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COMPUTERWORLD | Articles | Market Analysis
25 Feb
2014
 
 

Bulgaria Recreates its Past with an IT Startup Renaissance

Nick Farrell

In the 1980s, Bulgaria was at the cutting edge of the Soviet bloc’s computer production; the small Balkan country made the Pravetz-8M which used two processors. The primary one was a Bulgarian-made clone of the MOS Technology 6502 chip that was under the bonnet of a computer designed by Ivan Vassilev Marangozov, which looked suspiciously like an Apple II.

The Pravetz had 40% of the Soviet market but were made in the Bulgarian towns of Pravetz and Zagora, and Bulgaria’s second city, Plovdiv. All that disappeared overnight when the Soviet bloc collapsed. The factories closed and Pravetz turned into small town of 4,000 people, surrounded by picturesque mountains and with its main industry an expensive international golf course.

Now, 30 years later, a Bulgarian firm became celebrated nationally when it released a 64-bit laptop under the Pravetz name. The news was initially considered by cynical Bulgarians a prank, but LaptopClean which owns the brand was real enough.

Director Boyko Vuchev said his company had completed prototypes and has performed the first tests on the machine. This time, instead of cloning Apple, machine parts will be made in Taiwan and systems assembled in Bulgaria. He added that he had not expected such a huge response to the launch of the Pravetz, nor that Bulgarians would be so nostalgic about their days of electronic glory.

He also did not realise that Bulgaria saw itself as entering a high-tech renaissance with a new generation of IT entrepreneurs seeing themselves as becoming the new Pravetz.  

The Bulgarian government, when it is not fighting off corruption scandals, has been successful in attracting the high-technology industry to the country. Most of the interest, ironically, has been coming from Chinese companies, particularly in the car manufacturing industry. French car parts maker Montupet has increased production capacities in the north-eastern Bulgarian city of Ruse by 50% in the last year. Investors from Shaoxing have been considering sites in Burgas for the potential construction of a textile factory and a showroom.

If you read the Bulgarian press, the current government is claiming credit for the boom. Every day you will find some government minister bragging that he has met with some big business operation that is interested in investing in Bulgaria. However, Bulgaria’s new IT renaissance is more the result of significant amounts of money from the likes of IBM, Cisco Systems, Microsoft, Hewlett-Packard, Oracle, BAE Systems International and ITT Electronic Systems and the European Union over the last two decades.

This solved many of the problems which has made Bulgaria’s IT industry stagnant. Today, infrastructure has improved. Bulgaria has an extensive but antiquated telecommunications network from the Soviet era which has been replaced by a modern digital trunk line with connecting switching centres in most regions. Those areas that could not be connected have a digital microwave radio relay. This has resulted in an explosive growth in internet use, particularly in urban areas that have been improving with the expansion of cable companies. This created two generations of IT-literate young people, many of whom are forming their own startups.

Co-founder of graphics rendering software company Chaos Group Petar Mitev is one of the new generation of aggressively pro-enterprise young businessmen. He caused an outcry earlier this year when he said that one of the problems that Bulgaria faced was that entrepreneurship was still an alien concept.

“People should know that there is no God, that everyone is responsible for his fate and that entrepreneurs are the most important and valuable part of society,” he said.

“This recognition will be a good foundation for the renaissance of entrepreneurship and rapid, nationwide wealth … the state should never interfere with the entrepreneurs.”

It is around people like Mitev that the startup culture has bloomed in the last two years. Chris Georgiev, entrepreneur and volunteer at the StartUP Foundation, has warned that the country is not keeping pace with this enthusiasm. There is no access to people in key positions, legal consultants, VCs, nor are there enough people with business and marketing skills, he says. He is concerned that people are being trained to be managers rather than entrepreneurs.

However, as a foreign business expert living and working in Bulgaria for the last decade, Steve Keil says that there is a good seed of young IT business people creating start-ups.

“You can feel the enthusiasm here,” he said. “The startup people are really having fun, and giving it a go. This is a transformation from a decade ago,” he said.

Initiatives such as Launchub and Eleven have helped to support startups that are not only winning investment, but contracts too. Keil thinks that these are the first signs of a dramatic acceleration although there will be a large number that will fail.

“But they should learn. The whole idea of failing is becoming more acceptable; not that we want to, but [there is] less stigma when we do it,” he said.

That mind-set did not exist after the fall of communism when too many people were frightened of failing.

Keil said there are two issues which are holding the country back. The first is government corruption which has been funnelling development cash into organisations owned by their financial backers, and the other is the presence of the big IT companies in Bulgaria.

“I generally don't like the big companies here as they overpay and attract good people, which sometimes makes it harder for startups to hire,” he said.

On the plus side, the big IT companies have been responsible for giving the younger staff the initial confidence and savings to think, “I can do that”, Keil said.

“They can provide some basic training, some years of good salary, and then when the person becomes more senior, they sort of have the ‘wings’ to try taking off on their own,” he added.

And it is going to be these start-ups which will be hitting the rest of Europe, and the world, hard in the next decade.

Nick Farrell is a freelance writer who was born in New Zealand and recently migrated from Bulgaria to Italy. He writes widely on technology, magic and the esoteric. | IDG Connect

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