Over the past five to six years, we have all been witnesses, if not victims, of Greece’s unsustainable growth model. With a debt-to-GDP ratio exceeding 176 percent and an unemployment rate of 58 percent among young people under 25, it is evident that the Greek growth “recipe” was somehow wrong.
According to a McKinsey report published in 2012 under the title “Greece 10 Years Ahead,” the Greek growth model should be based on an economy that would become more extrovert and productive, more attractive to investors and active in new and promising industry sectors.
These recommendations have been familiar to all of us for years. The real question is: Can we implement them?
I would not bet on what the public administration, or the government, or even mainstream Greek businesses can do. I believe, however, that a number of newcomers to Greek business, a number of Greek young entrepreneurs and their respective start-up companies have already started making their own point.
These are young people, passionate about their ventures, creative and innovative minds, which pursue their dream, irrespective of the obstacles. They are a new breed of entrepreneur, who have brought a fresh change to the way of doing business in Greece.
In fact, some statistics attest to that. According to this year’s GEM Report on Entrepreneurship*, published by the Foundation for Economic and Industrial Research (IOBE):
a) There is an impressive increase in young Greek entrepreneurs in the 25-34 age bracket that are deciding to start a business. Over 160,000 young people became entrepreneurs in Greece in 2012, a figure 9 percent higher than the year before. This figure is the second highest among the 69 countries assessed in the report.
b) Greek start-up entrepreneurs are more export-oriented, or want to become export-oriented. One in five entrepreneurs who started a business in 2012 say that over 25 percent of their clientele is going to be outside Greece. Again, this is an improved figure compared to last year.
c) There has been a year-on-year increase of over 11 percent in Greek start-ups using new technologies/procedures in their business. This is the highest figure among all countries assessed in the report.
Apart from statistics, a number of developments reflect a change in the Greek entrepreneurial scene:
In 2013, there was a fast buildup of a start-up ecosystem in Greece, with more than 10 start-up incubators launched in the market and over 50 award competitions for innovative start-ups taking place in Athens and other cities. There was also an increasing investment interest in Greek start-ups, with more than $50 million invested by VCs and two successful “exit” stories, in the case of Bugsense and Imagga, both technology start-ups. Last but not least, new institutional players such as the regional authorities or universities have expressed support for the continuously growing ecosystem.
What do all these developments show? I think they reflect change and, consequently, hope. Economic and social shifts – a consequence of Greece’s financial crisis – have generated a momentum for Greek start-ups. Now, these young companies, using different practices, with new and more relevant principles and values, could create opportunities for the development of an innovation-based and thus more promising economy.
For example, “lean start-ups” have introduced a new operational business model based on quick rounds of experimentation and feedback from customers, made possible by the use of technology. According to Steve Blank, a Stanford University professor, lean start-up techniques reduce risk and failure levels of start-ups and have proven to be more efficient than traditional operational models. Blank claims that lean start-up practices are being already implemented by large companies such as GE and Intuit and could be implemented by many SMEs that make the bulk of the economy**.
Start-ups shake up the economy because they carry new principles and values. For example, as young entrepreneurs grow and develop their ideas in co-working spaces and accelerator centers, they constantly share their experiences and ideas by collaborating with each other. Collaboration is a fundamental concept in the start-up culture broadly but particularly in Greece. Moreover, young entrepreneurs do not perceive failure as failure. It is simply a learning process for them, which shows their commitment to continuous improvement. That, in my opinion, is a sign of hope.
Start-uppers are – with no exceptions – passionate about their ideas; they want to see them turn into success. Not only for money, but because they want to make a contribution to society. This is another very important catalyst for change in today’s entrepreneurial culture.
Having said that, one should not disregard the various future challenges posed to start-ups, nor should their impact on the Greek economy not be questioned.
If one considers that 75 percent of all start-ups fail***, can the recent Greek start-up buzz really have a significant impact on growth? How many Greek companies will experience successful “exits”? Can the start-up market become sizable enough to have a positive effect and eventually improve the state of the economy?
Another concern that comes to mind is whether the global start-up buzz might end up like the dot-com bubble of the 90s? Are start-ups based on more solid foundations this time?
There are no reassuring answers to these questions. Nevertheless, this new breed of entrepreneurs has already managed to shake up the traditional entrepreneurial models and been handling the mounting complexities of our times with success.
My experience with the egg-enter*grow*go program on youth entrepreneurship, a joint Eurobank and Corallia initiative, illustrates a small “case study.” The program kicked off last May and in less than a year the 21 attending start-up teams have achieved significant progress: Now they are all registered companies with names and trademarks. Fourteen have already completed their prototype. Thirteen have added new colleagues to their teams. Ten have already received funding and 10 have developed synergies between them, thus speeding up their growth. Eight start-ups have already invoiced actual clients. And they all operate in innovative industry sectors and are simultaneously aimed at Greek and foreign markets.
These young companies provide the best evidence of what I am trying to suggest: that Greek start-ups are making a fresh mark on Greek business. They may not have an impact on the big numbers of the country’s economy in the short term, but they are affecting the spirit of entrepreneurship in Greece for the long term. They are a significant catalyst for change and will probably prove to be a glimmer of hope for an otherwise stifled economy.
* Lyda Modiano-Leon is adviser to the Group management at Eurobank and member of the Steering Committee of the egg-enter*grow*go program.
* An annual research conducted by the Foundation of Economic and Industrial Research (IOBE) in the context of the international Global Entrepreneurship Monitor program (GEM). The research has been running since 2003 and covers/compares data on entrepreneurship among 69 countries around the world.
** Harvard Business Review, May 2013.
*** Harvard Business School research, Shikhar Ghosh.