[David Strom's Web Informant] July 29, 2013: A Letter from Budapest

David Strom david at strom.com
Mon Jul 29 06:19:08 EDT 2013

Web Informant, July 29, 2013: A Letter from Budapest

I spent this last week in Budapest, thanks to Balabit, a Hungarian
security software company, and fell in love with the city and its

Budapest has an interesting mix of old world charm and new age coding:
a vibrant startup scene that is just taking hold. I estimate that it
is four years or so behind where I see things in St. Louis. That isn't
a knock on their innovation or spirit, just more a comment on their
available support infrastructure. Hungary isn't completely in tune
with the notion of startups as economic development: there are crazy
laws on the books that don't encourage new businesses and seem to date
back to the Soviet era when full lifetime employment was the goal. But
that just means their startups are more determined to succeed. Call it
Silicon Goulash, perhaps?

Hungary has a fascinating and long history of innovation. Many of its
citizens were prominent mathematicians and physicists, including the
Intel founder Andy Grove and the grandfather of computing himself John
Von Neumann. The carburetor, the transformer, parts of the first
telephone exchange, the first synthetic vitamin, the modern CRT,
Rubik's cube and the ballpoint pen all came from the minds of

Speaking of the Soviet era, Hungary was also ahead of its time in
offering long-term asylum to political refugees. Cardinal József
Mindszenty was the leader of the Catholic Church who was imprisoned
and then lived in the US Embassy in Hungary for 15 years before being
allowed to flee in 1971.  Does this sound familiar?

I found Budapest a very walkable and livable city. It has hundreds of
outdoor cafes packing dozens of pedestrian streets; something that we
so desperately lack in the States. It has a terrific riverfront on the
Danube with bikeways galore and an island park in the middle of the
river that has my favorite water park ever. And speaking of water,
there are dozens if not hundreds of thermal baths that span centuries.
You can see why I enjoyed my time there so much.

Ostensibly, I was there on behalf of Balabit to meet with their
executives and see their products and story. The company is behind the
open source log aggregator syslog-NG and other security products, and
has been in business for more than a decade. But while I was there I
also met with other IT firms, including Electool.com, Graphisoft and
Metta.io, and also visited with Prezi.com.

Prezi, the alternative SaaS-based presentation delivery tool is one of
three software companies to have become an international success,
along with LogMeIn and UStream. The three of them originated in
Budapest and still have decent-sized development offices there.

Of the three, LogMeIn is a public company, while Prezi and UStream are
private. All three have attracted tens of millions of dollars in
A-list Silicon Valley venture funding. UStream and LogMeIn both have
several offices around the globe in addition to the ones in Budapest
and America.

The three firms got together to recently produce the well-attended
RAMP conference about how to scale up your software architecture,
bringing in experts from around the globe to Budapest.

And founders of the three firms have also put together their own
nonprofit called Bridge Budapest to offer fellowships and internships
at major software companies to Hungarians, and for the rest of us to
come to Budapest and intern at one of their companies.

While I have tried Prezi several times over the years it has been
around I never have been able to gain much traction with the tool.
Maybe it is just the way I work or my speaking style. But their
offices are an interesting twist on the typical tech startup
playground: they have recently moved into a Beaux-Arts building with
the top floor a former telephone equipment room. It is a fitting place
for a modern tech startup.

Tech isn't the only thing happening in Budapest. I met an agribusiness
manager one night. He just moved his family from the Midwest to
Budapest. His company does a lot of business in Eastern Europe and
Russia, and wanted a stable place to have an office. "To Western
Europe, we don't look all that stable a country," said another
entrepreneur to me. "But to the east, we look rock solid. It is a nice
position to be in." Hungary is in the EU but doesn't use the Euro: its
currency is the Forint, which sounds very Princess Bride-like charming
to me.

Budapest is also home to the Soros-backed Central European University.
It was the first on the continent to offer an American-style MBA
several years ago and now has a budding entrepreneurship program, a
business incubator and courses that seem quite current with promoting
startups and what one could find in the States.

Speaking of schools, if you know someone who is a CS/EE student and is
looking to study abroad, take a gander at the program that is offered
by the Aquincum Institute of Technology (and where Rubik himself

I asked several people about the tax situation in Hungary and got a
range of responses. One source told me, "Our tax and legal system is
so wonky," and complained that half of one's salary is taken in taxes.
Another source said while this is true, the tax rate is less than it
has been in recent years, so things are improving.

Here are some of the photos I took while in town:
Also please check out some of the links to the above activities and
post your own thoughts on my blog here:

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