Start-ups hold promise but are no panacea for Greek economy, say experts
Akis Laopodis was 23 years old when he was ready to enter the work force. Though it was before the start of the economic crisis and he did not face the staggering 60 percent youth unemployment rates that young people do today, he said that he wanted to start his own business rather than work for someone else. He was eager to make a name for himself as an entrepreneur, even if it took a few tries.
Laopodis is one of tens of thousands of Greeks who have started their own business in the last few years, and one of a few hundred who have created a start-up. According to Endeavor Greece, a nonprofit organization that supports entrepreneurs in the country, in 2013, 144 new companies were considered “start-ups,” meaning new companies with a well-designed business plan and plenty of growth potential. In 2010, only 16 new companies were considered start-ups.
This increase – in addition to a dramatic expansion in start-up investments in Greece from 500,000 euros in 2010 to 42 million euros in 2013 – has led many to believe that start-ups are the key to saving the Greek economy from six consecutive years of recession.
Endeavor’s managing director, Haris Makryniotis, said that the organization does not have any data for the number of start-ups created in 2014 yet but he expects there will be an increase over last year. He added that he expects the number of new start-ups to rise sharply over the next few years before reaching a point of stabilization.
While Endeavor can track how many start-ups are developed, it does not have a record of the number of start-ups that failed along the way. The organization has determined that only 25 percent of start-ups have a high probability of success, while the remaining 75 percent are typically low-impact or low-potential ventures, which means they will likely be the first to collapse.
“Now we are starting to hear about the failures, which is healthy,” Makryniotis said. “Internationally, it’s acceptable to fail; in Greece, we need to build this culture.”
Laopodis started two separate businesses that ultimately fell through – the first because he wasn’t able to make it work and the second because of the economic crisis.
“After having done that and failing, I wasn’t really sure that I had what it takes to become an entrepreneur,” he told Kathimerini English Edition.
Though Laopodis tried his hand at other jobs, he says that he finally realized he had to give entrepreneurship another try and started his third company. This time decided to launch a technology start-up since he saw greater opportunities in that sector – according to Endeavor, 50 percent of investments in 2013 were in information and communications technology (ICT) firms.
Now aged 31, Laopodis is the founder and CEO of Offerial, which aims to help hotels increase their revenue margins by getting more direct bookings. In his third attempt at starting a business, Laopodis’s start-up is standing tall.
Offerial started on an initial investment of 60,000 euros in cash and 30,000 euros in services during the incubation period in the first round of investments – from both Greek investors and via the European Union’s JEREMIE initiative – and his company is now finishing the second round of investments. Though the company is still in the free trial phase and does not have revenues or profits yet, Offerial is now working with 50 hotels and is looking to start selling the product abroad, Laopodis said.
“You fail and you learn – you learn the things you shouldn’t have done, the hypothesis you shouldn’t have taken for granted, the perceptions that led you to the wrong assumptions, all of that,” he said. “And that’s basically the best way that an entrepreneur can accumulate knowledge.”
However, many of the entrepreneurs and experts in the field interviewed by Kathimerini English Edition expressed doubt that start-ups can influence the local economy significantly and that Greece can compete in the global start-up market.
“The ecosystem [in Greece] is not yet ready to support these numbers [of start-ups],” said John Papadakis, founder and CEO of Pollfish, a survey platform that helps monetize mobile applications. “The most important thing you have to do is to not focus only on Greece. If you want to succeed on the start-up scene, you have to get clients in the United States. You have to play in the good league, not in the second league.”
This eagerness for Greeks to join a more prosperous start-up market abroad, the low success rate of start-ups to begin with and their relative small size in terms of providing jobs are factors that lead these entrepreneurs and experts to believe that start-ups can have only a limited effect on lowering the high unemployment numbers or ending the economic crisis.
Vicki Kolovou, a digital marketing strategist and co-founder of MobileMonday Athens, an open community platform for those involved in the mobile industry, said that she thinks the reported success of start-ups and the expectation that they will help the economic crisis is “a hype; it’s a light in the tunnel.”
Start-ups should only be seen as one piece in the puzzle of Greece’s growth, those interviewed said.
“It’s so often said that start-ups will solve the unemployment issue in Greece, but they will not, and they should not, and they cannot because you cannot expect 200 or 300 companies starting up now to create 1.4 million jobs,” Makryniotis said. “Some want to see start-ups as the Holy Grail for Greece… but you cannot put the pressure on them to fix all the shit that was created in Greece for decades.”
