Europe Tech Bright Spot Doesn't Make Life Easy
By Nektaria Stamouli, Wall Street Journal
ATHENS—Founding a tech startup isn't easy anywhere. But Greece, with its shattered economy only now showing signs of modest recovery, has to be one of the harder places to do it.
Exhibit A: Alex Christodoulou, 37 years old, and his partner Grigoris Zontanos, 34.
Last year the two friends launched Locish—a mix between Foursquare and Yelp, which lets travelers ask like-minded locals for recommendations on places to eat, drink and have fun. It has now been rolled out in Athens, New York and San Francisco, after securing a million dollars in Silicon Valley financing. Raising the money wasn't the hard part; it was quitting their easy jobs in the public sector.
Mr. Christodoulou struggled for almost a year with Greek bureaucracy before getting released from his job teaching at a public school. After quitting his banking job, Mr. Zontanos fell out with family and friends, living off Mr. Christodoulou's girlfriend's sofa for several months.
Despite the travails, Greece has become one of the more unlikely bright spots in Europe's nascent tech scene. It still pales in comparison to established tech hubs like London, Berlin and Paris. But the country is nurturing a surprising array of tech startups—attracting funding from both local venture capitalists and Silicon Valley types.
According to Endeavor Greece, a nonprofit organization that supports new entrepreneurs, there were 144 startups in Greece in 2013, up from just 16 in 2010. The money invested in them has climbed to €42 million ($57 million), compared with just €500,000 three years ago. Shared workspaces in business incubators—a new addition to the local scene—have recently sprung up in Athens and other major Greek cities.
A handful of the startups, like Taxibeat Ltd, which makes a taxicab-hailing smartphone application, or recruiting software firm Workable, have succeeded abroad. Dozens more are growing steadily, including online yacht booking service incrediblue, and Fashinating.com, a portal for real-time information on the garment trade.
Greece still lags the rest of Europe in Internet penetration, with just 58% of its population accessing the net, surpassing only Bulgaria and Malta, according to internetlivestats.com. The nascent tech scene is underpinned by new financing and the creation of four venture capital funds, Openfund, Odyssey, First Athens and PJ Tech Catalyst. Up to 70% of the money in those four funds comes from a joint European Commission and European Investment Bank fund for small businesses.
"We are nowhere near affecting the Greek economy. But I believe that, in the next 10, years, one in three companies in Greece will be technology-linked," said George Tziralis, a founding partner in venture-capital firm Openfund. The VC company has helped jump-start the new high-tech scene in Greece. ITS first fund invested €500,000 from 2009 to 2011, but its second one now has nearly €12 million at its disposal.
In a country where the promise of a lifelong public sector job or a place in the family business has faded along with the Greek economy, the high-tech startup scene represents a possible alternative to soaring unemployment and grim prospects for finding a decent job. According to the national statistics agency, 58.3% of Greeks aged 15 to 24 are out of work. For the 25-34 age group, the unemployment rate is 35.5%.
"The startup boom was bound to happen," says Taxibeat founder Nikos Drandakis. "Before the crisis we were [comfortable with] what we had, whether it was a job in the public-sector, a good salary or even the good pension of our parents. When you lose all these, then your innovative and creative side comes out."
Meanwhile, would-be tech entrepreneurs face a daunting array of obstacles: an indifferent and sometimes hostile bureaucracy, a shattered economy starved of financing, even doubtful friends and family.
"Things are starting to change because of the crisis, but at a very slow pace," said Mr. Christodoulou.
His mother "freaked out" when he told her he was leaving his secure teaching job at a public school in southern Greece. But Greece's bureaucracy prevented him from stepping down for nearly a year. When he filed his resignation, his bosses refused to accept it, thinking he was crazy and would eventually come to his senses. When that failed, Mr. Christodoulou decided to stop showing up at work.
According to Greek law, if an employee fails to attend work for 21 consecutive days for no reason, they are fired. But it was only after seven months of not going to work that Mr. Christodoulou received notification that his resignation letter had been accepted. At the time, the Greek government was trying to cut jobs in the public sector, in line with demands by international creditors offering terms for a bailout of Greece's economy.
So to add another twist, Mr. Christodoulou says he received a further notification that his resignation had been rescinded, his salary would recommence, and he would have to face disciplinary action and eventual termination. All this so that the government could count him among the public sector workers it had laid off; they needed to hire him again so that they could fire him, Mr. Christodoulou said. The Education Ministry wasn't available to comment.
The exasperated Mr. Christodoulou began a media campaign to highlight his story. As soon as that happened, he was fired.
Mr. Zontanos, his business partner, also didn't have it easy. After leaving a cushy bank job and moving to Athens to start the new business, he found himself homeless when his brother, dismayed by his folly, wouldn't let him move in with him, telling him, "If that's your decision, I will not make it easy for you."
"I had to sleep on Alex's girlfriend's couch for months. My brother also lives in Athens, but he found our idea so crazy that he didn't want to support me, in order to change my mind," recalls Mr. Zontanos. "We had no money at that point; we sold books, gadgets, clothes, bicycles on eBay, to make ends meet."
But with financial backing, Locish survived and prospered. Now, Locish's mobile app, which offers travelers the opportunity to ask locals for restaurant and entertainment recommendations has spread from Athens to New York and San Francisco.