Since our founding, we have grown organically without relying on external capital or investors, LIDER

The original article – Lider

Since their beginnings in 2017, Syntio has focused on cloud data integration and management. Today, Syntio solutions are present across Europe, from Scandinavia through the UK, Switzerland, and Germany to Croatia and the USA. It has formed partnerships with the largest technology companies such as Microsoft, Google, Amazon Web Services, Databricks… The company emphasizes that there will be work for them for a long time because machine learning is only as good as the data being input.

SWOT ANALYSIS

STRENGTHS:

  • High expertise of employees in data engineering, internal knowledge base
  • Timely and efficient delivery of solutions

WEAKNESSES:

  • Insufficient brand visibility in a competitive market
  • Clients are mostly large corporations susceptible to market trends

OPPORTUNITIES:

  • The growing importance of quality data enables key partnerships to transform data into business decisions
  • The trend of returning to the office in European markets and clients’ need to have a supplier on-site

THREATS:

  • Economic instability or global recession reduces spending on IT services and solutions
  • Huge competition in the global IT market

By VALENTINA STARČEVIĆ
valentina.starcevic@lidermedia.hr

Seven years ago, several IT professionals from Zagreb, with years of experience in the information technology (IT) industry gained from both domestic and international markets were convinced that technology should be used to create innovative solutions enabling companies to extract real value from data in real-time. Trends in data engineering with the growing use of cloud technologies were still in their infancy, but experts knew in which direction the story would unfold.

The constant need for digital transformations of large international companies and the potential of data to drive these changes prompted Syntio’s founding in 2017. CEO and co-founder Davorin Cetto emphasizes that the focus on cloud data integration and management was crucial for the company, which was rare at the time and distinguished Syntio from others in the market. Also, partnerships were established with leading technology companies such as Microsoft, Google, Amazon Web Services, Databricks, Snowflake, dbt, and Confluent, which enabled access to advanced technologies and resources and increased client trust.

On the FT list

Syntio is represented throughout Europe, from Scandinavia through the United Kingdom, Switzerland, Germany to Croatia and the United States. The headquarters and largest office are in Zagreb, with almost a hundred employees. Since 2019, there has been a smaller office in Copenhagen, and recently an office in Gothenburg, Sweden, whose Managing Director is Fredrik Blom. This supports expansion into Scandinavian and Northern European markets, while Jörg Schnitzbauer, Managing Director of the Munich office opened in June, will cover Germany and Central Europe. Co-founder Tomislav Domanovac is the Chief Software Architect. Syntio’s growth trajectory has been recognized by the Financial Times, which has included it on its list of 1000 fastest-growing European companies for three consecutive years. Although after 225th place in 2022, then 551st last year, it is now in 958th place, Cetto sees maintaining a position on this list as an exceptional achievement given the market challenges.

“The company has grown organically since its founding, through so-called bootstrapping, without relying on external capital or investors. This approach has allowed us to maintain complete control over the company’s development and strategy and build our business model gradually and sustainably. We avoided investor pressure and focused on long-term goals and the quality of our services. Syntio offers services in data strategy development, architecture design, and implementation of modern data platforms for artificial intelligence (AI) and machine learning (ML). Such solutions are considered data infrastructure. We specialize in real-time data integration, processing, analysis, and management, thus facilitating data-driven business decision-making. We develop data strategies, resource assessments, project plans, and identify opportunities for improvements in data management. We design and use scalable, secure, efficient, and customized data platforms. We integrate data from various sources, use AI and ML to predict trends, optimize operations, and improve user experience,” lists Cetto.

Dataphos Platform

Cetto explains that Syntio’s solutions are applied in project execution: these are software modules that have built-in best DevOps and development practices that save a lot of time and allow focus on solving business problems. A large research and development department, Syntio Labs, he explained, is behind the huge knowledge base and use cases for various technologies and new products. For example, Syntio has its data platform, Dataphos, composed of several components that enable data collection, processing, and distribution for various users and industries. Its unique selling point lies in its flexibility and scalability, and recently the United States Patent and Trademark Office awarded patent number 11,829,343 for the data retrieval method underlying the Dataphos Publisher component.

“Besides recognition, the patent legally protects our innovations. This strengthens our market position and enables us to deliver solutions quickly and reliably. We started developing our accelerators, which today form Dataphos, to save customers time and speed up the development of data infrastructure. Our vision is to simplify the technological part of the project and focus efforts on the business goals the customer wants to achieve. Furthermore, our R&D project ‘My Energy Community’, launched in 2022, officially ended in the first quarter of 2024. The project goal, led by Syntio in collaboration with partner company Grid ONE, was to develop an E2E (end-to-end) platform that enables real-time energy exchange and pricing through cloud data and customized hardware for real-time measurement data collection. The project enables the use of green energy, reduces costs and CO2 emissions, and encourages citizens to participate in electricity exchange. The funding was provided by the Norwegian Financial Mechanism, which supports innovation and sustainable development and contributes to the goals of the European Green Deal to achieve a carbon-neutral continent by 2050,” describes Cetto.

The company recently opened an office in Gothenburg, Sweden, led by Managing Director Fredrik Blom. This is the second Scandinavian office, alongside the one in Copenhagen, established in 2019.

IT professionals in crisis

Syntio’s revenues last year amounted to 5.81 million euros, 4.06 percent more compared to 2022, despite numerous challenges. Martina Mandic, Managing Director for Croatia, states that the IT industry in 2023 was marked by a crisis due to global economic uncertainty and inflation, geopolitical tensions, and excessive investment and over-hiring after the COVID-19 pandemic. It was believed that digitalization would continue at the same pace, if not accelerate, but the opposite happened. Companies worldwide, including leading tech giants, were forced to lay off workers and cut costs to weather the economic downturn. For Mandic, this naturally meant postponing IT investments, but despite this, Syntio managed to overcome the crisis and increase revenues by a few percent, with a net profit of 699,768 euros, which is 59.14 percent less than the previous year.

“By the end of 2023, we continued to grow, both in revenue and number of employees. However, the area we operate in is complex, so it takes more than a year to monetize a new employee, which affects profitability. The global market has slowed down and become uncertain in the past year due to high interest rates, which has affected the choice of IT services, slowed innovation, and lengthened our sales cycle. While we are currently following market trends and have slightly slowed down growth, increasing the number of employees was necessary to be able to grow in line with the market when the time comes. We expect a significant jump in profitability in the coming years. The first quarter of 2024 consistently followed trends from 2023, but the second quarter brought new opportunities and the first signs of a possible revival and a new round of IT investments, as well as an awakening of the global market. The growth in profitability will be most visible in the last quarter when we believe the market will recover. So far, everything is going according to plan, we don’t expect surprises,” Mandic believes.

The Financial Times listed Syntio among the 1000 fastest-growing European companies for three consecutive years. Despite moving from 225th place in 2022, to 551st place in 2023, and now to 958th place, Cetto considers just maintaining a position on this list an exceptional achievement

Future European giant

Mandic emphasized that their clients are large enterprises, that have faced significant changes in their operations due to supply chain disruptions, inflation, and rising energy prices, postponing many IT investments planned for this year. Although closing new projects is more difficult, thanks to excellent relationships with existing clients, 2024 is so far very similar to 2023 for Syntio. However, a deepening of the current crisis and further cuts to IT budgets would certainly be a big challenge, but since there is no application of artificial intelligence without data quality in the background, Mandic has no such fears for now, quite the opposite.

Long-term, Mandic sees Syntio as a European data leader, an alternative to global integrators from the American and Asian markets. In addition to data engineering, data security, privacy, and data quality are becoming increasingly relevant, she emphasized. She pointed out that it is important to spread awareness that machine learning is only as good as data input and that artificial intelligence is just another tool, not a miracle cure for everything.

Foreign markets, Cetto continued, are a great opportunity because they involve large systems that require specialized knowledge and solutions, although it is challenging to build a local presence in each foreign market as it requires a lot of investment.

“If such ventures are financed exclusively from our own earnings, the process takes a long time, giving us freedom but also slowing us down. An additional challenge is the limited support from Croatian banks and investment agencies for this type of business development compared to similar institutions in the EU, USA, and UK. To address these challenges, we are strengthening our internal capacities and optimizing our business strategies to make the most efficient use of available resources. Recently, we have also faced challenges due to long periods required for implementing decisions at the commercial court, especially after the court staff strike,” Cetto notes.

The headquarters and largest office are in Zagreb, with nearly a hundred employees. Besides Croats, Syntio’s employees come from France, Germany, and Sweden.

Search for experts

After rapid growth in the first five years, Cetto has maintained a steady number of around a hundred employees over the last year. In addition to Croats, employees come from France, Germany, and Sweden. Given the IT niche that Syntio operates in, he noted that it is difficult to find ready-made employees in the market, so close ties have been created with technical faculties, especially the Faculty of Electrical Engineering and Computing in Zagreb. There, Syntio’s experts lead Cloud Data Engineering Technology using the GO programming language. Mandic concludes that these collaborations and several years of maintaining the ‘Syntio Summer School’ internship program have resulted in truly good recognition of Syntio as an employer in our market. Salaries are in line with current industry trends, she said, and the company offers additional benefits including the opportunity to attend online MBA studies (along with other studies offered by thePowerMBA), funds for additional equipment, hybrid work mode, third pension pillar, rewards, use of official Synto bicycles, and Multisport card.

Within the framework of the Investment Promotion Act in Croatia, Syntio has utilized incentives that have enabled further growth and development of the company by improving technological capacities and increasing employment. The aforementioned incentives from the Norwegian Financial Mechanism used in developing the solution for the real-time energy sharing platform enabled research and application of new technology, including hardware and software development and platform testing. Cetto estimates that incentives account for approximately three percent of the company’s total revenue.

The company’s management: Davorin Cetto (co-owner and CEO), Martina Mandic (Managing Director for Croatia), Jörg Schnitzbauer (Managing Director for Germany), Tomislav Domanovac (co-owner and Chief Architect) and Fredrik Blom (Managing Director for Sweden)