Macedonia, a nation learning to choose itself

I returned from an international trip and missed the shuttle bus from the airport to Skopje city center by a few minutes. The next one was coming after one hour. I decided to wait outside and hitchhike my way to the city. Fifteen minutes later, a car stopped. As expected, the driver wasn’t local but was from Germany. Locals still smirk upon hitchhikers in a country that is learning to believe its government as well as each other.

– It’s been four years since we’ve last been here.

– Has it changed much?

– Plenty. I can barely recognize this suburban area and the highway. The city has grown up and looks more modern.

I often joke that Estonia took what should have been Macedonian. With a fantastic geolocation, attractive weather, diverse culture sprinkled with Orientalism and yet so colorfully Balkan, Macedonia could have become the regional Dubai, if reforms with the depth and seriousness of Estonia’s had been implemented. That didn’t happen, likely due to a lack of political leadership and because the Macedonian nation is a nation that is still learning to choose itself.

How far has the small Balkan nation come in choosing itself, in setting up a vision, a competitive advantage it can offer to the global market?

The current government appears vocal in replicating Estonia’s digital society model and turning Macedonia into a tech hub of the Balkans. The intention is noble but we are yet seeing the deep dive reforms that Estonia implemented to revamp itself from the inside out such as Tiger’s Leap program. Instead of revamping the education system, the former nationalist government of Macedonia has spent ample amounts of cash revamping the center area of Skopje with baroque sculptures and Athenian statues in an attempt to stitch to itself some imaginary ancient identity.

Some progress on the digital society initiative has been marked with the signup of a partnership agreement with Mastercard aiming to bring local digital identity and related services – like digital document signing and verification – that Macedonian citizens can use across a number of day-to-day activities. Once again, this move doesn’t exactly replicate the “Estonian way” where the government doesn’t invite a foreign conglomerate to develop its systems but instead spreads the cash among the local tech force to motivate them to develop technology of this magnitude.

Most of the startup activity in Macedonia is focused in the capital Skopje. The country has several startup ecosystem support organizations such as Startup Macedonia and only one (regional) venture capital fund is active in the country – Slovenia’s South Central Ventures. A few other regional VC funds and accelerators have established their presence, although their primary aim is more to attract Macedonian entrepreneurs to come and innovate in neighboring countries such as Bulgaria, rather than stimulating the local ecosystem.

There is still no coworking space in Skopje. Local founders prefer to rent a flat in a city where office rentals are unreasonably expensive for small businesses. This is partially caused by the proliferation of casinos and sport betting stores that pop up all over the city and push the real estate prices up.

North Macedonia is cubed into the so-called Western Balkan region, a political concoction by Brussels bureaucrats to denote the group of four Balkan countries aspiring towards an EU membership. The group includes North Macedonia, Serbia, Montenegro, and Albania. Locals find this bundling repugnant not just because of the cultural and ethnic differences between each of the states and because each state sees being in the company of the other one, deplorable. Macedonians are convinced Albanians don’t work hard enough on their structural reforms; Montenegrins say the same for Serbians.

Despite the differences, these so-called Western Balkans states have one thing in common. Each of them has already launched a successful scaling company raising Series A or B. Kosovo has Gjirafa, a widely used local search engine in the country founded by Mergim Kasani. Serbia has Numbeo, one of my favorites – ManageWP, and the mobile game development startup Nordeus, the company behind the globally renowned Top Eleven. Albania has Kredo.al.

Some notable Macedonian startup stories include the edtech startup Brainster; GSix, which became the first Macedonian startup company to acquire a foreign company; DoXteam, which recently got acquired by Alite International, and Cognism, a B2B sales acceleration software which has raised $28.9 million up to date.

As a former Swiss EP, Entrepreneur in Residence, I have spoken with a number of local founders. One thing is certain – Macedonia is not short of eager, talented people. The country’s engineering colleges match those of Europe in quality. It is said that this region powers the backend of every successful Silicon Valley company. Slice, a startup company with over $15 million in investment, helping independent pizzerias compete with big pizza chains by offering simple online ordering technology, personalized in–store marketing, and customized digital ads, has its entire team of back-end developers located in Skopje and Struga.

The Macedonian diaspora is constantly reaching out and leveraging the local tech force. The local pool of developers is not only talented but very affordable, with prices almost matching outsourcing in South Asia.

Outside engineering colleges, the country’s education system is still lagging and young people work hard to catch up with online self-education. The bureaucracy and the current legislature seem to be an even bigger problem. It is still not possible for an angel investor to be able to invest in another company if the first one fails. The government promotes entrepreneurship on the surface, but deep-down things rarely pan out. For example, the government announced a hackathon, inviting innovative solutions to deal with food wastage. A team of young people submitted their work, including one of them that was particularly good. Weeks later, a government-funded NGO initiated an identical platform with the same set of features and virtually sabotaged the private sector project rather than supporting it towards scale.

This is a recurring scenario – bureaucrats invite the private sector to innovate, then copy the solutions and apply for funds from EU development schemes, kill the project six months later and stash the money away, as per the words of dozens of founders I’ve spoken to. This is the reason many of them would never join a community, partake in a government hackathon or invite help from a supporting organization.

Another reason why the country doesn’t have a scaling startup story yet is simply because of the opportunity cost. Many of the talented developers work for international companies, selling their skills per hour. In a country that struggles with low wages, a salary that goes by the thousands of euros per month comes as a boom and makes for a very comfortable living, so why bother. A friend of mine, a Macedonia-born American, was recently hiring backend programmers. He offered local programmers an attractive package of salary + equity. To my dismay and his, no one was interested in the equity part (of a growing company which recently got an investment of $3.2 million). Every programmer he spoke to only wanted the salary. In Macedonia, we have the skill, but most of the local founders lack the ambition, the business acumen, the Ray Krook mentality. The country is missing local startup mega successes, the local Mark Zuckerberg, stories that would propel everyone into daydreaming. Finally, young dreamers face the general apathy of the older generations, their parents with their keep-it-low-don’t-cause-ruckus mentality.

Does all of this make the country a murky place for aspiring entrepreneurs? Not necessarily. If you are bootstrapping, the country’s affordable living standard comes as a boom, not to mention the great Mediterranean weather, the food and the availability of local tech talent. The tax structure is relatively friendly; recent talks of returning to a progressive tax system have been put on hold until 2023 and the current corporate tax rate is 10%. This is an election year for the country and the opposition even promises a 0% tax rate for technology companies. Starting a company has become relatively straightforward, but scaling from Macedonia remains tricky, with problems ranging from difficulty in obtaining a visa for international employees (in a country struggling with brain drain) to the apathy of the local angel investors.