The Next Step is to Establish Algebra University

It took us twenty years to achieve overnight success – with these words, Algebra Board Member Hrvoje Josip Balen, paraphrasing an old saying from Walmart’s founder, described Algebra’s first twenty-five years. What started literally in ‘grandma’s room’ now, after a quarter of a century, spans 12,500 square meters of a new modern campus that would not shame even a more serious university. Algebra has, figuratively speaking, grown up. It has completed all courses, undergone formal education, finished a professional study, and is now pursuing an MBA, and it is logical that, as desired by the founder, it wants to become a university. That is the plan! There are no shortage of challenges, but in a country where academic excellence is of questionable quality anyway, such a plan does not sound unfeasible or unrealistic.

Balen and his team, Tomislav Dominković and Mislav Balković, the two remaining co-founders of Algebra, just wanted to see if their entrepreneurial idea had potential. They assumed that with degrees in electrical engineering and computer science, they could always find employment in some telecom or bank, which understood the importance of new technologies. Moreover, they were, and this is no small thing, unburdened by loans, family obligations, or debts, so it was an opportunity they say they could not afford to miss.

– Each of us three gathered six thousand kuna, which was enough for our starting capital, and we additionally acquired three computers. And so it began. We recognized the opportunity for education at the best moment for digital and information technologies because the late 90s were marked by a strong expansion of computers and software tools in all areas of life and business. We started with short seminars on using the most popular computer software, then we combined them into educational programs, and after that, we turned to collaboration with industrial partners such as Microsoft, IBM, Adobe, or Autodesk to create retraining programs and prepare future professionals for certification. We followed, as we do today, global trends, employer needs, and individuals’ desires for global careers – Balen recounted, emphasizing that their most important decision in the early years of business was to immediately redirect all added value created in various trainings within Algebra into further development and investments.

The Harder Path

However, not all decisions were logical or self-evident, and often not simple. They realized they had to constantly change, adapt to the market, remain flexible, but also that, as Balen noted, they had to ‘venture into regulated areas dominated by large, budget-funded institutions with centuries-old traditions.’ Of course, he meant faculties that changed slowly, where trends were not followed as much, and which, it is a general criticism for years, did not adapt to the needs of the labor market or potential students.

– In the first five years, there was no profit because we reinvested almost everything. This is a harder path than one that offers dependence on state or local budgets, but it is much more credible in the eyes of our users, their parents, or employers. In the first few years, we grew at annual rates of 30 to 50 percent in revenue, and after the first decade, growth slowed a bit to 25 to 30 percent. In the last few years, we have again had several jumps due to large European projects in which we were engaged as partners or suppliers of specific services – Balen highlighted.

Solid for a Startup

Algebra today operates as several business entities: Algebra d.o.o. was established back in 1998 and specializes in adult education and services. Last year, it achieved a total annual revenue of 9.7 million euros. In 2021, revenues were drastically lower, likely due to the pandemic, at only 3.8 million euros. The Higher Education Institution Algebra achieved a total annual revenue of 8.6 million euros last year, and the year before, nearly 6.5 million euros. They have a total of 240 permanent employees, and according to information from Algebra, the Group’s revenues exceeded 21 million euros last year. Currently, only the entity University Algebra is making a loss (which, however, still has no employees).

– In mid-2002, due to changes in the Adult Education Act, we had to establish a non-profit institution Open University Algebra because that was the only way we could continue with accredited adult education. We established the Higher Education Institution Algebra in mid-2008, deciding that our direction was higher education, as required by that law. In mid-2016, we decided to implement a functional reorganization, so we have consolidated quite a bit in the last five years. I believe that we will soon operate with only two entities: Algebra d.o.o. as the founder and holder of certain commercial projects and the University Algebra, which will conduct most educational activities and all scientific and research production – Balen announced.

When it comes to business and financial indicators, the Higher Education Institution Algebra is the only private educational institution in Croatia that, along with the International University Libertas, has made it onto the list of the thousand largest companies in Croatia. On this list, Algebra is represented both as the Higher Education Institution Algebra and as Algebra d.o.o., and consolidated in these two entities, it has revenues, at least in 2022, of 18.3 million euros and a profit of over five million euros. For a former educational startup, these are quite solid results after twenty-five years.

What are the plans for the future, what do stakeholders in the IT market say about Algebra, and what does the competition think, read in the printed or digital edition of the weekly Lider.