Talk of the hottest startup scenes invariably revolves around cities like Berlin, Stockholm, or London. Rarely does it touch on Central Europe, yet it is from here that a new generation of entrepreneurs has been emerging and creating some extraordinary startup success stories like Prezi.
Founded in Budapest, Hungary in 2009 by CEO Peter Arvai, CTO Péter Halácsy, CTO and Principal Artist Adam Somlai-Fischer, the high-growth startup has evolved into a premier presentation platform and an integral tool for today’s global workforce.
Arvai, a Swedish entrepreneur, had already founded medical data firm omvard.se and developed the world’s first mobile newsreader that allowed people to follow TED Talks from their mobile devices, before he became involved with Prezi.
He says: “Actually, it was my co-founder and international artist Ádám Somlai-Fischer who had the idea for Prezi and it came about because he needed a new kind of presentation tool to support him in his work. He couldn’t find what he wanted, so he coded it himself. Of course, presentations are hugely important to artists, as one of the key ways of selling their work.”
With the new tool, Somlai-Fischer was able to explore a ‘big picture’ overview of his ideas and zoom into the details of individual projects, the functionality that lies at the heart of the Prezi platform.
Péter Halácsy, a professor at the Budapest University of Technology and Economics, came on board when he contacted Ádám about using his presentation software.
“Soon, he was working with us to figure out how to make it possible for non-experts to create effective and unforgettable presentations,” says Arvai. “I convinced them both that the only way to succeed with our ideas was to leave our jobs and focus entirely on Prezi.”
Working without salaries for 18 months, the founding team launched their new business in April 2009 from Budapest, to many, an odd choice of location given that at that time the city was virtually devoid of startups.
“That’s true,” recalls Arvai. “The startup culture was brand new and unfamiliar to many in the city; in fact, Ádám and Péter had actually looked up ‘startup’ and ‘venture capital’ on Wikipedia before they reached out to me.”
As well as lacking a startup scene, Hungary was also missing business role models. There were no successful entrepreneurs from whom the Prezi team could seek advice or mentoring, but what they did have was a wealth of talented and very enthusiastic engineers.
“They really wanted to prove that a company started in Budapest can become a global success,” says Arvai.
Investor interest was also thin on the ground, not surprising given that Hungary and most of Europe was still reeling from the fallout of the financial crisis.
“As you can imagine,” he says. “Investors were shocked when three guys from Hungary approached them with ambitions of equaling Microsoft MSFT -0.02%, Apple AAPL +0.29% and Google.”
In order to gain investors’ interest they knew they needed to have the product ready, and when people started seeing the finished result, the feedback exceeded their expectations.
“When I was pitching Prezi at The Next Web conference in Amsterdam, the audience really loved what they saw. Soon, entrepreneurs were using Prezi to pitch their companies, which led venture capital firms back to us. In a sense, Prezi became our Hungarian Trojan horse,” says Arvai.
To date Prezi has received $15.5 million in funding from investors that include Accel Partners and Sunstone Capital.
For startups aiming to create a global brand the US is one market that can determine its long-term potential, and opening an office in San Francisco has played a pivotal role in Prezi’s success.
Arvai says: “The presentation culture in the US was stronger than in Europe, which presented a clear opportunity for us. And we learned a lot by moving to San Francisco. For example, while our original pricing was in Euros, we quickly discovered that many of our customers in the US weren’t familiar with this currency. Once we switched to dollars, we were better understood by a global audience.”
But the transatlantic move was no mean feat. Their first location was far too small, while limited finances meant they had to buy chairs and tables one by one. On top of all this, working in time zones nine hours apart presented huge challenges. Nevertheless the team remained focused on its goal of building a global brand, knowing that the US market was the key to success or failure.
Today Prezi has over 45 million users globally and attracts 55,000 new users every day. The company employs 70 people in its San Francisco office, and 170 in Budapest, the latter comprising a hugely diverse team of talented people drawn from 26 different countries.
“It is easier to build a diverse team in Budapest, a beautiful city that captivates visitors and, being in the heart of Europe, is great for attracting foreign talent. Work visas are easy to come by here, which also puts Europe at an advantage over the US,” explains Arvai.
And Budapest has changed dramatically since 2008, boasting a vibrant startup scene, plenty of people with great ideas, a wealth of talented, well-educated engineers, and mentors to support flourishing startups.
Hungary is now home to globally successful companies such as Ustream, LogMeIn, NNG, and Prezi, which have collaborated to launch Bridge Budapest an NGO to promote entrepreneurship.
Arvai says: “I know the Stockholm startup scene well, ever since I built my first company there. Nowadays though, I think Hungary has everything that Sweden has. We wanted to inspire people to start their own businesses, and we wanted to share our stories to show that you can build a company from Hungary too. For us today, Hungary seems to have the most vibrant startup scene in Europe.”
By Alison Coleman (Forbes)