JanRezab / Blog

Founder & Executive Chairman of Socialbakers.com

Prague beats Berlin with its tech scene, could challenge London in the future!

Published: June 16, 2013

Tags: czech republic

Yeah, I agree the article title is bold, but I think that is the confidence that Prague should have about where it is right now, and where its going.

Comparing Berlin vs. Prague

Berlin has got SoundCloud, 6Wunderkinder, Wooga, and a few others. Although Berlin companies are great, the hype around Berlin as a city is perhaps even bigger. I think it started with the Jamba brothers, I mean, Samwer  brother copycats. Jamba was quite a big exit for them (although wrote-off by both its buyers Verisign and Fox Mobile. I was in the same business at the time, and selling ringtone subscriptions to small children on their or their parents phones for a few dollars a week is on the edge of good ethics (rip-off), or sometimes the law). One thing some Berlin tech companies have in common is, they are not run by German founders – thats not the case in Prague. What Berlin will quickly run into is a shortage of developer talent. Prague has a huge developer talent, with a potential to tap into towns around it and also Slovakia much easier than Berlin can. What is also great in Prague, lots of these developers still work at “boring” big companies, outsourcing companies, that could quickly move to start international start-ups.

I would remind that Czech Republic, together with only Russia is one of the only markets in the world, where Google is not the dominant player, its Seznam.cz, who despite losing its market share in search is still the #1 online company in terms of revenue ($130MM revenue, 31% of that profit/EBITDA). There is a huge pool of developers both in Seznam, and other internet companies still focusing on the local market. When these companies are going to turn their focus to creating international companies, we will see something huge happen. 

But lets not talk about the future, lets talk about the present international companies that Prague has:

  • Security companies: (note: 2 of top 10 biggest security companies in the world) AVG (NYSE: AVG, market cap: $1B), Avast (similar size to AVG) – AVG and AVAST in combination have a huge market share (btw: ESET is a Slovakian company), that makes for “Czechoslovakian” firms have 37,1% of global antivirus marketshare (see report below). We also had Cognitive Security, acquired by Cisco for an undisclosed sum
  • Gaming companies: Geewa (one of the TOP5 real-time social multiplayer gaming companies in the world), Madfinger Games (best 3D first person games on iOS),
  • SaaS companies: Socialbakers, Good Data, Zoom International, and many other smaller
  • In valuation only of these top companies, we are talking about several billion dollars worth of the TOP 10 companies.

I would thus make the bold statement, that it is my opinion that Prague’s tech companies are currently worth more than the top ones in Berlin. This is really not an analysis, this is my opinion of looking at the top companies and comparing them together. Berlin is quite hyped up (and maybe, its deserved, we are to see that), but Prague is not get the attention it really deserves.


Startup accelerators

Czech is really growing its startup accelerator scene: Startupyard (Global Accelerator Network), Node5, Starcube, also Wayra (starting in June). The benefit of these start-up accelerators is they are creating really good communities, and they are trying to attract global professionals to help out.

Few facts on Prague and Czech Republic you might not have known:

  • Skype has one of its developer centers in Prague, housing back-end, web apps, SkypeOut, SkypeIn, Callforwarding, and a few other things.
  • Do you know Red Hat (the Linux OS)? They have 700 guys in Czech Republic.
  • Huge companies host its development and product centers: IBM, Siemens, outsourcing companies Cleverlance, Ness Technologies, DHL
  • From the mentioned companies, AVAST and Zoom International are self-funded, still a very typical practice in Czech Republic, as the investors don’t have the trust of the local founders, and local founders need to be better educated about the process of funding.

Challenges for Prague

Prague has some great challenges ahead of itself. The availability of funding isn’t the best, the capital available locally is typically very “equity exhaustive” for the founders, not motivating founders to actually go for any capital. The other thing is, that of course making sure the tech talent isn’t sucked up by the big companies, but developers are motivated to join or start companies on their own. I think that Prague could really do with more good leaders of companies, leaders with both vision, and spirit to join people together and create huge projects.

If you are not from Prague, come and see it, we will be happy to give you a tour of our offices, and connect you with the right people – drop me a note on Twitter: @janrezab.

Small note: I am aware AVG has its development in Brno, and many innovations are coming also from Pilsen (Socialbakers including), but ultimately we all HQ in Prague.

Update: Nice article on Techcrunch written by Ciaran O’Leary (@ciaranoleary) from Earlybird on Berlin and its brewing scene. Berlin is going on this with volume, so Praguers – try harder! :)

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