We have a passion, and its name is #ScaleUpGreece. If you are a regular reader of this blog, you will have come across a few articles about our very own Greek scaleup success story, Epignosis. It is the one of the reasons we began setting up our new series of #ScaleupGreece meetups and events.
The first one took place recently at the Epignosis’ headquarters, and the Epignosis team shared their experience in an insightful and constructive open conversation with all participants.
And there are many more where that came from, as we look to grow the community of entrepreneurs, investors and startuppers who are eager to find new, innovative ways to boost business in the country. As we’ve previously mentioned, we are also open to collaborating and welcoming any joint-sponsors who are interested in joining our “revolution”.
This is going to be longer than our usual posts, so get comfortable and prepare to receive some first-class wisdom. First, let me quickly refresh your memory [or enlighten you] about Epignosis, a definitive Greek scaleup.
Epignosis: a true Greek scaleup
If you don’t know who Epignosis is, then shame on you by the way. No, just kidding. Epignosis, for those of you that aren’t aware, is a scaleup which came out of Greece in the area of learning technologies for enterprises.
Founded in 2012, Epignosis develops TalentLMS, one of the leading SaaS LMS platforms worldwide with more than 5,000 customers around the world. The secret of their success boils down to a great product-market fit, and a brilliant business model. Both of those aspects are the reason for their growth from startup to scaleup, in a relatively short amount of time.
What is Scale-up Greece?
Now, before we get into the insights of the event itself, let’s talk about our vision for #ScaleUpGreece. As well as Starttech Ventures’ very own call to action, it is a tribute to Greece’s ongoing status as a European startup and scale-up hub. This is a community for anyone who is interested in entrepreneurship.
A common misconception around the world is that the number of start-ups or the number of SMEs has something to do with the state of the economy. Another common misconception is that venture funding is a prerequisite for entrepreneurial success in our era. In this community, we aim to dispel these myths. How? By sharing real-world experiences on how true, international scale-ups were born and grew. Our aim? To boost the morale of entrepreneurs and help them think out of the box regarding scaling their businesses. Oh, yes, and also to clear up the countless illusions about venture funding and risk financing.
Athens did not win the recent European Capital of Innovation 2018 title for nothing. And, since the season of giving is upon us, it’s only right that we say “Bah Humbug” to pessimism amid the ongoing financial struggles Greece finds itself in, and talk about how we keep the momentum going into 2019 and beyond.
Which brings us nicely to the key insights which came out of the inaugural event.
What is a scaleup?
Good question. More specifically, what are the differences between a startup and a scaleup?
Starttech CEO and Founder Dimitris Tsingos narrates the beginning of the Epignosis’ story well. “We’re talking about a company that started as an idea, at the science park of Patras in 2001. And the total investment before this company became profitable was much less than 1 million euros. If you know anything about investments, we’ve recently seen a lot of much bigger ones in Greece, which have not amounted to anything. So, in terms of capital efficiency, we take a lot of pride in considering ourselves as offering the highest possible capital efficiency in the world. And that’s no overstatement. I think it’s interesting to hear stories about people who accomplished such an achievement.”
He asked the million-dollar question to Athanasios Papangelis, CEO and CTO of Epignosis.
Dimitris Tsingos: “Scaleups and startups: What is the difference for you? What do you consider as the key difference between a startup and a scaleup?”
Thanos Papangelis: “This is my own definition so feel free to correct me or contribute to it. For me a startup is an experiment. A few crazy people, that have an idea to create a big company. Most of the time they do not have a good understanding of the reality. The team is really small, basically two or three. They do not have customers. They do not have money, and most of the time they actually fail. Around 95% of the time. That’s what happens.”
When you become scalable
“A scaleup, on the other hand,” Thanos continues, “is when you manage to find to customers. When you manage to create a product that people want. When you manage to do things on a scale. Then, you become ‘scalable’. A scaleup is a company that creates a lot of jobs (good ones), and has a lot of customers. From the societal point of view, it’s much more important compared to a startup. So, as a society here in Greece, we should focus on scaleups, because only scaleups create many jobs. And only scaleups create good jobs.”
Dimitris: “Would you say that a scaleup is basically a successful startup or a small business?”
Thanos: “Yes, in my opinion, most scaleups start as startups. And let’s say that when you reach a point where you have more than 20 people and more than one million in revenue, then you become a scaleup.”
So, what about the primary qualities you need to have to increase the chances of a Greek startup becoming a Greek scale up? And what about this obsession with pushing for an exit? Everybody seems to want to create something and sell it these days.
As Thanos pointed out, trying to get money from investors without actually having a proven product, and without having customers, is the wrong way to go. Most startups run out of money, time and customers before they get going. Some of them, a select few, get to the next stage; let’s say that’s the scaleup stage. And this is the most important part. Why? Because this is where you can create value for society. Startups don’t create value. This is an important distinction for Thanos.
He says: “A scaleup grows fast, has sustainable growth, and has a lot of customers. It also has a good market/fit product and profitability – or at least profitability is just around the corner.”
And those are the qualities right there. Sustainable growth model, customers (lots of them already), product-market fit and profitability.
The Epignosis way
But wait. Let’s say we have two startups. Which qualities does one have that make it more possible to become a scaleup then?
For Epignosis, this is what Thanos had to say: “First, we were a small team which had been together for many years. And I believe that this, I mean when people work together for a long time, this creates a lot of value. In our case, we didn’t have a lot of money. This was important. Why? Because we were very lean since the start . Actually, we opted to be very lean, or we knew we would die. It was funny, investors came to us when we didn’t need them, and this is something very unusual. For us, though, it was a good sign, as we reached profitability before the investors came in. And I would really suggest that people should create startups and start thinking about profitability from day zero.”
When investors came knocking, Epignosis had already grown significantly. And, in seeing how fast the company was growing, the investors also saw that we had a team ready to help us grow even faster. So, they decided that it was a good bet for them. It’s as simple as that.
Until investors came in, Epignosis had private investment between the co-founders. Then two fundraising growth equity rounds from American investors followed. But growth equity financing means by definition it was and is a profitable company.
What the Epignosis team say
OK, so now let’s get the view from the office floor. There are many factors which make Epignosis a true Greek scaleup success story. A few of the company’s stakeholders gave us their views.
And here they are, in all their unfiltered glory:
On customer success
Natalie Petsali – Customer Success Manager
“What is customer success? It’s more than a job, it’s a whole function. And that’s exactly what I believe. It’s just not enough to employ a person or a team with the term ‘customer success’. It’s not a job title, it’s a culture thing, and it’s a philosophy thing – to apply customer success strategies.
Ultimately, my goal as head of customer success is to help our customers obtain value from our products and to convince them on a daily basis that they made the right choice, so that they stay with us for a long time. We prevent them from churning, and make sure they have successful experiences with our products, with our company, and with its people.”
On Information Technology, strategy and implementation
Why do we develop software in the most beautifully ugly city in the world, when there are cheaper countries, such Bulgaria, etc.? And why don’t we just outsource software development to such neighboring countries? Good questions. Over to Manos Dramitinos, Epignosis’ CIO to explain.
“First of all, we develop software because we are passionate about it. We love it and we sincerely want our customers to enjoy it. And this is actually our principle regardless of the role of each one of us. You need to have the right environment, the right talent, the right mentality; which means that people, all people, are professionals. When there is a serious problem to solve you need to work beyond duty, for long hours, investing your personal time just because you need to fix something. So, we are doing it here because we have a team of the right people with right skills.”
“Athens offers a balance between life, culture and technical skills required, and this is the right combination for success. Because we need our people to be as happy as they can possibly be in order to be productive.”
On Quality Assurance
Petros Bountis – Test Architect
“Your goal is to increase customer satisfaction, and you can achieve this if you increase the quality of your product. In my view, in order to see more Greek scaleups, this focus on quality should be a little bit enhanced. Why? Because this is something new. I mean the quality assurance throughout the software industry. It’s not automated in the way it should be. So, many companies need to do this but they don’t know how. And you can really help them do that.“
On Growth Hacking
Angelos Papaioannidis – Head of Growth
“What is growth hacking and capital efficiency? And how can you really grow fast internationally without having to spend a lot of money? Both are good questions. For me, it’s all a matter of testing and doing everything you need to in order to get actual feedback. You should have real numbers, you should be able to know the reasons you failed and use them for your next experiment. And, of course, do all that while always respecting your data.”
Elena Leandros – Marketing Manager
“For a Greek scaleup, there were many challenges at very different levels marketing-wise. The first one for example is that when we scaled up our team, all of a sudden there were tasks that could have been done by one person and now we are a team of eight. The very same task might involve 4 or 5 people. So, basically, setting the procedures right and making sure that the processes run smoothly and more effectively. That has been one challenge.”
“The second biggest challenge is trying to foresee where the focus should be. When you’re smaller, the focus is very much on demand generation. Then, when you start growing, some of your channels might reach a cap, and so you might need to shift the focus on something else to keep on growing. Right now, we’re shifting the focus to the brand. We’ve reached a level of growth where the brand is very important, and in order to grow further, we really have to invest more in brand and see what our clients are feeling and what they’re saying, and so on. So, it’s not just putting in money and seeing what comes out but, it’s really more about having a holistic strategy and making sure that you’re working with the different departments and everyone is aligned.”
“Marketing is not a separate function that is shut off from the rest of the company, it’s actually linked with all the different departments, and making sure that everything is aligned to our strategy is key. For example, great marketing would mean nothing if we didn’t have great products, and vice versa.”
George A. Pappas – UI/UX designer
George A. Pappas presented Epignosis’ history in brief, showing all the iterations and pivots that lead Epignosis to its success. He emphasized on the fact that TalentLMS was built upon the knowledge, the foundations and the gettings from their previous failures.
“We built TalentLMS upon our strengths and our weaknesses”, he mentioned.
But George also made a clear statement on how company environment and team-bonding plays a significant role in success.
“It’s very important to maintain work-life balance. Work is not your home, but it can feel like home sometimes. When we work together on a problem, we work as team. There’s a significant value of working with and as a part of a team, when there’s safety, mutual respect and warmth within a corporate environment. And that’s a rare feeling in the Athenian work-land today.”
“I believe in the power of people to create potential out of nothing, potential out of an idea, potential out of a conversation, potential out of failure.”
“Success is a combination of company, product and people. And that’s where the magic happens.”
Wow, a lot of great insights there from the Epignosis team.
What’s next for the #ScaleUpGreece community?
Hopefully, after reading this, you’ll be as enthusiastic as we are about our inaugural event. And we’re looking forward to talking more about noise-free startups, business models, investments and exploring new ways and means of scaling up businesses from the ground up.