In a world where startup ecosystems seem to make or break the success of new ventures, the contrast between Silicon Valley and Central and Eastern Europe (CEE) is striking. Today, we sit down with Georgi Koreli, a Stanford MBA graduate, CEO and Co-founder of Hinkal Protocol, and the creator of Silicon Valley Icons, a prominent tech community stemming from Stanford University. In this interview, we explore the significance of being immersed in the risk-taking culture of Silicon Valley and the challenges faced by startups attempting to enter the US market. Join us as Georgi Koreli sheds light on the Stanford Edge and the crucial factors that define success in the competitive world of innovation, both in Silicon Valley and Europe.
Michał M. Kozłowski: Georgi Koreli, thank you for joining me today to talk about your experiences in the Central and Eastern European (CEE) and Bay Area startup ecosystems. As someone familiar with both regions, I’m eager to compare their entrepreneurial strategies. Since you recently graduated from Stanford and haven’t worked in a corporate environment, how did you recognize a market need that your startup, Hinkal Protocol, could address?
Georgi Koreli: Thank you for inviting me, Michał. There are several methods to spot opportunities in the market. One approach is using domain expertise to identify problems in a traditional market and devise solutions. Another is concentrating on emerging technologies, such as climate, AI, or blockchain, where substantial investments are being made to create new industries. This method can be more difficult since you’re competing with many others to advance these technologies. However, being at Stanford provided me with an edge in comprehending and accessing cutting-edge technology.
Michał M. Kozłowski: So, you’re saying that you initially focus on the technology and only after developing it, you look for market gaps to fill?
Georgi Koreli: Yes, that’s correct. You start by examining the technology’s potential in future markets. In the case of blockchain, it’s financial rails, gaming, and other areas where digital scarcity is valuable. You then identify the necessary elements for blockchain to become widely adopted, such as privacy. If it isn’t already solved, you work on addressing it.
Michał M. Kozłowski: How do you bridge the gap between recognizing the potential application of a technology and creating a sustainable business based on it?
Georgi Koreli: I completed my MBA at Stanford, and the beauty of my degree was that we genuinely learned how to understand business models and network effects. We had exceptional professors from the business school teaching us. For our business model, we needed to meet several crucial criteria. We catered to both B2B and B2C markets, meaning that the more integrations we had, the higher the value of the platform. We made sure to provide what was valuable to our customers, which allowed us to charge fees for transactions. I believe that a successful business model is one that knows how to drive network effects and enhance the value for every customer with each additional customer. Once it meets these criteria, it’s worth developing.
The essential steps include initially concentrating on the technology and grasping its potential applications in the market. After that, identify the challenges or unresolved problems within that technology. Finally, develop a business around it.
Michał M. Kozłowski: Georgi, you mentioned that your MBA from Stanford helped you understand business models and how to build network effects. Do you believe this approach is unique to Stanford, or can it be replicated elsewhere?
Georgi Koreli: Stanford encourages risk-taking and entrepreneurship, and there’s so much capital here. It’s the ethos built around trying different things and figuring out what works best. So, I don’t think that Silicon Valley can be replicated anywhere else anytime soon. The difference is just too big. New capital comes in and mixes with the old capital, Stanford attracts the best talent in the world, and so on. It creates a network effect.
Michał M. Kozłowski: How crucial is it to be physically present in this environment? Can you forge relationships remotely, or do you need to be in Silicon Valley to meet people and create connections?
Georgi Koreli: I think it’s crucial to fully immerse yourself after coming here. Because if you take some Stanford remote programs, you have a couple of remote meetings, you are still in the ecosystem that you used to be before. You don’t change. What is important here, at least what was crucial for me, was to fully change myself right after I moved to the Bay Area, and just immerse myself in all this risk-taking, all these business models, people, professors, speakers. You start feeling, people call it “bubbles,” and a lot of people actually, at least in my class, they’re like, ‘Hey, I don’t want to be in the bubble anymore. I want to go to reality in New York’, or ‘I want to live a beautiful life in Europe’.
You know, people have all types of different priorities, but, I like this bubble because it creates such enormous opportunities. You can be a completely different person before, and suddenly you are a founder raising money, building cutting-edge tech, and hiring the best people in the world. So I personally think that being here is crucial.
In CEE, we don’t have enough capital, so the business models must be way better than those in Latin America.
Michał M. Kołowski: What do you find to be the biggest difference between this ecosystem you are in and ecosystems you know from the old continent?
Georgi Koreli: So I think the biggest difference here is: You are never left alone. I mean, whatever you do, you have support to embrace risks. And then you are always understood, so people welcome the risk-taking, they respect you, and they support you, while in Eastern Europe it’s most likely for people to judge you. People are not as welcoming to take risks because people used to do more traditional jobs and tend to keep a more stable environment. You have a job, you have a salary, and that’s what we respect. Here, the currency is found right in the whole Silicon Valley. You might think it’s like tech and tech workers, but that’s actually not true. So like the currency of the area is the founders.
Michał M. Kozłowski: I agree that founders are the driving force, as evidenced by simply looking at the winter batch of Y Combinator.
Michał M. Kozłowski: What do you think would be the most significant change that could be done in Central and Eastern Europe (CEE) startup ecosystems to help us move forward? We have brilliant tech people, but startup-wise, we’re lagging behind.
Georgi Koreli: We should think about what enables Latin America to be a good market. It’s a huge market population-wise, and it’s close to the US. A lot of people come from Latin America, making it easier to attract capital allocation there. In CEE, we don’t have enough capital, so the business models must be way better than those in Latin America.
Michał M. Kozłowski: So, are you saying that the smaller market size in CEE makes it harder to raise investments, or is it more about the limited investments available for startups in this region?
Georgi Koreli: That’s the point. We have less capital here, held by venture funds, and our market is quite small. Many US investors invest in Latin America because expansion there makes sense. In terms of organic growth and population, Latin America is the more attractive market. The CEE region is still somewhat underdeveloped.
Michał M. Kozłowski: Yes, Latin America is quite unified, with similar cultures, which makes it easier to expand across countries. In Europe, you essentially start from scratch in every single country. However, there are smaller countries, like Israel, that have very successful startups despite their small domestic markets.
Georgi Koreli: Israel focused on developing expertise in one market, specifically security startups. They have some of the best cryptographers, and their startups are considered top-notch in the field. When investors look at Israeli security startups, they see proof of legitimacy and quality. This focus on a particular niche is what smaller markets should aim for.
Michał M. Kozłowski: So, finding a niche and specializing in it is crucial for smaller markets?
Georgi Koreli: Exactly. It’s essential to define your specialty and understand where you can build something defensible compared to the rest of the world. For instance, Georgia is known for its wine and food, while Korea is renowned for gaming and blockchain. These markets should focus on areas with cutting-edge innovation or unique niches that stem from a brilliant idea or geographic advantage. By leveraging these strengths, they can build on their economy and move forward.
Join us for Part 2 of our conversation with Georgi Koreli as we continue to explore the role of entrepreneurial ecosystems, the impact of networking, and the strategies that can help startups in CEE and beyond succeed in the competitive world of innovation.