to grow.
Debnár confirmed that to succeed, a start-up needs more than a good idea.
“Its success is largely due to how the idea is executed and whether it addresses a real market need,” said Debnár, mentioning for instance, among Slovak start-up success stories, Piano Media, Sli.do, Datamolino, diagnose.me – all well-established in the global market. Apart from these, there are quite a few new potential companies such as InHiro, runform, Cloud Fender, eDocu, Divano and many more.
Another question is, when can a start-up be determined as successful.
“It definitely does depend on your definition of success,” said Debnár. “For a lot of young entrepreneurs, getting funded, reaching an early exit or a buyout, are all considered as a success. That makes sense in a way, especially because these outcomes are all popular and well-publicised. On the other hand getting off the ground and sustaining the business might be worth it, it just does not fit the definition of a start-up that should have high growth opportunity.”
He added that the success of a start-up further depends on a talented staff and a management team that should ensure that the right decisions are made along the way. Capital is also essential to make everything come together and push the venture ahead. In order for a business to succeed in the long term, it should be able to scale up. He warned that one of the most common mistakes of many start-ups is that they do not validate their assumptions early enough.
In respect to lectures to be learned Gažík said that there is still a very deeply rooted perception of failure when doing business in Slovakia.
“But such a failure is, in the sector of start-ups, directly considered to be an inevitable experience,” Gažík said.
State help wanted
“Slovakia on the way towards an economy based on knowledge needs to develop sectors with a high potential moving into the future, but whose products are missing real commercial usage for the time being,” said Gažík of Neulogy. “Thus the state should try to create an environment attractive enough to draw R&D activities, venture capital and so on.”
Gažík points out that the business environment in Slovakia is not ideal in general, which is proven by several comparisons and rankings, in which Slovakia is lagging significantly not only behind leaders but also neighbouring countries. According to him, there still persist problems with excessive red tape and a complicated legislative-regulatory environment.
“Contrary to this it is necessary to assess planned activities of the state within the concept to support the ecosystem of start-ups that are in the pipeline,” Gažík said.
The government of the Smer party plans several changes that should help all entrepreneurs who are active in Slovakia. It includes tax allowances and lowering the entry barriers. The Slovak Ministry of Finance also wants to see more successful start-ups at home and therefore decided to facilitate the process of starting a business. A new form of joint-stock company will issue obligations that should decrease the bureaucracy of the potential investors into new start-ups and they can also benefit from tax-allowances and government financial support in the form of loans.
“We see great interest from the government to improve the conditions and at least match the level of support in surrounding countries,” said Debnár. “We hope that they will do even more and use the best and verified practices from around the world to potentially leapfrog surrounding countries that all want to attract the best people and motivate them to create a business there. ”
