In one decade, they transitioned from the attic of the Belgrade Business Incubator of Technical Faculties to Silicon Valley in California, where HTEC Group’s headquarters are currently located. It took them five years to get from zero employees to 100, then just as many years to get from 100 to 2,000, which is how many people their company employs today.
What connects the founders and owners of this tech company, Aleksandar Čabrilo, electrical engineer, and Dušan Kosić, biologist, is not only their joint business venture but also similar childhoods. They came to Serbia from war-torn Bosnia and Herzegovina, spent part of their education abroad, and then returned to Serbia to start a business together—they just couldn’t see themselves in a foreign country. Still, today, they both live in the US, recognizing the necessity of being where the clients are.
In an interview with Forbes Serbia, they share their origins, what they look for when choosing employees and business partners, and address the recent crisis and layoffs. They also delve into trends and expectations in the world of tech in the face of the current crisis.
Aleksandar hails from Mostar, while Dušan’s roots lie in Mrkonjić Grad. The war that struck these areas in the 90s deprived them of a carefree childhood. They say that, in a way, the situation made them tougher and more resilient to crises and risks.
Aleksandar: It certainly influenced the development of my character. It taught me to never give up and to fight until the end. We definitely have a higher tolerance for risk. When making a critical decision, people always start by evaluating how close they are to their own limit and what the worst thing that could happen might be if they make a certain decision.
If a person can live with the consequences of the worst possible scenario, then they go forward and don’t look back. If you’ve been through situations where you’ve had to fight for your life, everything else looks far less fatalistic. You become more resilient to risk. Also, there’s not much to lose in the beginning. When you’re starting from zero, it’s hard to go below that.
Dušan: Although growing up during the war brought many challenges, losing my father is certainly the biggest. However, my mother did all she could to at least minimize the fallout of that situation, so my sister and I often had more than others. During that difficult period, she managed to find a true entrepreneurial spirit in herself and remarkably started a small private business selling tableware, clothing, and toys, which later evolved into a jewelry store. From this perspective, it seems that I inherited her entrepreneurial spirit.
Dušan started his first business as early as high school, when he established a basketball school for children aged 7-11. He hired several classmates with whom he used to practice. He says that this entrepreneurial venture later paved the way for his scholarship to study in the USA.
During college, Aleksandar sold computer equipment, organized parties, and managed nightclubs to earn money for summer and winter vacations or to buy himself the things he wanted.
Aleksandar: I watched my parents work hard every day, sometimes several jobs. I wanted to contribute so that, if anything, I wouldn’t have to ask them for money—especially since I could find ways to earn money on my own.
When I was a boy, my mom was my inspiration, as an expert (aeronautical mechanical engineer) and as a tireless person who could juggle multiple jobs to support the family. Thanks to her, I fell in love with aviation and technology. She found great ways to introduce children to physics and science.
Dad was more of an entrepreneur. He worked several jobs and started a private business. He was more willing to take risks, and he supported me in those early entrepreneurial ventures of mine, if we can call them that. So, that combination is probably the reason behind my life choices.
As a boy, I dreamt of becoming a military pilot. However, in the aftermath of the bombing, when aviation was left devastated, my mom helped me make the right decision and guided me toward studying engineering instead of piloting “birds.” She steered me toward an engineering path where I could contribute to developing new technologies. That’s how I enrolled in electrical engineering.
Dušan: It’s interesting that in high school, my favorite subjects were mathematics, especially physics. I got the idea then to enroll at the Faculty of Electrical Engineering. However, when the time came to enroll, I realized that my sister and many other relatives were studying medicine and dentistry.
My senior thesis in high school was on the topic of irrational inequalities. Then, at the last moment, I changed my mind and decided to enroll at the Medical Faculty, driven by the idea that, one day, I’d be able to start a private medical clinic where I would employ all my dear relatives.
Soon after, having been granted a scholarship to study in the US, I had to adjust my plan. Once in the US, I quickly realized that as a foreigner, I wouldn’t be able to get a full medical school scholarship regardless of my performance. So, I decided to supplement my education with a business school degree.
After graduating from college, I was left with a bad taste in my mouth, having failed to execute my initial plan. I remember so vividly that I was determined to defy my circumstances and find a way to start a private business and support young people dear to me.
Right after graduating from college in Belgrade, Aleksandar went to the Netherlands for an internship at a startup called Silicon Hive, where he worked on his master’s thesis. Meanwhile, Dušan ended up in Minnesota at St. John’s University. He remembers it seeming exotic and unfamiliar to him, and although he had no strong desire to leave the country, he decided to do it anyway. After a while, however, both Dušan and Aleksandar returned to Serbia.
Aleksandar: Back then, in 2007-2008, this region did not have the opportunities that we see today in this industry, either in terms of career advancement in technology and science or in terms of the availability of state-of-the-art technologies or professional growth. In addition, the opportunities for making money in our industry in the Balkans were not comparable to those in Western Europe or the US.
Still, after some time, and this was probably more of an emotional rather than a rational urge, I wanted to come back to Belgrade and start a business that would be oriented toward the foreign market.
Dušan: Thanks to my entrepreneurial venture in high school and my involvement as an international organization activist, I got the opportunity to study in the US at a college in Minnesota. I never envisioned myself living abroad, so I returned, first to Banja Luka and then to Belgrade.
Today, I don’t think it’s too important where you start your company, but I believe you have to be where your clients are. We made the decision to both move to the US because it is our key market, most of our income comes from America, and we need to be there to develop our global operations.
HTEC stands for High Tech Engineering Center, i.e., a center for developing high technologies, explains Aleksandar, who founded the company in 2009 – the same year the two met working together on projects promoting Serbia’s investment opportunities abroad. At the time, Dušan was employed at Serbia Investment and Export Promotion Agency (SIEPA), and Aleksandar was working on establishing INTEL’s development center in Belgrade.
Aleksandar: Working together on these activities, I decided to leave INTEL, and Dušan, at that time a manager at Serbia Innovation Fund, decided to leave the Fund and join me in building HTEC. At first, we had one employee, then after a couple of months, one more intern, and then two more engineers.
It took us a year to build a single team. We tirelessly used every opportunity we could find across the globe, even the smallest one, to meet people, present what we do, and try to spark their interest in collaboration.
We were very fortunate to find extraordinary people and professionals to join us right from the beginning. Even today, after more than a decade, they make up HTEC’s leadership team and serve as the paragons for everyone else in the company.
We’re proud to have, in some way, contributed to lowering the risk of investing in companies from the Balkan region. A $140M investment we received from Brighton Park Capital was the largest initial funding round in Europe. In addition, we’re working every day to ensure our region is not perceived just as the source of a cheap workforce but rather as a place where clients come to have their most demanding technical problems solved.
Some of the technology we’re developing with our partners is an integral part of every mobile device in the world. More than 90 percent of all payment card transactions go through systems that we developed, and we have enabled great advancements in the field of medical technology.
Initially, our goal was to build a service company that would employ about 200 to 300 people. I don’t think we foresaw back then how quickly it would become a global business. To this day, what keeps us going is the fact that we still anticipate to grow ten times more in the next 3-4 years, and we’re thinking about how to achieve it.
Dušan: I like to tell my American friends about HTEC’s beginnings, about how it all started. I’m filled with a sense of pride telling them how we carried out our first sales activities and job interviews in a tiny office at the Business Incubator of Technical Faculties, which was located in the attic.
Our beginnings were quite modest. We had no startup capital, and we had to earn it through the services we provided to our partners. That’s why, in the first couple of years, our growth seemed quite fast from a percentage standpoint. In reality, our journey from zero to 100 people took almost five years, and then five more years to get from 100 to 2,000 people.
In the first few months and even years since we started, there were a few companies we admired, and we dreamt of reaching and surpassing their successes. At the time, those companies had 100 to 200 people. Those numbers were both our goal and our dream back then.
It’s all about the people
A consulting firm is only worth as much as the people who make it up, says Aleksandar, adding that their desire is for people from HTEC to start their own companies, to build new unicorns that will reach global success and change the environment in which they work.
Dušan adds that when hiring new employees, they make sure they are not only great talents but, first and foremost, excellent personalities. He emphasizes it’s crucial to have “good people who will fit into a team of good people. If there’s something you don’t know, there’s always a way to learn and improve on what you know, but you cannot change someone’s character“.
Dušan: With the rapid growth, we made certain mistakes when choosing talents, and we needed some time to look at ourselves in the mirror and admit we made some bad decisions. However, our focus remains on gathering people with the best character, as this is the only way to continue developing an exceptional work environment.
Aleksandar: We strive to be a company that provides people with the best opportunities for growth and professional development. We want to excel at a few simple aspects that motivate the best talents to be on our team.
The first thing is that the best want to work with the best. The second important factor is learning opportunities, because we enable our people to get acquainted with new domains and new technologies and develop as experts. The third factor is business growth, because it creates career development opportunities. It’s how people become managers and leaders, how they take on new responsibilities, and, ultimately, how they can earn more. Growth is the foundation of every healthy business and long-term sustainability.
I think that a large number of companies will have a considerable problem meeting their financial obligations, and a major corporate crisis might yet occur at the end of next year.
– Aleksandar Čabrilo
CEO of HTEC Group
Last but not least is acknowledging and recognizing an individual’s value in the industry, because after spending a few years at our company, those who take on a leadership position, either as managers or experts, can choose another company in this industry anywhere in the world. However, what we would like most is for them to start their own companies. We’re a successful company because our leaders choose to stay with us, and we’ll be even more successful as a society when each of them has their own version of HTEC.
At the beginning of this year, HTEC laid off 200 employees, for the first time since the company was founded. The founders saw this decision as tough but necessary, seeing that the tech industry suffered the greatest impact of the current financial crisis.
Aleksandar: We projected rapid growth, just as we’d experienced previously, so we made proactive investments and built capacities based on the anticipated results in the given areas. With a significant increase in the cost of capital that occurred in response to rising inflation, coupled with increased geopolitical risks, companies reduced budgets for innovations and new product development, turning away from buildout and toward surviving and maintaining the status quo.
Like the rest of the industry, we employed people proactively, driven by a plan to almost double our business this year based on the signals coming from the market. That growth was slowed in the areas where it was expected, and the focus of services and products further changed. In these circumstances, we were among the last, if not the last, in the region to make a decision to take the necessary steps and partially optimize unused capacities.
This had to be done so we could invest more in the areas we believe will give us differentiation in the market in the coming years and create more opportunities for the company, such as artificial intelligence, machine learning, and big data processing systems in general, with the development of basic technologies.
In this way, we will increase stability and competitiveness for the time to come. It was undoubtedly one of the most emotionally difficult decisions in our professional careers so far. The most demanding thing in this job is having to constantly evolve and learn a lot because you encounter new domains, new technologies, and new development challenges, and we draw our motivation from these challenges.
We had to evolve several times, both as leaders and as a company. The services we work on are seemingly similar, but the difference is actually huge. Today, our project competitors are no longer small, local firms. We now compete with big international companies – Accenture, Thoughtworks, EPAM, Globant, Deloitte, Slalom, and large consulting firms.
For some, a crisis is yet to come
Our interviewees say that there’s currently a reset happening in the tech industry. Some companies are currently worth less than the capital they’ve raised, and there are large public firms whose market capitalization is lower than their current cash balance. They’re confident that the market is poised for substantial consolidation in the next couple of years. This consolidation will separate the good companies from the bad, and it will make the barrier to accessing capital even bigger for the majority of companies.
Aleksandar: I believe that there’s a lot of restructuring ahead of us. Companies that aren’t profitable and depend on external capital will need to make major changes, where founders and initial employees, as well as earlier investors, will have to accept truly unfavorable capital conditions, or those companies will simply cease to exist.
It’s evident that a large part of Fortune 500 companies are either unprofitable or on the border of profitability. With slowed growth, they face difficulties in financing the capital they’ve taken. When you add to that the fact that by the end of next year, a large chunk of corporate debt will need to be refinanced at double-digit interest rates and the fact that financial models were previously made with nearly cost-free capital, even though I’m a natural optimist, I think that a large number of companies will face serious challenges to meet their financial obligations.
Because of this, we may have yet to see a major corporate crisis by the end of next year. In addition, I think companies will turn to investments in key technologies, i.e., technologies that can help them reduce operational costs and even change their way of working. I’m primarily referring to the use of AI and machine learning, which is also our company’s main strategic growth trajectory and an area in which we’re currently investing the most.
The difference between leading companies today and how they were prior to the global financial crisis is that today, these companies, especially the big seven that drive stock indices higher (such as Apple, Google, Microsoft, Meta, Amazon, Nvidia, and Tesla), have behind them brilliant business models, fantastic execution, and solid differentiation. They still deliver fantastic profits with exceptional rates of growth, and capital markets essentially, among other things, focus on those two things: gross profit and growth rate.
I believe that medicine and pharma will experience a significant transformation. Diagnostics will be drastically improved, and I also believe that the ability to develop drugs through personalized medicine will greatly change the way we live.
– Dušan Kosić
President of HTEC Group
I don’t see anything that could possibly stop them in the next few years, especially since each one of them is in some way set up to take advantage of the coming wave of development and the use of artificial intelligence in various domains. On the other hand, smaller tech companies that have questionable business models, which aren’t profitable and which don’t grow as dynamically, have already undergone significant corrections in value.
I believe that the best companies, with the best teams and solid business models and financial performance, will find it a lot easier than before to raise capital for growth. I also believe there will be plenty of consolidation in the market in the next few years.
Selling the business
They’ve had several offers to sell HTEC, but they say they’ve never regretted not doing that.
Dušan: We feel there’s still a very exciting road ahead of us. We’ve made a solid foundation on which we can build a serious company. This means that we’re looking at companies we can acquire and also looking to offer teams within those companies our dynamic of growth and development, such as has been the case with several acquisitions we’ve had in the previous period.
Artificial intelligence will most definitely change the world in which we live, our interviewees claim. According to Dušan, the AI strategy takes priority in company board meetings. It’s a question far more pertinent than all others, whether from a defensive or an offensive point of view, in the sense of “what are we doing to protect our primary business model and source of income to prevent AI from either disrupting or jeopardizing us; how much of a risk does that present and what are we doing on that front? Also, from the offensive side, what are we doing to open up new opportunities with the use of artificial intelligence in the ecosystem in which we work?”
Dušan: Even if, I believe, we’re still in the infancy of using artificial intelligence in specific applications, the concepts have been around for decades. However, today, we have the technological and computing capabilities to finally process large amounts of data and train models at a level where we can see practical applications in real-world scenarios.
Certain industries and professions have already been radically altered, and some professions are now disappearing. It’s not something that’s coming – it’s something that’s happening as we speak. As a service company, we must be ready to support all our clients in this process, from strategic thinking to implementation.
We’ve launched an initiative that, if not all, at least 80 percent of all of our employees become AI literate by the end of next year, of course, with varying degrees of literacy in relevant areas. I anticipate big changes in many areas.
The increase in productivity that’s expected from automatization in industrial production and transport, for example, will bring with it exceptionally substantial financial results. But, I like to believe that medicine and pharma will experience a significant transformation, and I believe that the biggest positive impact will be in these two fields. On the one hand, diagnostics will be drastically improved, and I also believe that the ability to develop drugs through personalized medicine will greatly change the way we live. I’m rooting for the greatest positive impact on medicine and pharma.
For some things, there’s no compromise
From the day they established HTEC, they have insisted on not working with certain industries.
Dušan: In our opinion, what we want to do equally defines the values we stand for, and one of the main ones is to create a better future through engineering. We don’t work on developing anything that can harm human lives, such as destructive military technology, betting systems, lotteries, gambling, and platforms for the sale of cannabis.
We don’t want to direct the intellectual and creative capacity we possess toward the development of products that cause harm to people, society, and the environment or to develop something that would make others’ children increasingly addicted while restricting access to such things to our own.
At the very end of the conversation, we asked them where they saw themselves and the company 10 years from now, and here is what Aleksandar Čabrilo had to say:
“I’m not sure what we’ll be doing in 10 years, but I know it won’t be what we’re doing now. Technology is evolving so fast, and we’ll need to make turns and evolve to keep up with it.
I hope we’ll manage to grow and evolve as people along with the company, as every next development step requires new skills and new knowledge. The need to learn and develop is our biggest challenge, and it motivates us to continually set new goals.
In a few years, we’ll have several more thousand of the smartest and most creative people on the team, and I’m convinced that we’ll once again find the best way to utilize their intellectual and creative capacities and lead them in the right direction. The ultimate goal being to become a globally recognized company and a leader in our industry.