When John Hazlewood told one of his advisors he was planning to
hire a team of Bulgarians to build and operate his online travel
company, the advisor thought he'd lost it, according to
Hazlewood. Today, with TheStoreMaker.com up and running, Hazlewood is
proving that basing his high-tech business in Bulgaria makes sense.
The small country, located near Romania with access to the Black
Sea, has a tradition of high-tech skills dating back to when it was
a communist nation.
"During communist times, Bulgaria was producing
computers," said Jonathan Kimball, desk officer for Southeast
Europe at the Department of Commerce in Washington, DC. "Now,
with access to Western technology, their engineers can be highly
valuable to American companies. There are opportunities, especially
in the high-tech field, because of their highly educated work
force. This, combined with the low labor costs and close proximity
to Europe, creates many opportunities for U.S. companies in
Bulgaria."
Hazlewood didn't just wake up one day and decide to open a
business in Bulgaria. Before becoming an entrepreneur, he was a
sports agent, and he had met and worked with many Bulgarians and
was impressed by their drive and competitive spirit. In 1994, he
recruited the Bulgarian national soccer team to train in Austin,
Texas. The team surprised everyone by ranking fourth at the World
Cup competition that year.
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The Bulgarians' technical expertise, coupled with low wages
and an eagerness to work with Americans, convinced Hazlewood to
base his company in Sofia, the capital, rather than San Francisco
or Austin, where his accountant, attorney and advisors live.
Because the company builds free Web-based travel stores, it could
be based anywhere. Just about anyone with a Web site can apply to
sell travel products.
"You can buy travel products for yourself and keep 30
percent of the commission or sell products and services to
others," explained Hazlewood, who has signed up about 1,000
Web sites so far. The company has relationships with 455 airlines,
200 hotel companies and 44 car rental agencies, according to
Hazlewood, who spends about two-thirds of his time in Sofia. He
said his company keeps expenses low because his overhead is about
one-tenth of what it would cost in the States.
Kimball, who has visited Sofia a few times, said Bulgaria is
also politically and economically more stable than many of the
other countries in the region, and it's very cheap to live
there. Hazlewood says he pays $250 per month for a two-bedroom
apartment in downtown Sofia. And Sofia is easy to get to: It's
a two-and-a-half-hour flight from London.
Hazlewood began recruiting workers through help-wanted ads in
Bulgarian newspapers. "All the people we interviewed had
master's degrees and doctorates," recalled Hazlewood
during an interview in New York City. "The average salary was
$150 a month, and we were offering $500." Today, the
company's 30 Bulgarian employees do everything from Web design
and programming to providing customer service via e-mail. Hazlewood
outsources some telemarketing in the United States but has no
American employees.
Hazlewood credits much of his success to the financial and moral
support of experienced investors like Bobby Inman, a retired U.S.
admiral and former director of the National Security Agency. Inman
also served as deputy director of the Central Intelligence Agency
in the early 1980s. "Admiral Inman was the person who
encouraged me to pursue it once it made sense," said
Hazlewood.
Inman, who remains in close contact with Hazlewood, said
he's happy with the company's progress so far.
"I'm attracted to investing if I like the technology and
the people are interesting and hardworking," he said.
"John had friendships and contacts to rely on. It was also
clear that there was a very significant pool of talented people,
and if they didn't know the latest systems, they had the skills
and the drive to learn them quickly."
Inman, who has invested in several high-tech companies, says he
is comfortable backing an overseas venture. Because he sits on the
board of directors of several multinational corporations, including
the Fluor Corp., which has extensive operations in India and the
Philippines, he knows the advantages and disadvantages of doing
business abroad. "The English language competence in Bulgaria
isn't as high as it is in India, but there are people who are
fluent, and you aren't writing software code in English,"
said Inman, whose Austin-based Inman Ventures has provided seed
capital for two of Hazlewood's ventures. (Inman declined to say
how much money he has invested in Hazlewood's firms. The first
company Hazlewood launched was sold to a German company).
Inman said the U.S. Embassy in Sofia has been helpful and
"the Bulgarian government is friendly toward these
[entrepreneurial] activities. You pay taxes, but they are not
exorbitant."
Before the Soviet Union disbanded, its various states were known
for producing different products. Inman said Czechoslovakia, for
example, was the center of rifle-making, while Bulgarian engineers
developed software for the government. "Many hackers are from
Bulgaria," said a business expert familiar with the region.
"Bulgarians also reverse-engineered Unix and other operating
systems."
In 1996, the socialist government resigned after inflation hit
500 percent and the banking system collapsed. The current
leadership, known as the Union of Democratic Forces, implemented
financial reforms, and although times are still tough for many
citizens, analysts predict the incumbents will be re-elected. To
encourage more U.S. investment, especially in the high-tech arena,
one analyst said Bulgarian officials apparently agreed to work with
Microsoft to buy legitimate rather than bootlegged copies of
Microsoft products.
Sofia, which has a downtown district paved with faux gold
bricks, has a lively café society and many good restaurants
serving wine of such high quality that it is banned for sale in the
European Union, according to an analyst familiar with the country.
"It's also a very safe place to work," said
Hazlewood. "I'm out at 2 or 3 a.m., and I feel very
safe."
Despite the demise of many e-commerce businesses, Hazlewood is
optimistic that TheStoreMaker.com will continue to grow and remain
based in Bulgaria. "Our chief operating officer is now
planning to spend 50 percent of his time over there," said
Hazlewood.
If you are interested in doing business overseas, contact the
U.S. Department of
Commerce's International Trade Administration. ITA desk
officers are familiar with business operations in hundreds of
countries and can offer insights, information and resources.
Jane Applegate is a syndicated columnist and the author
of 201 Great Ideas for Your Small Business. For
a free copy of her "Business Owner's Check Up," send
your name and address to Check Up, P.O. Box 768, Pelham NY 10803 or
e-mail it to info@sbtv.com.
Sarah Prior contributed to this report.