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StartInPoland – Polish startups ecosystem.

Startinpoland - polish startup

StartInPoland represents the chance for our country to take advantage of the great potential which lies in one of our most precious resources, the ingenuity of the alumni of our technical universities.

Yesterday I spoke with a colleague of mine, and we asked ourselves why StartInPoland should take advantage of the City of Wrocław to strengthen the entire Polish startup ecosystem. I think, that answering this question is worth a while, because Minister Mateusz Morawiecki and his team can make it happen and it would be a shame to waste such an opportunity. Allow me to add, that I myself own a startup business, and building a suitable environment to support innovation was the subject of the most important academic work of my life. Please allow me to present to you some of my private views on the subject. Especially, that I’ve spent two years of my life studying American and British literature and analyzing success factors for such titans of innovation as e.g. Google.

I lived in two other Polish cities, and I like them a lot, but now I’m based in Wrocław, and this is the place which I consider to be the capital of Polish startups. It’s where I see most potential.

Four things which make Wrocław my #1 choice?

  1. Exceptional culture and atmosphere of the “city of meetings” which just cannot be bought for money. You can spend hundreds of millions and believe, that in ten years time such atmosphere will magically occur somewhere else, but can we afford to wait 10 more years? Can we risk waiting 10 years to find out that in the end it doesn’t happen?
  2. Location. Even if you have billions to spend, you can’t make another city a more attractive location than Wroclaw. In the Silicon Valley, they sometimes joke that their success is based on the weather. There’s some truth to that. As a matter of fact, Wrocław is the sunniest city in Poland and when the winter comes it’s only an hour-and-a-half away from ski slopes. Proximity of both the Prague and Berlin airports is another good thing. Plus, it’s only a 3.5-hour train ride by Pendolino to the capital. OK, there’s no sea, but we have a beautiful river – the Oder.
  3. A mass of well educated IT and marketing professionals, graduates of Wrocław Technical University and Wrocław Economic University who don’t want to move away from this city.
  4. Wrocław has already been chosen the best location for R&D projects by such international corporations as Nokia, Dolby, Viessmann, Mondelez, Red Embedded and also McKinsey, one of the best, if not the best strategic consulting company in the world. Why do their Warsaw and Poznan offices deal only with consulting and shared services while they decided Wrocław was the most suitable location for R&D?

StartInPoland – How does the culture of Wrocław support startups?

Probably it has a lot to do with the history of this city. I didn’t spend a lot of my time thinking about this, but even if you have a quick look at the last 100 years of the city’s history you can see that:

  • It was the victim of a huge siege called “Festung Breslau” and was heavily destroyed during the War. It fell to its knees and had to rise up again.
  • After the War, it was settled by “newcomers”. Mainly from Lviv, which you can still see in its population, and that is a good thing. Everyone is friendly. There is no division between the “real” inhabitants of Wrocław and those who came here more recently.
  • The great flood of 1997 ruined the city again. The people of Wrocław experienced the mighty force of nature and could only count on themselves for help. This kind of situations verify and integrate local communities, even though it may not be so obvious. Wrocław passed this exam with flying colors. The city rose up yet again.
  • Citizens of Wrocław have a history of choosing good candidates for their local government
    • Bogdan Zdrojewski ruled the City for 11 years,
    • followed by Stanisław Huskowski, who until last year was the Secretary of State at the Ministry of Administration and Digitalisation,
    • currently the City is governed by Rafał Dutkiewicz – known not only in Wrocław. No other large Polish city is so unanimous about the choice of their President. Three terms in a row. This is no coincidence.
  • For many years Warsaw was very hard to reach from Wrocław, so we had to create our own business community. This just strengthened the region.
  • Wrocław is a very strong academic center, our University of Technology competes with Warsaw University of Technology in many fields.
  • Wrocław has learned the lesson from the process of setting up the  EIT+ Research Center. The City is fully aware, that this project didn’t take the best possible route, but it won’t repeat the mistakes next time. Besides, this is the place where Olga Malinkiewicz chose to work on her perovskite project. If we are to find another Marie Skłodowska-Curie among Polish female scientists she’s a very strong candidate. 
  • Wrocław is the city of meetings. It’s part of the city’s culture.
  • What city is the European Capital of Culture for 2016? Wrocław!

Ok, so I told you about the culture, but the article was supposed to be about creating innovation and new technologies. The truth is, that without a certain cultural basis there is no way to create an environment to benefit innovation. And if innovation is created in such unfavorable environment, it’s not likely to be disruptive, and only this kind, combined with properly executed patents create a competitive advantage for the national economy.

Can such culture be easily copied, or paid for?

 

I sincerely doubt that. Proper culture at a technology driven company can be compared to innovation in management, and history shows how difficult it is to replicate that. Allow me to bring forth an example from the automotive industry, as this is one we are more familiar with this history should be more comfortably comprehensible. Toyota’s success was a threat which caused a significant shockwave throughout the automotive industry. Competing giants in the industry sent their “specialists” to Toyota factories to find out why the company achieved such high level of excellence. One would have thought that it might take, let’s say a month to understand innovations introduced by Toyota. Here’s the problem; it took the Americans 10 years, and I don’t think I have to mention how many billions of dollars they spent to achieve that.

Wrocław already has the right unique cultural setting. Everyone who visited this city at least once should understand. Most importantly, Wrocław can prove it matters. Allow me to provide your with a few examples of companies and people, whom I had the pleasure to meet. I’m sure it’s the culture and the values present in this place, that made them as successful as they are today. Besides these three examples below there are many other ingenious companies in Wrocław, which I have never visited. Many of these companies you have never even heard of. We should also praise these companies, just as much as we boast of Techland. Especially, that there is nothing to be ashamed of. We should be proud of that.

  • LiveChatone of the world’s leaders in the market of internet communicators for business. Valuation? Close to a billion PLN (~$250 mln)
  • Trans.eu – probably the second largest European logistics marketplace. Valuation? It’s not a publicly listed enterprise, so no valuation was made publically available, but it would be no surprise to me if the company was valued at more than 500 million PLN (~$125 mln), and maybe more.
  • Pixers – surely it is the largest large format print manufacturer in Poland and probably one of the largest in the world. Valuation? Again, the company is not listed publically, but it should be worth some 50-100 million PLN, even though it is the youngest among the three above. This company is only 5 years old.

There are many examples of great startups from Wrocław, but I focus on those that I know and those which I know, and which can be evaluated clearly enough for anyone to understand. I know that valuation is no proof of success, but such high valuations surely are no proof of failure either. These three companies alone are probably worth as much as 80% of the entire Polish startup scene. I know, that for the average Kowalski it’s just some website (livechatinc.com). This particular website and the product it sells is worth about a $250 mln! It’s more than 10 times what Bosch offered for the Fagor Mastercook plant in Wrocław. It’s shocking, but these are the facts. This is what we should be talking about.

This is the easiest way for us to build our own, Polish capital, import revenues and profits into this country. Perhaps this is the shortest path of development for Poland, which is full of ingenious programmers, whom the whole world envies us. They regularly win international programming competitions. We cannot sleep over this chance and waste it. Most probably another chance like that will not repeat itself in our lifetimes.

So, Wrocław has this unique culture and there’s some valid proof that it can create startups, which are already globally recognized. Which another Polish city can provide such conditions for development? Unfortunately, with a high dose of certainty, I will argue that none. Why Wrocław, and locating StartInPoland right here can help the entire Poland? Because these three companies in total hire hundreds of people, and allowed hundreds more to gain experience and follow their own dreams. In order for diffusion of innovation to occur there is a need for strong innovative individuals. I mean such people as Mariusz Ciepły, Piotr Hunker and Maciej Białek. Their enthusiasm, views and values are contagious. They’ve infected me, among others, and I’ve further spread this entrepreneurial bug to others… only in the positive meaning of that metaphor, I hope.

Therefore, let’s not try to build our Polish “Silicon Valley” from scratch. Wrocław already has some global startups and local investors. Investors who’ve made money investing hundreds of millions of PLN into local companies. This is also important. Because how can we convince someone to invest into a highly valued Polish startup if we don’t have any other examples of successful exits from such investments. In Wrocław, we have those three. They are pure wins in the purest imaginable form of IT innovation. Students know, and share the stories of the “guy who was an intern at x, is a programmer and today he’s worth hundreds of millions and he loves what he does”. These stories make people believe it’s possible and if there are investors around, with previous successful exits in their portfolio, what better place to do business? Well it can get even better. I hope that is the reason StartIinPoland came to be.

What are the simple steps the State of Poland can take to witness even more spectacular successes as the ones I have mentioned above?:

  1. First and foremost… do not disturb these geniuses.
  2. Help promote them in the Polish media (SEO->stronger position on the global market)
  3. Promote successful case studies, so that the Polish people know, that it is worthwhile to believe in your abilities, and you can compete with the Silicon Valley from Poland!
  4. Strengthen universities in Wrocław, and mostly the Technical University (more engineers)
  5. Do not kill the spirit of entrepreneurship in young people with EU funding. Just don’t disturb them.

And if I were to keep on dreaming:

  1. Provide tax breaks for businesses operating in the field of new technologies. Especially at their early stages. First 2-3 years? At least for those which sell abroad and bring $$ back to Poland. This would create a whole new quality. More technological businesses would emerge in a single year than in the entire period of UE funding. Singapore, the technological heart of Asia introduced the same model in the past. Coincidence? I don’t think so.
  2. Education, reconstructed in such a way, that instead of creating projects only to boost personal ambitions, gain further titles and utilise EU funding, it solves actual important problems. I will use the example of Singapore once again. Out there, to get a scientific grant you have to prove, that you can find customers for the end result. Customers willing to pay for it. Therefore, at the very beginning the purpose of the initial analyses for each project is to find niches or identify specific problems, which can be solved quicker and cheaper through research. So far, in Poland it is the other way around. We do something, and then we wonder how we can use this, and very rarely someone actually thinks if whatever they’ve produced will sell. Nobody even begins to consider how to sell it. The problems and challenges have to have their bases in business. They can’t be based strictly on scientific ambitions. In other words, an investment in research has to be profitable in financial terms. Only then it will help create a snowball effect, which will fuel further research.
  3. If the State of Poland is to subsidise anything, the funds should be used to bring some of the best specialists, scientists and managers to Poland. These individuals will infect their coworkers with innovation and it will continue to spread. It costs a lot of money, but it brings value in the form of know-how and promotion for the entire tech community. One post, one tweet of such person can do more, than many companies even if they invest millions.
  4. First focus on one region and when these companies grow their owners and more important employees will feel obliged to more actively share their knowledge, experience and to invest in other Polish teams. The will have the resources.
  5. Simpler laws and a better-funded court system.

I’d also like to add, that the StartInPoland.org domaing is in good hands, and I will not hesitate to use it 🙂

Fell invited to StartInPoland:

 

 

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