Conversations around the global startup scene tend to focus on western Europe or, more likely, emerging markets in Asia and Africa. When it comes to the up-and-coming startup ecosystems, the emerging markets are considered to be the hottest, most promising, and the most innovative.
But the world is a big place. And the pressing need for game-changing innovation and a revitalization in economies by way of building thriving startup ecosystems (the companies of tomorrow), is by no means limited to Silicon Valley or the handful of countries the business press tends to focus on. It’s literally everywhere.
When you think of thriving, promising startup ecosystems, Austria may not come to mind but, if the following interview by Monocle‘s Alexei Korolyov (@alexeikorolyov) with some of Vienna’s most promising entrepreneurs is any indication, you might be hearing about Ausria’s growing startup scene more often. Take a look at this list of Austria’s top startups by Startup Ranking and their music startups, and it’s easy to see why VCs are keeping a close eye on this part of the world.
Writer Alison Coleman (@alisonbcoleman) notes in a recent Forbes article on Austria’s startup ecosystem (Scaling Alpine Heights: Austria’s Startup Scene) that, while Austria is most certainly experiencing an “entrepreneurial renaissance,” startup founders still face stiff challenges that hinder growth: “It isn’t only the fortuitous return of seasoned start-up founders that has ignited Austria’s entrepreneurial spark. There are other significant factors, for example, access to talent is considerably easier here than in other start-up hotspots in Europe and US, and still comparably affordable. But starting a business in Austria is not without challenges. It is still quite costly and to a degree, start-up-unfriendly; although there are some political initiatives to adapt current law to modern day requirements, the wheels of Viennese bureaucracy turn slowly. Labour costs are also high, due to payroll-taxes and health insurance costs, but perhaps the biggest issue for entrepreneurs is a lack of real tax incentives for start-ups and start-up investors.”
Austrian entrepreneurs aren’t just keeping hope alive, their finding creative ways to innovate, to grow companies, and to reinvent how Austrians think about “business-as-usual.” Check out Alexei Korolyov’s interview below (and download the full podcast episode #170 HERE).
“Just like elsewhere in Europe, manufacturing in Austria has long been in decline, as established brands struggle to adjust to new market realities and lose their customers to cheaper international producers. Well, today, signs of revival. A smattering of new businesses have popped up that choose to manufacture on home soil, taking full advantage of eCommerce, social media, and EU Free Trade rules.”
Alexei: You might not associate Vienna’s grand imperial buildings and traditional trams with buzzy Internet trade, but this view is misleading. According to Eurostat data, Austrians are among the biggest spenders in online shopping in Europe. And it’s not just big international retailers such as Amazon or eBay that make up the statistics. Some of this new-found buzz is being generated by a brand new Austrian platform called FROMAUSTRIA (@_fromaustria). Launched a little over a year ago, it makes a point of selling only Austrian-made merchandise. It’s run by two successful entrepreneurs, Zissa Grabner and Alexandra von Quadt, who told me how they went about setting it up.
Zissa: Hi, I’m Zissa Grabner. Alex and I have been friends for almost 20 years now. Two years ago, we sat together and were like, “Okay, we want to establish something that is our own.” So we locked ourselves in, in the mountains, for a whole weekend, and we were brainstorming.
Alexandra: We had a very strict idea or strong idea of how it should look like and how it should work. That’s also why we started really fast. We started thinking about what we’re doing in November 2012, and we went online in end of May 2013 with 250 products by, I think, 25 different suppliers.
Alexei: The list has since grown to over 170 producers, making everything from food, to cosmetics, to clothing. Some of these producers are very young and green. And some are established brands that have been there for decades, sometimes centuries.
Alexandra: I always say, “We’re selling things that nobody knows and nobody’s looking for.” So we have to make them more emotional. We have to make them sexy. We have to tell a story. That’s easy because we have so many products that have great stories. We have so many companies that have been in the family for seven generations.
Alexei: Can you give an example of that?
Alexandra: For instance, we’re selling leather goods by a company called Scheer and Sons. They were the supplier of the emperors in Austria. They were making their shoes. And we’re not selling their shoes. Their shoes are about €5,000, and they’re only made to measure. So, obviously, online that won’t work, but they’re now establishing beautiful leather accessories such as iPhone cases and belts and jewelry leather. And they are still manufacturing their shoes in the house they used to make them 300 years ago.
Zissa: What we were able to create and establish is a surrounding that not only does it say, “Okay, you are from Austria.” But it also says, quality, emotions. Everything is very personal. And this friendly surrounding that we create is actually one of the main reasons why suppliers want to work with us, because nobody else does that.
Alexandra: And we talk to them personally, especially when it comes to traditional brands. They have their certain customers, but either their customer group is dying away because they’re getting old. Or, on the other hand, they don’t have the know-how and the ability to access new customers. And that’s exactly where we come in.
Alexei: One of the younger companies that is benefiting from this personal touch is Mostlikely, a Vienna-based architecture and design agency that uses FROMAUSTRIA to market its unique muzzle-shaped lampshades and jewelry. Bjorg Gundlist is one of the founders.
Bjorg: The first thing was a design for a mask for a theater play, and it got rejected by the theater crew. And the mask was just lying around in our office, and after a while we cut the hole in the top and had the idea to make a lampshade out of it. And this worked out very fine. We start at fairs. People are going crazy about it, and so we started doing more designs and more and more designs. And all of the lampshades, they turned like liberation with companies like Argot, and Baudselain, and Mühlbauer hat manufacturer. And also our jewelry series. The lampshades, it’s just a construction set. We only print out the paper, and so we stay very affordable. And the customer has to cut out, fold and glue together the construction set.
Alexei: Bjorg Gundlist says that while he does feel a part of some larger movement, he is all too aware of the problems surrounding it.
Bjorg: It’s very easy right now to found a company and to sell. On the other side, it’s very complicated as a small company like us getting contracts or getting jobs. We have to say that our product — we found it by luck. We realized that we can do more of these things. And what we try to do is produce affordable products in Europe.
Alexei: Now, on to another producer manufacturing in Vienna and marketing through FROMAUSTRIA.
Alexander: My name is Alexander Dorsky and I am from the Skoda Novena Hearst in Vienna, a kind of design label for souvenirs and gifts. And I do this with my colleague, Anka Yanera. We came together a few years before as two graphic designers from the University of Applied Arts. And our main starting point is this legend, this myth of Das Goldene Wiener Herz. This Golden Viennese Heart legend has not only a charming and cozy meaning, it’s, as well, deep, black, and mean. All this ambivalence is part of Vienna. So, for example, there is a record title of Hans Moser–he was a famous actor and Viennese folk song singer–called the Golden Viennese Heart or even a title of a social criticism publication in 1905. So you see, this can be very positive. It can be very mean and black as well.
Alexei: And back to Zissa Grabner and Alexandra von Quadt at FROMAUSTRIA for a final question. Do they feel like pioneers? After all, they do seem to be heralding, if not a wholesale revival, but certainly a gradual reawakening of Austrian manufacturing.
Zissa: It’s not easy to sell something that nobody knows. With products or something from Austria, people probably know a few things like Manufriten. They know Mutsa, they know Klimt, they know Schiller, they know Empress Elisabeth.
Alexandra: And the thing is that Austria has a very dusted image. Things just progress very slowly, and we’re like, “Okay. There’s so much more to Austria than Zapata, the Cecekin den Schiller. And we wanted to make it public that there’s so much more and, on the other hand, there are so many great inventions from Austria and so many things that initiated in Austria. And we wanted to make that public as well — to show people, this is made in Austria. You think this is from the States or from Germany or whatever. It’s like, no, this is Austrian.