Hungarian attendees seemed more pessimistic than I did about what we saw this week at BarCamp Budapest, at least according to my random sample of conversation. I enjoyed thoroughly being one of the only foreigners at hand, along with TechCrunch Europe editor, Mike Butcher and a handful of presenters. The best English-language tweet of the day came from Julia Krysztofiak-Szopa (AdTaily).
with all due respect for the #barcamp #budapest speakers – powerpoint presentation suicide & u don’t have to speak magyarul to notice it.
The truth is I hardly watched any of the presentations, except to occasionally poke my head in the door. I had been lead to believe that at BarCamp, the audience is the content, and so I used this as my excuse to largely ignore the prepared program and talk with people about what’s currently happening in the Hungarian online market.
Everybody’s heard about Jeremie, and several people I met had a business idea in their back pocket. The ad recession hit hard last year, and revenues are down across the board. One local media agency, Arcus, recently imploded. I have the impression that a good number of talented people are knocking around for opportunities.
It’s understandable why Hungarians might be pessimistic (this is after all their nature), but with €160M in venture capital available over the next four years, 2010 feels like a good time to start a company. It’s also a good time for a startup competition, and I’ll write about this one a little further down the page. First I’ll share a few impressions about this market.
Conversations in the foyer
One of the first people I ran into was Gábor Gerényi, who had recently left Index (where he was a co-founder and director of content) to join Mandiner, a blog publication which styles itself along the lines of the HuffPo. He believes he can take on Hungary’s bigger portals with his lower cost base, which surely says something about the state of affairs over at Index.
I also met István Türk, an SEO specialist at Kirowski and SEO blogger. He says local demand is growing for more sophisticated search services, including landing page optimization and keyword campaign management.
Downward pressure on ad budgets is driving the demand for search, and several competitors are ramping up. This is good news for data-driven e-commerce businesses, of which Hungary has a good handful. This development is about four or five years behind the US and UK markets, but that also means the best practices are well established.
Social media was a buzzword at BarCamp, but I saw little evidence that significant budgets are moving toward this sector in Hungary. This is not surprising, given that the model is still new, and best practices, scant. Despite the broad popularity of Hungary’s local champion, IWIW (or perhaps because of it) the local social media audience is unsophisticated and relatively small.
IWIW’s most popular application, Egymas Szemében, has attracted 1.5m users, but no significant revenues. The younger Hungarians I shared lunch with agreed that more sophisticated local users (such as themselves) now prefer Facebook. We also agreed the IWIW user interface is just …well, ugly. IWIW seems to want to take on Facebook, but they’re focusing on technology (e.g. applications) rather than user experience (interface). Too bad.
I met one young developer, Benedek Tóth, who has developed a popular Hungarian language Twitter mashup, Turulcsirip. He’s attracted a couple ten thousand users and apparently covers his costs, although I can’t quite see how. (Granted, his costs must be small and I admire his enthusiasm.)
Magyar Telekom has been talking about innovation lately. Unfortunately, I arrived too late to see MT CEO Chris Mattheisen’s presentation, which was apparently well received. Gábor Pukler, head of innovation and business development, was at hand with his latest product, a home security package which is apparently being tested in Szolnok as part of MT’s T-City project. Kitchen Budapest’s new co-CEO, Barnabas Malnay, was also poking around the conference.
The startup competition
You can read all about the six startup finalists on this page, but only if you read Hungarian. Oddly enough, each of the three winners at BarCamp have some kind of international ambition.
The day’s winner, Pocket Guide, is a product that might best be described as a Garmin device for pedestrian tourists. Those around me agreed the Pocket Guide presentation was, indeed, professional and compelling. (I was upstairs at the time watching a presentation by Hungary’s porn king, Kovi and Machomedia. What can I say? These guys have revenues.)
The second prize went to Otthonrol, an innovative service which aggregates remote labor (e.g. part-timers, housewives, the disabled) for ‘micro-tasks’ such as transcribing recorded text or conducting telephone surveys. The closest familiar model is Amazon’s Mechanical Turk. Otthonrol already has some 7,000 workers at hand, the service is generating revenue, and the owners are seeking capital to grow their service and expand outside of Hungary.
The third prize went to Joszaki, which might translate as ‘good handyman.’ As in most of Europe, finding a good electrician or plumber can be a nightmare in Hungary. Joszaki is an IWIW application that enables its users to rate and recommend these service providers. The concept is not unique, but with strong execution it might also have a chance.
Any conclusions?
With €160M in seed funding chasing good projects, things could heat up online in Hungary. Ten years after the dotcom boom, there’s a new generation of young entrepreneurs, the software tools are cheaper, the local web audience is larger and business models (for the most part) are better defined.
Having said that, the Jeremie money isn’t specifically earmarked for online. Web entrepreneurs are competing against renewable energy deals, as well as more traditional businesses – many with proven products and working revenue streams. Many local investors still have little experience with online deals.
The Jeremie funds are still in startup mode, and the first few deals might be closed by the Summer. It’s still too early to begin drawing any conclusions about these funds, their preferences or your chances. Execution is key, which means building a good team. A clear concept helps (what problem does your business solve?) and proven revenues are even better. Finally, you need to be able to communicate your proposition. More on that topic in a future update.
