October 2018

This year dialoggers are examining the next day for Greece after debt crisis. Thessaloniki as an entrepreneurship hub and its role in the Balkans. A productive dialogue between young journalists from Greece and Germany.  Aristotelous Square. The Ancient Greek philosophy and the common European history unite Greek and German journalists. The Greek crisis had caused an anti-German frenzy on the one hand and the mischaracterization of Greeks as “lazy” on the other, which are now replaced by a partnership between both parts. Seven Greek and seven German young journalists explored the next day’s opportunities for Greece and Thessaloniki at the 7th Greek-German Journalists’ Workshop of dialoggers of the Konrad Adenauer Foundation in Thessaloniki.  Young entrepreneurship and start-ups The start-up community in Thessaloniki is making its first steps. The emergence of incubators for start-up businesses, such as the Alexander Innovation Zone or the OK!Thess ecosystem, provide opportunities for their development. ‘‘Twenty-three start-up groups in Thessaloniki are in the process of looking for funding, four are negotiating with buyers and five are already members of the Greek market. In total, they have received €300,000 in funding, which at the moment is very satisfactory for Thessaloniki’’, mentions Marinos Tzotzis from the Greek side.  Young people’s modern businesses that focus on electrification, job placement, cultural guided tours are trying to spark a new sense of optimism against the misery caused by the financial crisis. ‘‘In Greece things are changing at a very slow pace and failure has only a negative imprint, while it can be a springboard to something successful in the future. Operating costs are high for businesses and that is why some people do not even take the first step’’, points out the young Greek journalist. His opinion is also shared by his research associate, Vera Lohner: ‘‘It is inconceivable that there is no change in tax policy in Greece. The advance tax is in fact preventing young people from creating their own businesses’’, she says adding that ‘‘something else needs to be done, there are solutions.’’  The role of Thessaloniki in the Balkans A city that is not looking towards the South but towards the Balkans is perhaps an opportunity for Thessaloniki. Much has been written in the past as well as nowadays about its transformation into the metropolis of the Balkans. The lower tax rates in the neighbouring Balkan countries are relocating Greek businesses there and are hindering the growth potential. ‘‘There are comparative advantages in the city that can help it regain its role in the Balkans. To achieve this, all areas need to help: politics, education, entrepreneurship as well as citizens’’, stresses Sophocles Geroulis, one of the participants in the workshop of dialoggers. ‘‘I realized that the target was there. However, does its shift towards the Balkans mean turning its back on Europe?’’, wonders Marlene Brey speaking to Deutsche Welle. More Europe and deepening The work of young journalists took place in groups of two people. The sources they used were the same, but the final result is different and will be presented in detail in Greek as well as in German containing text and video in the next few days on the dialoggers blog. ‘‘You cannot explain what is really going on with the crisis through shortened and simplified news, it takes time and analysis is needed. This is not what was happening in the media in the past few years and this has exacerbated the relations between Greece and Germany’’, says Jochen Markett, editor-in-chief of the workshop on the German side. The collaboration of journalists is perhaps more necessary than ever. ‘‘We need cooperation, especially on complex issues that are about to separate Europe. In my opinion, we need to establish a European newsroom’’, thinks Elina Makri, who was the editor-in-chief on the Greek side. Dialogue, research and collaborations are therefore what is required by us to better inform the citizens.  Diogenis Dimitrakopoulos, Thessaloniki

Altair’s example answers why Greece has never manufactured cars. What was it that the Americans saw and… landed in Thessaloniki.

If someone was looking for answers and was constantly expressing his discontent over Greece’s failure to develop heavy industry and manufacture cars, a company based in both Thessaloniki and 49 other countries in the world is the most convincing answer. The reason is that this company proves that when a country does not have a heavy industry, it can develop research and staff to become indispensable in heavy industry on a global scale.

The arrival of Altair, which is of American interests, a few years ago in Thessaloniki and the Balkan Center, was accompanied by a number of critical remarks, which, among other things, were questioning this choice. Typical is the example of one of the company executives from America, who was afraid that he was in danger of being kidnapped upon his arrival in Thessaloniki. The reality, however, was completely different to his first impression for the city of Thessaloniki as well as for Greece more broadly.

‘‘We decided to choose a specialist to come to Greece for a year and train our staff. Once he arrived in Greece, he believed that he was in danger of being kidnapped or mugged.The defamation that Greece was receiving was similar to Cambodia or Mexico according to him. He had a change of mind when he saw that everything was rumours told by people that had never visited our country. Within six months he decided to settle permanently in Greece, selling his house in America. He now intends to invest in real estate as well as in other sectors’’

‘‘Everyone thought we were mad when we said that we would settle in Thessaloniki’’

As the Altair’s Chief of Technology, Lazaros Tsioraklidis, has told Voria.gr, ‘‘when Altair announced that it was investing in Thessaloniki six years ago, the US businesses considered us to be crazy for investing in this particular city. Today, US companies with a turnover of more than $ 1 billion annually have directed their attention here, realising that they have lost six years of opportunities and investment in Greece’’.

‘‘As executives of Altair, we have been noticing for many years that a number of Greek engineers and computer programmers are employed by our customers in key positions. We have visited automotive industries and seen many Greek employees. When you see highly skilled people coming from a non-industrial country like Greece, it means that not only do the Greeks emigrate but also have a way to become indispensable in the countries where they are settled. They are well-trained because of Greece’s system. A Greek is examined in all classes of high school to obtain his diploma, thus is constantly tested. Altair has observed that Greece’s workforce had considerable specialization. Given that I also had business experience in the country by already having another company in Thessaloniki, we made the decision to start a business here. All the advisers that we turned to, were arguing that we are heading towards destruction for sure. However, amid the financial crisis, in 2011, we chose to take the first step and disprove everyone’’.

The decision to settle in Thessaloniki, which has shown significant activity in recent years, was a right choice. It is the city where the Alexander Innovation Zone is being developed, hosting innovative businesses, each in its field.

Special software production for large industries

Its scope is related to the production of special software. What the executives of the parent company perceived and chose to come to Greece was the fact that our country has scientific personnel of recognized value and training so that it can expand its research activity. Altair found in Greece the cradle of scientists who take the decision to go abroad to work having completed their studies.

‘‘They once asked the founder and CEO of Altair what it is exactly that we are doing. I also found out myself that when I was assigned to give a presentation on the activities of the company, it would take a lot of time to explain what it is exactly that we are doing, since we are a company with a multidimensional strategy and occupational areas. Our main field of activity is computational engineering, based on cloud or on fluid engineering. Moreover, we deal with cloud computing, optimization engines as well as optimisation through which we hold a leading position in the technology market. Our solutions are chosen by companies that can be found on the Map of Global 500+’’, says Mr. Tsioraklidis. For instance, Altair cooperates with most of the major automotive industries that design and seek to optimise the chassis of their cars and the strain they receive.  Altair is also present in medical technology, providing software, but is also present in companies that calculate electromagnetic radiation as well as in agricultural technology companies.  Listed on Nasdaq Since October, Altair has been listed on the Nasdaq Stock Market.  The acquisition of Solid Iris Apart from Thessaloniki, it is also based in Athens through the former Solid Iris Technologies, which produces photorealistic software. ‘‘It was a very small company, when we spotted it. We liked a lot what it did, while it consists of highly skilled scientists. Now its software is available all over the world via Altair’’.  Networking Start-up Companies Altair’s vision, which is particularly gratifying for Lazaros Tsioraklidis personally, as he admits himself, is the cooperation with innovative start-up companies. ‘‘In this context, we are implementing a programme called Startup program. Small start-up companies can be integrated in this programme to network through Altair globally and sell their software. Fieldscale has already joined the programme, from Thessaloniki, distributing its products all over the world. Our goal is to give the opportunity to young people that were considering migrating abroad, to globalise their ideas and stay in Greece’’. As he says himself, Altair is discussing possible partnerships with several businesses through the Startup program. ‘‘Our goal is not to overshadow these businesses. Our philosophy is based on American standards. Therefore, we believe that it is preferable to work with a small company than to overshadow it. Do not forget that Google is currently working with more than 200 innovative companies without demanding to acquire them. On the contrary, the common belief that prevails in Greece is that someone needs to be trapped in a large enterprise, otherwise he is not accepted’’.  The role of the state in Greece Regarding the role of statism in Greece, he mentions that Altair was confronted with it several times during its presence in Greece. ‘‘I had proposed to Greek universities to cooperate with us in the field of research and technology. The only department that accepted the proposal belongs to the Aristotle University of Thessaloniki and its professor is of American standards and ideologies, having a lot in common with us. At the moment, the development of one of the major solvers belonging to Altair’s portfolio is being created in the Dynamics Laboratory of the Aristotle University headed by Sotiris Natsiavas. At the same time, we run three research programmes and we intend to increase them in the future’’. Targeting new acquisitions and funding With regard to Altair’s next steps in Greece, the company is also considering new acquisitions and the financing of small companies. ‘‘We are in discussions with businesses wishing to join Altair. We are also constantly testing new technologies aiming at our further development in the country’’. Why Greece does not need to manufacture cars Finally, commenting on the fact that Greece has never developed heavy industry, Mr Tsioraklidis is clear: ‘‘One of my teachers used to tell me that we would not all become scientists in Greece. This is the truth. Greece has no reason to manufacture cars. And indeed, the number one company in car manufacturing per capita is not Germany, as you may think, but Slovakia. The reason is not related to intelligence, but to the lack of infrastructure, including logistics. One cannot transfer a car from Greece to England. Transport costs may, in many cases, exceed the profit earned by the manufacturing plant from each car. Moreover, the reasons are also environmental, but they are related to the existence of suppliers as well. All suppliers should be at a reasonable mileage from the manufacturing plant. For example, the supplier of tires, plastic, seats cannot be at a distance of hundreds of miles from the factory. Thus, I repeat that we really do not have to manufacture cars in Greece. Our country could export technology like Estonia and Israel, creating technology parks. Greece has the scientists, who are now part of some of the largest automotive industries. It could as well make good use of the workforce by creating infrastructure for research and development and by selling know-how and innovation globally’’. Altair in numbers Over 5,000 customers worldwide Turnover: EUR 400 million Personnel internationally: around 3,000 people 2,000 scientists 500 people administrative staff 500 people for support services Presence in 50 states with 70 offices Personnel in Greece 20 people in Greece 9 in Thessaloniki Its main customers AirbusVolkswagen Porsche Opel Ford Toyota Honda Nissan.

In the midst of crisis, the tourism industry has done well, as we all know, as well as some export-oriented manufacturers, which are known to those who follow the financial press. Yet few people know that information technology products and services have also grown a lot. Statistical data shows an increase in employment in software and electronic equipment from 18,000 workers in 2013 to 28,000 in 2017 (+ 55%). The increase is much higher than that of total employment in Greece (+6%) as well as much higher than that of total employment in corresponding sectors across the EU (+13%).

Growth was not mainly driven by local companies that create their own products, produce on their premises and sell with their own salesforce, as is the case in other industries. New employment in information technology is more as part of international production chains for businesses based elsewhere. I have noticed six models for the expansion of the sector.

First, businesses that are founded here and grow on the basis of innovation or the quality of their product. These are the better known cases. Some are startups, i.e. they have a fast-growth business model with an innovative and standardized product that can be made available internationally. Others have grown gradually but steadily, starting before the crisis, and continuing afterwards.

Second, local companies of the first category, acquired by large international companies, whose new owners increase employment in the Greek unit because they believe that it has a good quality of technical know-how with a competitive cost. Third, multinationals or smaller foreign companies that have decided to establish a product development or customer service center in Greece for the international market. In some cases, these centers employ hundreds of highly qualified workers. Fourth, local companies that provide product development services for foreign customers from developed countries, with comparatively low cost and good quality (outsourcing). Fifth, spin-offs of the local companies of the previous category, with a specialized offering, that are sold by the parent company to leading global players.

Finally, there are many engineers that work from home for clients in the US or Europe. Many work full-time for one employer. Some of them manage teams that are scattered across three continents. Others are freelancers who serve two or three customers in parallel. Hours are flexible for some, while for others hours are defined by the customer, which means that they work at night.

The sector is booming because of it is outward-looking and not dependent on domestic consumption. Because it does not need special facilities that require permits, it only needs office buildings, and and in some cases not even that. Because it does not require a large initial investment in equipment and infrastructure, but invests only in people, who are recruited gradually. Because Greek tax on profits does not matter if your headquarters and sales are out of the country. Because there are still quite a few young people who have strived hard to get educated more than what the ordinary degree of a public university requires them to do, and want to stay here. Because of the good quality of life in beautiful Greece if one has a decent salary and does not have a big family.

This model of light investment with good salaries could become a major pillar of the economy if three things change: the excessive taxation on incomes exceeding 30,000 per year, which drives away the most skilled employees. The situation in schools, which drives away those who want good education for their children. And the situation in universities, which drives away professors and researchers.

Two ministries, three laws and five years of persistent implementation can make a big difference.

*Mr. Aristos Doxiadis is partner in Big Pi Ventures, a fund for technology startups in Greece.

In recent years, Thessaloniki’s imprint on the global innovation map is becoming stronger and stronger. We estimate –along with the precariousness due to the lack of systematic reliable recording of relevant official indicators – that over the last three years about 1000 jobs have been created in innovative enterprises from foreign direct investment in the city.If one combines this fact with the parallel development of domestic start-up companies as well as scale up companies, comes to the conclusion that there is an undergoing peaceful revolution in Thessaloniki quietly and away from the spotlight that is creating a new working reality and unprecedented dynamics in its economy. This is first perceived by the entrepreneurs and the human resources managers of the technology companies in the city who are increasingly complaining lately that they cannot find available personnel. In other words, we are noticing a sector with negative unemployment when the total unemployment rates,both nationally and in Central Macedonia,have remained above 20% over ten years now. There are of course two other factors that contribute to this; many young scientists choose to work freelance or move to another country.

Even so, what is a given is that there is an atmosphere of optimism and creativity that is directly perceived by those who move to specific parts of the city where innovative enterprises are concentrated, mainly on the eastern side of the city, where the Thessaloniki Innovation Zone has been delimited. This is not incidental at all along with the fact that the boom in foreign direct investment in innovation businesses began to appear a year after the city’s branding initiative under the general title “Thessaloniki Innovation Friendly Destination”, which the Alexander Innovation Zone in cooperation with the Municipality and business and research institutions undertook. How do we convince them all to come here? Yes, we have a very good quality of human resources, but it is not enough, since it can be found elsewhere as well. Labor costs are indeed still competitive compared to other Western European and North American countries, but they are more competitive elsewhere.

What is there that cannot be found elsewhere? First of all, there is a wonderful environment to experience and I refer to both the climate and the community.The city is as big as it should be so you do not get bored and as small as it needs to be so as not to get lost, as much international as you need to be able to integrate, and as much as Greek to have colour. Secondly, our fellow citizens have a very good knowledge of foreign languages. This may sound insubstantial or self-evident, but it is extremely important, because it is scarce on an international scope. Thirdly, we have been successful in business innovations that impress when showcased especially in the niche market where we are world leaders, such as simulation software for the automotive industry or building materials. Finally, very important is the fact that there are Greeks everywhere, Greeks who grew up and / or studied in Thessaloniki,who are in positions of responsibility or co-decide development initiatives for the corporations they work for and who do not have to be convinced of our worth because they already know. This is the most direct and practical example I know of BrainDrain’s famous transformation into BrainGain. What do we have to do from now on to reinforce this trend of foreign and domestic investment already recorded? I think the answer is easy and obvious.

The first thing we need to do is to further strengthen our comparative advantages. For example, regarding the affair of the environment, we have worked out a plan in cooperation with the Municipalities of Thermi and Pylea – Chortiatis for the regeneration of the Thessaloniki Innovation Zone, which will make it comparable to the top international examples we have studied (mainly referred to BostonInnovationDistrict and Barcelona@22 which have been analysed in the strategic development of the Innovation Zone presented by AIZ last spring) and which we are expecting the Region of Central Macedonia to adopt. Another example is the initiative we have taken to develop the Agri-food Digital Innovation Hub in the first Pocket of Innovation of the Alexander Innovation Zone. The primary sector and its processing besides being the first priority in the region’s smart specialization strategy can be another area that we will excel at, since it has a tremendous potential for improvement by introducing innovation in its processes, productivity per acre, product quality and the selling price, among others.

The second thing we need to do is to build on the initial success and to continue with greater intensity and confidence. For this reason, the next initiative of the Alexander Innovation Zone will be called ‘‘Move toThessaloniki’’ through which we will invite the creative people of innovation to move to Thessaloniki where they will find work that will inspire them in an environment that encourages them. It is a point of reference that innovation is for the first time a central theme in the Thessaloniki International Fair (TIF) and that the honoured country is the US. All the available data show that with elementary moves to encourage entrepreneurship, as for example some of the main motives of the list we have processed and presented, we will witness an investment boom focusing on innovation in Thessaloniki in the coming years. I am convinced that we will be talking about this with enthusiasm in the next International Fairs of Thessaloniki to come.