Starting and self-funding a software business in Eastern Europe at the age of 23
hackernoon.com> The economy is not developed, making it extremely difficult to convince anybody to buy anything you try to sell them. People are pessimistic and desperate, most of the rich make money through corruption and criminal activities. There is little support or financing for running a legitimate business. Talent is scarce. There is nothing to compete over and nobody to compete with on a local level.
Away with the violins already. Bulgaria may not be entrepreneur friendly or corruption free, but it is not a misery cesspool (source: my friends there).
> Unlike the people I met in the Silicon Valley, only a handful of our tech-oriented students had participated in hackatons, contributed to open-source software, had started a personal blog or answered questions in online help communities such as StackOverflow.
This is classical Silicon Valley fetichising. Some wannabe entrepreneurs have it too, here in Belgium. But if you want that mindset, you better look at the rest of the ideology that comes with it. Personally I want no part in it.
Nevertheless, the rest of the post shows that it is in fact easier to start a business in Bulgaria. The relative immaturity of the tech scene means it's actually much easier to make a splash and find opportunities. Better be self-taught in the land of opportunity then well-schooled in a saturated market.
And at the end of the day, that's also what entrepreneurship is: doing your own thing, with no one holding your hand.
> Bulgaria may not be entrepreneur friendly or corruption free, but it is not a misery cesspool
I absolutely agree with your opinion. There are companies like Telerik (acquired by Progress Software) and Chaos Group which have earned our country a formidable reputation on the global tech scene and it's relatively easy to get recognized. The overall ennvironment is good too - the country has grown a lot since it became member of the EU. Despite all this, it doesn't have the extremely competitive atmosphere, the "evolve or die" mindset of the more developed markets. There is nobody who's going to push you out or take you over. Personally I think such type of atmosphere would have let us grow much faster and innovate quicker.
> Nevertheless, the rest of the post shows that it is in fact easier to start a business in Bulgaria.
I'm not implying the opposite. It's easy to start a run-of-the mill software development outsourcing business and sustain it, but with such "immature tech scene", it's very difficult to evolve it in something bigger, and that's a big problem.
p.s I'm the author of this article
I'am an ex ChaosGroup employee and I can tell you that if there's one thing I learned while working there, it's that all these constraints are in your mind. You can find talent here. You can create a product here and sell it worldwide and be successful. You can be competetive or better than your western competition. In some ways, doing this is even easier than in the west. My view is that in order to be greatly successful, you need 3 things, no matter in what part of the world you happen to be:
1. Great idea.
2. Great timing.
3. Lots of work.
(besides the companies you listed, I could also mention coherent-labs.com, which are also global leaders in their market).
I don't live in EE (and maybe I'm naive about this), but shouldn't it actually be easier to find great talent if you put in an effort?
I mean, there are great people in pretty much in every country, and if the alternative is, say, (boring) outsourcing development work, shouldn't you be able to convince people with above average (local) pay and offering them a great place to work, etc?
> convince people with above average (local) pay and offering them a great place to work
With hardly any VC money around, you don't really have a way to pay for those.
Nonsense. You’ll make plenty of money by actually building something people will pay for. You know, a product can actually make money without raising VC?
I agree, but then you have to bootstrap with your savings, which means you definitely won't be paying above average wages and renting nice offices etc (which is what I was replying to).
A great many successful entrepreneurs have money (and often a tradition of entrepreneurship) in the family to get them started. No VC needed.
Don't need to raise local. And you probably shouldn't anyways if you're in Europe.
That may be valid only if you're able to raise good money but the tech investing culture is quite underdeveloped here. The startup scene needs several bigger exits to make the investors greedy and curious about it and also construction/private property yields huge profits right now, so the tech startups are not the spotlight catcher.
Without making this sound ridiculous -- sometimes it just doesn't make sense to do tech. If I can make crazy returns investing and/or building property, you should probably be doing property and not tech. EE is probably a good place to be in terms of property investing at the moment.
But there's probably a place for both.
4. world class execution.
Without this, all you have is just time to tinker about on an idea.
> only a handful of our tech-oriented students had participated in hackatons, contributed to open-source software, had started a personal blog or answered questions in online help communities such as StackOverflow
People do it mostly because they feel employees expect if of them. I guess employees in Bulgaria have different expectations, so students adjust accordingly.
Eastern Europe is state of mind, not a geographical location.
It just boggles my mind why a young person (like the article author) would choose to think in such a lazy manner and beat that narrative to death -- corruption, local economy, the struggle to run legitimate business, etc.
With all due my respect and w/ the risk of being downvoted -- that is BS; and completely opposite of the SV mindset.
It just shows that the author haven't been exposed to the actual environment (i.e. not the university) in Bulgaria -- there are numerous large-scale companies w/ strong regional presence, as well various small outsourcing shops and at least 5 co-working spaces, where you can find lots of very capable people working in very healthy environments; anecdotally, for the last ~13 years I haven't heard even one founder/c-level exec of being asked to pay anything under the table.
> Eastern Europe is state of mind, not a geographical location.
Author here. Perhaps I put a little bit too much drama in the classic Eastern European issues. I'm not complaining, I do acknowledge the advancement of Bulgaria's economy (it's definitely not like the 90s as far as the narratives go), but I'm not very satisfied with the competitiveness of our country on the global scene. Take Singapore for example - it's more deprived than Bulgaria in numerous aspects, yet it is one of the technological powerhouses of Asia. I'm not focusing on the problems; I'm focusing on what could be improved and leveraged from the current situation.
> ...there are numerous large-scale companies w/ strong regional presence, as well various small outsourcing shops...
True, but for how long have the co-working spaces been around? Around 5 years. Healthy companies? Since we joined the EU (~10 years). All the companies before that period (Sciant, Telerik, Chaos Group etc.) were made of a bunch of extremely talented young people willing to work almost for free in order to gain reputation and recognition from outside. Plus, the working conditions you mentioned apply only for no more than 20,000 people employed in the tech industry in Bulgaria. The majority of the population is in survival mode.
There is much to be improved.
> only a handful of our tech-oriented students had participated in hackatons, contributed to open-source software, had started a personal blog or answered questions in online help communities such as StackOverflow
It's Eastern Europe, so those even marginally competent who haven't left are employed for peanuts in outsourcing centers, working on brain-numbing projects 9-5 or even 8-6. Ain't nobody got time for that.
It depends, there are quite a number of exceptions. Yeah, if you're going to get yourself into a farm-like outsourcing company as a fresh CS graduate then you'll have a pretty numb programming life in front of you. But there are also lots of start-ups/small companies which do really interesting stuff (some of them have been acquired by Western companies for quite a lot of money or have grown into "middle" companies).
I for example have started doing Django-based projects back in 2006, me and my other programmer co-worker were at the time I think the only Django programmers in our Eastern European country. We had also done some quite cool map mash-ups. But pretty soon after that people around us also started doing Ruby stuff, Plone/Zope (maybe not so cool, but interesting nonetheless), we had a local site that had done street photos the same as GStreetView 2 or 3 years before Google started covering our streets, some Information Retrieval/AI projects, it was not all a technological desert. And in recent years things have started becoming even more dynamic, but I have to admit I stopped paying that much attention to the local IT scene.
But, yeah, Eastern Europe (and Europe in general, with the possible exceptions of London, Berlin and maybe Dublin) will never get even close to the "feeling" one gets as a programmer in SV. In my mid- to late 20s I was pretty well aware of that I and was kind of let down, I was feeling that I was losing out by me not being in SV, but now, that I've grown a little older, I feel like I didn't lose that much by staying here.
> But, yeah, Eastern Europe (and Europe in general, with the possible exceptions of London, Berlin and maybe Dublin) will never get even close to the "feeling" one gets as a programmer in SV
That's exactly the thought that hits me every morning I wake up. That "feeling" that you're in the right place and in the right time to build some truly revolutionary technology. I hope that I start getting this feeling here, in Bulgaria, soon. Otherwise I'll have too many reasons to emigrate for a few years.
> That "feeling" that you're in the right place and in the right time to build some truly revolutionary technology.
How many of the people in SV have that 'feeling' yet are completely wrong? Or... maybe a better question - how many actually build that 'truly revolutionary technology'?
There's a chance you'd get such a great 'feeling' every morning you wake up in SV, but there's more chance you can have an impact on the lives of people in your country by working with others and expanding the pool of opportunity right there.
You're in a position to help create a revolution in your geographic area, vs just sharecrop on someone else's revolution plantation.
For each success story I'll give you a failure counter-story. To engage in such project one needs funding, hardware, spare time, some decent side income. These are very difficult or even impossible to obtain over there.
Fortune cookie: a niche IT job in Eastern Europe will, with high probability, grant you the best life standards available worldwide.
A great number of my Romanian programmer friends have already started to realize this and have stopped emigrating to other European countries.
Yeah, moving to a place like London would most probably get you 2 or maximum 3 times the salary you are now getting, but you'd also have to pay rent which is 8 to 10 times higher in London, going out is outrageously expensive (7 pounds for buying a beer in a pub after a day's work is pure robbery), the general geographic area is quite nice around these parts (we have mountains, seaside, nice rivers for fishing), all in all they're doing quite ok. They won't ever be able to buy a $100,000+ car, a small boat or a small air-plane, like I see many of the SV engineers doing, but that's not that huge of a sacrifice to make. What's letting me down, personally, and what would convince me to finally take the plunge and emigrate to a Western European country is the health and the education system, which right now is in shambles in Romania (and I guess in Bulgaria, too).
Private health care is very neat and relative to your paycheck it's as affordable as in the Western world
The cult of and preference for private and premium health care services in Central/Eastern Europe are going to backslash terribly in couple of decades. Everything works well as long as the only contributors and users of it are young, healthy, employed people. Then those private health providers and insurers will simply disappear or bankrupt, and people will end up with disintegrated public healthcare if only they will be eligible for it at all.
The current state of things is not perfect, and the private healthcare probably has indeed the inherent problem you're describing, but it is also maybe the only thing that keeps the bulk of our medical doctors from emigrating to richer parts of Europe.
>(7 pounds for buying a beer in a pub
An Indian friend who lives in London (this was some years ago) told me that a single naan in London cost about 3 pounds then. Anecdote, of course; how well you manage there will also depend on how much pay you get.
>They won't ever be able to buy a $100,000+ car, a small boat or a small air-plane
Except for the few lucky ones in SV who cash(ed) out in time, these toys are mostly bought on credit. Salaries are high, but so are the costs.
>7 pounds for buying a beer in a pub after a day's work is pure robbery
7 pounds beer is shi£ there, normal beers start at double that price
Even in central london you wouldn't be paying more than, say, £5.50 for a pint.
That's exactly my case: working as a niche IT specialist I earn about 4500 USD per month after taxes.
It might not be much by SV standards, but in my neighborhood (which is a capital city of one of CE countries) it is top 2% income. It's enough that after maybe 5 years of saving I'm now able to buy 1 bedroom apartment in the city center WITH CASH. Buying 2-3 bedrooms would also be possible if I needed it and decided to live further from the city center. Add cheap healthcare, free education, overall low living cost and that's really hard to top.
I get job offers from UK on regular basis, but never seriously considered it for that reason.
8500 USD after taxes here :) (in Poland) I spend around $1000 per month of that.
Be thankful, you might probably afford the best living standards that is possible to afford as an employee... worldwide.
I was an expat in Poland for some years (unfortunately non-STEM job) and with that money your only limit is yourself.
My plan is to retire in 5-7 years. I could do that sooner if I went into stock market (and prayed that the mythical 4% per year returns will be sustainable in the future) or became a landlord, but I prefer to play it safe.
Would you be retiring in Poland? What kind of monthly expense do you foresee?
I'm also dreaming of doing this, though currently on the other side of the world.
> Would you be retiring in Poland? What kind of monthly expense do you foresee?
Yes, retiring in Poland. My plan is to go broke at 90-95.
I'm thinking 5000-6000 PLN per month ($1300-$1500), plus owning a property, will allow for a great living. This should even cover a very good nursing home (well as far as these places can ever be very good) when I'm unable to take care of myself. (I dont' and won't have children).
BTW there seems to be plenty of people from the UK who moved permanently to SE Asia (I imagine it can be cheaper than Poland + no winters) and who are sustained via rent from their London flat/house.
Yes, I actually know of a couple on a sailboat living off the rent of their house in London.
I would like to retire in Europe. Thanks for your answer, it's nice to have a realistic ballpark figure.
What is playing it safe? Keeping it in cash in a bank account?
> Keeping it in cash in a bank account?
Yes. There are accounts in Poland which pay around 0-2% post-tax above inflation (the number vary year-to-year, depending on current economical conditions), which will help the capital still earn a bit of money.
Keeping your entire net worth in one currency seems pretty risky to me. Nothing is ever as it seems.
Yes that is a risk. Maybe I'll put some money into USD/EUR too.
For all, be aware that this kind of money are extremely rare (but doable in some niches) in Poland. Half of that is generally perceived as very good salary for most IT jobs, and median is probably quarter of that.
Yep - even our prime minister/president doesn't make that much a month, more like half that. I used to know a Polish guy making million Polish zloty/year(so about $300k) but he was the head of the Polish division of a major German insurance company.
Most of my Polish friends working in Poland as programmers(ranging from C++ to Web development) make about ~$2500-3500/month, and that's considered extremely good for where they live(Krakow and Warsaw).
Yep that's true. I don't count on making this kind of money locally (I don't even go through Polish job ads any more, as I can make more remotely or by taking up a contract in Western Europe), I just randomly found this opportunity.
But still, you can work remotely for a US company and make that kind of money. That's pretty realistic and was probably the source of the fortune cookie wisdom.
>> But still, you can work remotely for a US company and make that kind of money.
How does one do that, except by working for infamous Crossover company?
I never thought such kind of money is possible in Poland, except in one shitty company that shall remain unnamed here. Could you tell what do you do to earn such a salary ?
One was a remote job at a SV startup and now I'm making pretty much the same in an in-office job in an international corp. I filled a niche they badly needed to fill (it's not like I'm some unicorn though) hence the unusally high pay.
Is that niche called Machine Learning? :)
Nope, it's Big Data (infrastructure, pipelines etc.). Nothing exciting or innovative, it's just that there are too few people in this field who know what they're doing compared to the demand.
That's weird, because most Big Data jobs I know about are paying below average rates, like 3000 USD after tax, no more. Basically there's almost no market for such skills in Poland, yet.
>working as a niche IT specialist I earn about 4500 USD per month after taxes.
Interesting. Is this working for a Western European or US company, or a local one (CE - assuming it means Central European)?
Yes, if you can manage to find even some 40k or 50k/year contract it will put you into about 5% of top earner in population in many central/east european countries.
Prices are not as low as you might imagine, but it will give you a very nice life standards. You are not going to be able to afford luxury cars or other luxury items (those costs the same everywhere), but otherwise you would be set.
You will be rich in Eastern Europe but you'll still be considered average/poor in the developed world. Doesn't sound like a huge bargain to me.
It is a huge bargain, because most of what people really want out of life are positional goods - the nicest house in the neighbourhood, status with the higher-class local women whether for tinder dates or relationships/marriage, cheap local staff to perform services (child care, cleaners, gardeners, drivers, cooks).
You can afford none of these earning $100k in SV, but most of these earning $30k in Bucharest or Minsk.
Of course if you are after material goods, the opposite is true - if you don't care about a nice house but want a new Tesla, a new iDevice every year, Hermes bags and a Cessna instead, then you are better of living in a flatshare or a shoebox in San Fran or the Valley.
If they are local, they may not want to go abroad. The mindset here is that you begin to accumulate large amount of cash savings early in life (20s-30s), which is a huge boon. This gives you a number of benefits compared to your peers in less hot industries: you can buy an apartment and save on rent long term; you can start your own business; you sleep better not worrying about the future; you can negotiate better work conditions because you are not afraid you'll lose a job.
The fact that you would not have the same position abroad (i.e. your cash savings are large locally but small if you lived in a rich country) is not a loss of any kind, it's just a fact that has no bearing on daily life.
Even at the 50k/year contract (and you can get much more), you'll afford a mortgage on a big house, will afford eating out daily etc. You'll be way above average most people in Europe and probably in the US as well.
Your saving rate is going to be higher on 50k/year in easter Europe than 100k SF salary. Just by using this extra money and investing them in various assets might help you get additional income streams that will eventually helps you cross that gap or maybe just retire much earlier.
> Your saving rate is going to be higher on 50k/year in eastern Europe than 100k SF salary.
Yeah, except that the going rate for a good junior developer in SV is about $150k (Google, Facebook) and in Romania it's $20k. I recently moved away from Romania because while I could find a job in Western Europe paying more than $100k, there was no way to find something in Romania (or remote) paying even 30% of that. And not for lack of trying.
Also, $300k a year in SV is much more achievable than $100k in Romania or Bulgaria, and with that sort of money you start caring about other stuff than housing (luxury goods, exotic vacations, investments etc.) whose stuff doesn't depend on location.
1. Opportunities are often global, and location doesn't matter as much if you can sell something via the internet.
2. One big advantage of Bulgaria which is often overlooked, if you do make it: the corporate tax rate is 10%. Meaning you get to keep most of your profits.
> Most of the rich make money through corruption and criminal activities
Is this the case? Could you give an example?
Generalizing it as "most" is definitely not a sign of a realist's view. Most of them reap profits from low wages and the open EU market. Others get oversized government contracts funded by EU funds and a large part of them do it with corruption. Finally there are some but not that many "no-go" markets which are a special interest of the local and Russian oligarchs and their lobbying kills the competition. Romania did a relatively good job in their judicial reform, but Bulgaria lags behind a lot on that.
>> The economy is not developed, making it extremely difficult to convince anybody to buy anything you try to sell them
You easely get the same thing on the opposite end. In countries where people are used to buy a lot of stuff, people are constantly bombarded with advertisements and drivel.
In a poor country, it is hard to convince anybody that stuff you sell is good. In a rich country, it is hard to make people buy your stuff, even when they know it is good enought.
Ok, find a medium rich country. Got it.
> Unlike the people I met in the Silicon Valley, only a handful of our tech-oriented students had participated in hackatons, contributed to open-source software, had started a personal blog or answered questions in online help communities such as StackOverflow.
The overwhelming majority --by a huge margin-- of entrepreneurs have never done any of this.
Your perception is skewed by reading HN and following the Silicon Valley "culture". That isn't at all a reflection of the majority. In Silicon Valley and in politics there are certain things you might have to do to signal club membership.
In the case of starting and running a business none of the items you list are a necessary part of success at all. I know people who are doing multiple millions of dollars a year in revenue who have never gone to hackathons, contributed to OSS, started a blog (that one is particularly funny) or spent time answering questions on SO.
The shadows you are looking at are not reality.
Note: Before anyone thinks that's an insult, google "Plato cave" and read it.
Bulgaria has low income tax, but a monsterous social security, EI and pension payments as is with most formerly red countries.
This gives self employed people, or people leaving their profits on a company account an ennormous, unfair advantage
That is, until those people realize that they most likely will need that assistance at some point of their lives (child birth, major health issues).
EDIT:
To expand a bit, my wife is currently in one of those situations. A government program allowed reduced social taxes for small businesses (<5 employees, <720EUR/month wage). The place my wife has worked for the past 5 years has been like that (her first workplace).
Now, with a child underway, we came to realize, that the social benefits she will be getting before and after birth will amount to maybe few tens of EUR/month (compared to 60% of previous wage when full social taxes are being paid).
The issue there is that: A. Those people will get all of that anyways B. Paying more towards you EI, SI, and pensions there gives very little additional benefit C. Truckloads of people still in productive age are dependent on cash payouts from the state. You can imagine those are the ones who make the majority of the electorate of most Eastern European nutjob political parties
What values are we talking about? From a few sites, it seems ~31% (employer + employee), which doesn't seem that high relative to other European countries.
Well, they went down. Used to be like that http://www.worldwide-tax.com/bulgaria/bulgarialaborlaws.asp + income tax + "real insurance" + different property taxes, and all of that in a country with a relatively high VAT
Even today, that 31% rate + 10% income tax, + other stuff can easily halve your income.
Yeah, well, as a Portuguese I'm paying 35% in SS contributions, plus more than 10% in income tax if one earns more than 920€/month, so I feel your pain.
It wouldn't really bother me if so much of it wasn't wasted, though.
Bulgaria has number of advantages for starting software business which sells globally.