A number of Croatian IT companies have been enjoying international success of late. Gaming company Nanobit sold back in December for 148 million euros, whilst agency Five was acquired for $40 million earlier this month. There have also been large investments made in a number of other companies.
Another Croatian softwear firm which has come on the radar is Agency04 who are one of the fastest-growing IT companies in Central Europe and the EMEA region.
With over 100 employees, Agency04 generates over 80% of its income from clients outside of Croatia in countries like Germany, Switzerland, Austria, and the USA.
We caught up with one of the founders, Roko Roić to find out more.
When did Agency04 start, who started it and how did it start?
The Agency04 was started in 2014 by seasoned industry veterans, Domagoj Madunić and myself. When we started there was a small start with just three employees and our sale strategy was based on our previously gained network based on trust in our personal delivery. From there we grew quite fast, we were expecting to be a company of 20 people in the long run but we reached that number in the first year.
What are all the services you offer and has it changed since starting?
We are a full-service digital agency, meaning that we develop complete digital solutions for our partners from ideation to delivery and managed cloud services. This is our current positions but as we grow we pivoted our strategy a lot, we started off as a company that was focusing on Java development mostly in Croatia, after the first year we internationalized our strategy, and from there on Croatia as a market has become a relative minority in our revenue, and currently it is down to 10%.
Most of our work comes out of the United States and Western Europe. As our origins were based on Java technology, soon enough we discovered that as a full-service digital agency we need to provide a wider range of services and now our services include user experience, coaching, design, mobile development, web development, backend systems, etc.
The company is one of the fastest-growing IT companies in Central Europe and the EMEA region. What do you think was key to achieving that?
I believe it comes down to our approach to clients as we approach every client as a premium business partner and also now our delivery capacity.
We hire only the best engineers and try to tune our processes of delivery as much as possible which all comes down to the fact that we have never failed to deliver the project and that is basically what counts in our industry. Our fast growth was strongly felt by recommendations based on our successful projects and our sale strategy is still based on delivering first and then the case studies will help you so.
In recent years we have opened up to several new markets and now we have an office in Germany and the VP for the German market, Mr. Davor Basic, with more than 30 years of professional experience as a Business Agility Coach, Transformation Consultant, and Agile Service Manager.
Also, we are happy because we are based in Croatia. Approximately 35.000 developers are based in Croatia, and their number has been growing no less than 19% yearly. Among EU Member States, Croatia had the highest share of individuals aged 16 to 24 with basic or above basic overall digital skills, 97% of them. Followed by Estonia, Lithuania, and the Netherlands (all three 93%).
According to the latest Eurostat data, Croatian employees in the ICT sector will give you the best value for your money, not only in relation to its direct Central/Eastern European competition but also in most of Europe. Beaten by only two nations, such as Ireland, and only slightly by the United Kingdom.
A great majority of developers and engineers speak English fluently, and a considerable number of them are familiar with German. Great communication between stakeholders is emphasized and put in the front as one of the main pillars of building a trustful, and hence a fruitful partnership.
As a part of the EU, Croatia has the same laws and tax policy as other EU countries. Croatia is Central European Standard Time, just like the majority of other European countries, and around 2 to 4 hours of flight away from most of the other European capitals like Berlin, Zurich, London, Amsterdam, or Rome.
Agency04 has already won a number of awards?
We have received the Deloitte Awards as the Technology Fast 50 in Central Europe in 2019 and Technology Fast 500 EMEA 2020. We were also the finalist for the Croatian Golden Kuna award and our product Spotsie has been picked as one of the best startups at the Central European Startup Awards and won the Nikola Tesla Innovation Award for hi-tech innovation by the Ruđer Bošković Institute.
Our biggest award is the trust our employees are giving us, our retention rate is around 11% and it is way below the industry standard and of course, the new employees coming in, and in the past 3 months 30 new people got onto the Agency04 ship and we are sure 2021 will be a great ride.
How do your international clients hear about you?
As I previously said our clients are our best ambassadors. We are happy that we can talk about our long-term partnerships with clients like Strabag, Digital.ai, Iskon, Atrify, Elca, Namics, Erste Bank, Raiffeisen Bank, Photomath, A1, and more. Our clients appreciate our premium approach and innovative services, and when you have satisfied clients new opportunities are coming in every day.
Other than that our digital channels are always available and approachable to potential clients, we are seeing a lot of inbound requests from our clients through our digital channels.
You employ over 100 people today, where are they mainly from?
First, we started with only 3 people in Zagreb, and now there are more than 100 people all over Croatia. A large majority of them are still in Zagreb but considering the circumstances of the current epidemical situation, we are seeing a lot of remote work. From January 2021 we are also present on the German market through our representative office in Germany. We are also present in other Croatian cities with offices, such as Split and we are planing new offices in 2021. Most of our employees originate from Croatia but we do have people that have relocated to Croatia to work for us.
How has 2020 and the pandemic been for your business?
The pandemic itself promoted a switch in our working process towards more remote work, but the pandemic itself was not the major driver of change, it was the lockdowns that were initiated in most of the countries. The first lockdown in March of 2020 was stressful and a lot of our clients were hit really hard as their business is not digital.
We took proactive strategy and talk to all of our clients on day one, offered our complete flexibility in what we can do to help them, and with this we have strengthened our emotional as well as business connections with them. Luckily, all of our clients, not only survived, but continued at least on the same level after the lockdown was lifted.
But somewhere in early Autumn, another shift was emerging, the extremely fast-paced of new digital transformation started, we started seeing enormous interest from new and existing clients. All in all, when we sum up 2020, we are seeing that in the end, it was a year of fast growth and signal to even faster growth in 2021, mostly because a lot of traditional businesses are now seeing opportunities of going digital.
In December 2020 we made a brand refreshment, the new colors adorn the codes of Agency04. Mint is our color of choice — a refreshing and inviting color that succeeds the old magenta note. We also published a new website which lays focus on the two of our most valuable protagonists — our people and our partners and clients. So, if we need to draw a conclusion from all of the above, we can say it was a pretty good year for Agency04 and our people.
How is it to do business from Croatia, what would you like to see a change in Croatia to help entrepreneurs and businesses?
Croatia’s education system has a strong engineering and mathematical history and we are seeing a lot of bright young kids coming out of schools as a potential for our growth.
We would like to see more adjustments in higher educations systems which could be a little faster in adapting to the changes in the technological industries, but we are trying to fill that space with our own educational modules such as Summer Schools.
It is normal that all entrepreneurs tend to promote lower taxation and of course we would like to see lower taxation on salaries in Croatia, which we believe, is something that the Croatian government has in its long-term strategy.
Other than that, Croatia has a lot of advantages, we are culturally really close to the Western European mentality, we are geographically really close and our airports provide a lot of direct flights because we are a tourist-based economy. Also as a side effect of being a tourism-based economy, most Croatian speak perfect English which is a large incentive for us as we work mostly on the global market.
You are moving into a new office – where is it and what are the plans for the future and expansion?
As I mentioned we have a new office in the Zagreb center, with 5 floors and more than 1,200 square meters of space. And as we are growing very fast, we are also looking for new offices in Croatia. The next office will be in Split, it’s interesting for us because of the growing IT community in and around the city.
While most of our operations are held within the DACH and Benelux region, our next goal is to expand to the USA market. Having experience working with USA partners and having people that are up for the task, our USA steps should be manageable.
You also have a Summer School program
Agency04’s Summer School program is one of the biggest and most exciting projects in our house. The idea is to educate young people/students about Java and work on real cases. Our technology-driven approach helps them strengthen their coding skills and our best engineers will mentor through the whole process, sharing their know-how and best practices. In no time, they will be delivering complex Java solutions with Spring Boot.
Participants are working a 5-week sprint with our best developers, gaining practical knowledge and preparing for the greatest test of them all – The Agency04 Hackathon. Taking place for 2 days at the end of our education plan, they will have the opportunity to showcase the skills they have gathered over the last few weeks.
Winners get the prize in the form of a cool gadget, and all participants receive a diploma. Also, some of them are employed by Agency04, making them step up their game and hit that learning curve. In last year’s Summer School edition there were 1.091 applicants, and the year before 582. The growing interest for our Summer School program among the tech community is rising every year, and we enjoy every step of it.
You also launched an IoT product line Spotsie
Spotsie is an IoT product line that we financed and developed, and it is now a separate business entity receiving a lot of traction from the energy sector. We have started with the serious project of delivering IoT network and positioning systems in oil refineries and we are looking to be one of the leaders in the digital transformation of the oil industry with this product line.