Constructing an Entrepreneurial Ecosystem

Para la versión en Español ver abajo.

Constructing an Entrepreneurial Ecosystem

I returned last week to the Bay Area after participating in an event in Buenos Aires organized by Banco Ciudad and the IAE Business School. The theme of the event was “Innovation and the entrepreneurial spirit: Developing an engine for economic development, entrepreneurship and citizenship in Latin America”. Which such ambitious goal, the event was held last July 8th. This posting is a summary of my notes resulting from the interview the day before the most listened radio talk show in Buenos Aires (Lanata) conducted the prior day to the event.

Carlos Baradello during his conference titled:  “Constructing an Entrepreneurial Ecosystem”

Carlos Baradello during his conference titled:
“Constructing an Entrepreneurial Ecosystem”

Throughout the world, government leaders, businesses, educators, entrepreneurs, thought leaders, non-governmental organizations (NGOs), and other members of civil society — including young and so not young people — are attempting to co-create environments where human flourishing prosper. In this enterprise, they seek not only economic development, but seek to strengthen of all aspects of human society in particular its creativity and ability to change for the benefit of all its citizens.

I have observed this nascent trend most acutely in Silicon Valley and the broader San Francisco Bay Area, where visitors from the four corners of the globe come to visit, explore, learn, and share experiences. These are the proverbial techno–tourists, whom I have also dubbed the twenty–first century alchemists. The alchemists seek clear and simple formulas that allow them to replicate Silicon Valley on their respective continents, in disparate cities and regions including forgotten corners of the world. These alchemists, as you will recall, like to turn sand (silicon) into gold (wealth).

The reality is that Silicon Valley would not be able to re-create itself today even if it wanted to, because its development has not followed a single formula or prescription. As a result, the master blueprint for Silicon Valley that everyone seems to be chasing doesn’t exist. The lingering assumption that such a formula exists (with accompanying easy and fast solutions for its implementation) has given way to economic policies that sometimes have had the opposite effect inhibiting its economic progress as well as in some extreme cases to abort the gestation of entrepreneurial ecosystems.

Along these lines, I have outlined here ten observations guiding the development of an entrepreneurial ecosystem:

  1. Economic growth is necessary to create successful Startup environments. Not the opposite as it is often believed! In other words, you need to be already successful to aspire to become a stronger ecosystem. Some countries and regions mistakenly associate economic growth and development with an ascendance of a Startup culture.
  1. Entrepreneurial ecosystems to become self-sustaining must benefit many disparate actors of civil society, including:Government benefits as a result of an increase in employment and tax base.
  • Entrepreneurs benefit from the successes of their innovations.
  • Investors benefit from the investment returns.
  • Businesses benefit from innovations, new products, new talent, and improvements in the value chains, etc.
  • Universities benefit because of greater knowledge and increased donations.
  • Civil society benefits because of quality jobs created and higher employment. Some of the new wealth created spills over to foundations and NGOs, benefitting the arts and other cultural activities, as well as social welfare projects.
  1. Co-working spaces, leveraged funds for angels and venture capitalists (VCs), incubators, accelerators, development programs in innovation and technology, etc., are all part of the solution and facilitate the development of the ecosystem. But these “fads” do not constitute the secret formula the alchemists are chasing.
  1. Recognition of the distinction between subsidies and incentives. Subsidies are harmful and undermine entrepreneurial environments, while incentives are temporary tools that can remedy economic/social situation while stimulating new patterns of behavior.
  1. Entrepreneurship is essentially a Darwinian activity. As a result we need to liberate entrepreneurship from all forms of benevolent paternalism. Because of this dynamic, death is an integral component of an entrepreneurial ecosystem, and the lessons emanating from these deaths benefit broadly the flora and fauna of the entrepreneurial community, which comprise other entrepreneurs, investors, stakeholders, etc. Another important corollary of the Darwinian principle is that greater diversity in the ecosystem strengthens the quality of the ecosystem population. Diversity in thinking, perspectives, and problem-solving approaches, strengthen the entrepreneurial ecosystems and the quality of its inhabitants.
  1. Entrepreneurship is and should remain an inherently challenging human endeavor. Going to extremes seeking to minimize these adversities with government or other agencies subsidies, will prove to be counter-productive and harmful. A competent entrepreneur proactively jumps bureaucratic hurdles, understands that entrepreneurship requires great effort and sacrifices, and is steadfastly aware that the probability of his failure is greater than the probability of his success. He also knows that finding talent is difficult, finding the first client more, and financing his Start­up in its embryonic stages is even more difficult still.
  1. No one manages, governs, or administers an entrepreneurial ecosystem: an entrepreneurial environment is dynamic in nature and self–regulates its disparate actors: obviously there are various connectors and agents who influence one another. Some examples include:
  • Professors and thought leaders,
  • Investment bankers, venture capitalists (VCs), and angel investors.
  • La catalytic support infrastructure for innovation and entrepreneurship: non-governmental organizations (NGOs), foundations, consultants, and other participants.
  1. Companies (independent of their capital structure[1]) are important actors in the development of an ecosystem, because:
  • They could become partners of Startups (open innovation platforms/corporate incubators/accelerators, etc.), distributors, integrators, technology partners, etc.
  • They could become clients of Startups.
  • Their executives, with the right talent, can be good mentors/advisors to Startups.
  1. Focusing on strategic areas to leverage existing knowledge, competencies, and other local prevailing skills will facilitate ecosystem development. Furthermore, if the ecosystem optimizes the creation of products/services that meet the demands of global markets, the startups produced by this ecosystem will grow in both quality and quantity.
  1. Dream big, dream on an international scale with big global markets, and remember that the difficult things take great effort and sacrifice, and the impossible ones only take a little bit more additional effort. One must be impatiently patient, because the development of a successful company takes 10/15 years, and the development of a successful entrepreneurial ecosystem takes even longer.

Successful ecosystems foster innovation and entrepreneurship create multiple economic and social benefits in their communities and generating positive spillover effects that impact broadly society. Successful ecosystems create role models of success and generate new conversations driven by a positive attitude and the ethos that anything is possible.

In order to compare and contrast the 10 observations that facilitate the development of an entrepreneurial ecosystem development (see above), I am including below 10 enabling characteristics that facilitate of creation of Startups (quantity and quality) in Silicon Valley:

Silicon Valley Enabling Characteristics -- English

You can read more about the Banco Ciudad/IAE Event at:
1. http://www.apertura.com/economia/Innovacion-y-espiritu-emprededor-en-la- agenda-del-Banco-Ciudad--20150702-0005.html
2. http://www.infobae.com/2015/07/07/1740236-los-10-mandamientos-que-debe-cumplir-un-emprendedor
3. http://www.infobae.com/2015/07/06/1739974-emprendedor-se-nace-o-se-hace
4. http://www.minutouno.com/notas/1276332-el-estado-debe-acompanar-el-desarrollo-los-emprendedores
5. http://www.sinmordaza.com/noticia/311842-emprendedor-se-nace-o-se-hace.html

[1] Public, private, family owned, etc.

Como se Construye un Ecosistema Emprendedor?

Reflexionando sobre el evento que acabo de participar en Buenos Aires, organizado por el Banco Ciudad y la Escuela de Negocios del IAE, sobre el tema “El espíritu emprendedor y la innovación: motor de desarrollo económico, emprendedor y ciudadano en LATAM“, llevado a cabo el 8 de Julio pasado en Buenos Aires. Este posting es el resumen de mi entrevista con Lanata el lunes 7 de julio para su programa por Radio Mitre en Buenos Aires.

Carlos Baradello durante su presentación titulada:  “Construyendo un Ecosistema Emprendedor”

Carlos Baradello durante su presentación titulada:
“Construyendo un Ecosistema Emprendedor”

La construcción de un ecosistema emprendedor, esfuerzo amplio y mancomunado de la sociedad civil, líderes de gobierno, empresas, educadores, emprendedores, líderes de pensamiento, ONG’s, etc., a quienes les interesa crear un ambiente donde los jóvenes[1] (y no tan jóvenes) puedan co-crear un ambiente donde prospere el desarrollo humano. En otras palabras no busca solamente el desarrollo económico, sino que también potencia todos los aspectos del comportamiento humano.

Observo semanalmente a los visitantes que llegan de los cuatro rincones del planeta a visitarme en mi oficina en Sausalito y explorar el Silicon Valley/El Área de la Bahía de San Francisco. Ellos son tecno-turistas, a los que yo los llamo: “los alquimistas del siglo XXI”. Ellos buscan fórmulas fáciles y precisas, que les permitan replicar Silicon Valley en países/regiones, en su deseo iluso de transformar la arena (Silicio) en oro (riqueza).

La realidad es que Silicon Valley NO podría re-crearse hoy a sí mismo, aunque si quisiera, dado a que su desarrollo NO siguió una formula prescripta. Por lo tanto NO existe un blue-print o plan maestro que haga posible su re-creación. Esto crea constante confusión y ha dado lugar a la aparición de una mitología que propone soluciones sencillas e instantáneas y veces lleva a intervenciones equivocadas que son dañinas y retrasan o incluso hacen abortar el desarrollo de un ecosistema en gestación.

Las 10 observaciones para facilitar el desarrollo de un Ecosistema Emprendedor son:

  1. El Crecimiento Económico es el elemento necesario para crear un ambiento propicio para los Startups. No lo opuesto!, como algunos países/regiones que asocian erróneamente el crecimiento/desarrollo económico con un aumento en el número de Startups.
  1. Requiere que participen un amplio espectro de la sociedad y muchos se beneficien, como condición para que sea auto-sustentable, incluyendo:
  • El gobierno se beneficia debido a la generación de empleo y aumento de los impuestos
  • Los emprendedores toman riesgos mayores y hay una minoría importante que tiene éxito,
  • Los inversionistas se benefician de la riqueza creada,
  • Las empresas se benefician de las innovaciones, nuevos productos, nuevo talento, mejoras en la cadena de abastecimiento/valor, etc.
  • Las universidades se benefician debido a una mayor creación de conocimientos y donaciones,
  • Y la sociedad civil[2] se beneficia con buenos puestos de trabajo creados. Parte de la nueva riqueza creada tiene derrames en
  • Fundaciones y ONG que estimulan las artes, actividades culturales y también se promueven emprendimientos de beneficio social.
  1. Co-workings, fondos de apalancamiento para Ángeles y VC’s, incubadoras, aceleradoras, programas de formación en Innovación & Emprendimiento, etc.; son parte de la solución y facilitan el desarrollo del ecosistema. Pero NO son la fórmula secreta para el éxito de los alquimistas!
  1. Tener muy clara la diferencia entre subsidios y incentivos. El subsidio es perverso y deforma la cultura emprendedora, mientras que el incentivo es una herramienta temporaria que facilita/estimula a cambiar un comportamiento o adquirir uno nuevo.
  1. Emprender es una actividad esencialmente Darwiniana. Por lo tanto hay que liberarla de todo paternalismo. Como tal produce mortalidad, excrementos y descartes que fertilizan el ecosistema, producen aprendizajes que mejoran la raza (flora y fauna) de sus habitantes (los emprendedores, inversionistas, etc.). Como corolario importante al principio Darwiniano, es que una mayor diversidad del ecosistema ayuda a mejorar la raza. Es por ello que la diversidad de pensamiento, perspectivas y modos de resolver problemas ayudan a fortalecer un ecosistema emprendedor.
  1. Emprender es y debe ser difícil y por lo tanto facilitarla con docenas de subsidios es nocivo y contraproducente. Un buen emprendedor salta burocracias, sabe que requiere grandes esfuerzos y sacrificios, y es consciente que las probabilidades de fracaso son mucho más grandes que las de éxito! También sabe que conseguir talento es difícil y que el financiamiento durante las etapas tempranas más difícil aún!
  1. Nadie maneja, gerencia o administra un Ecosistema Emprendedor: un Ecosistema Emprendedor es dinámico y auto-regula a sus actores. Obviamente hay múltiple conectores y agentes que lo influencian. Algunos ejemplos incluyen:
  • Profesores y líderes de pensamiento en esta área,
  • Banqueros de Inversión, Venture Capitalist e inversionistas ángeles,
  • La malla catalítica de apoyo a la innovación y el emprendimiento: ONGs, Fundaciones, Consultores and otros participantes.
  1. Las empresas constituidas (independiente de su estructura de capital[3]) son actores importantes en el desarrollo del ecosistema, porque ellas:
  • Pueden ser socios de los Startups (Open Innovation Platforms/Corporate Incubators/Accelerators, etc.), distribuidores, integradores, partners tecnológicos, etc.
  • Pueden ser clientes de los Startups,
  • Sus ejecutivos con el talento apropiado pueden ser buenos mentores/ asesores de los Startups.
  1. Focalización en áreas estratégicas que apalanquen conocimientos, competencias y otras riquezas locales existentes facilitará el desarrollo del ecosistema. Si sus productos/servicios satisfacen grandes necesidades de los mercados globales esto facilitará más aun, la creación de Startups en cantidad y calidad,
  1. Soñar en grande, soñar grandes sueños y soñar con mercados globales, recordar que lo difícil es lo que cuesta mucho trabajo y lo imposible solamente un poquito más de esfuerzo. Y ser impacientemente paciente, dado que el desarrollo de un ecosistema basado en la innovación lleva décadas y puede llevar 10 años o más para empezar a generar emprendimientos exitosos.

Los ecosistemas exitosos que potencian la Innovación & Emprendimiento crean múltiples beneficios económicos y sociales en las comunidades de interés que participen; y una variedad de derrames positivos que impactan toda la sociedad en general. Crea roles de modelos éxitosos y nuevos temas de conversación donde permea una actitud positiva y llena de mensajes “que se puede hacer y lograr”!

Para comparar y contrastar estas 10 observaciones de como facilitar el desarrollo de un ecosistema emprendedor, copio abajo las características del ecosistema emprendedor más desarrollado del planeta. Estas son las 10 características que facilitan la creación de Startups (en calidad y cantidad) en Silicon Valley:

 Silicon Valley Enabling Characteristics -- Spanish

You can read more about the Banco Ciudad/IAE Event at:
1. http://www.apertura.com/economia/Innovacion-y-espiritu-emprededor-en-la- agenda-del-Banco-Ciudad--20150702-0005.html
2. http://www.infobae.com/2015/07/07/1740236-los-10-mandamientos-que-debe-cumplir-un-emprendedor
3. http://www.infobae.com/2015/07/06/1739974-emprendedor-se-nace-o-se-hace
4. http://www.minutouno.com/notas/1276332-el-estado-debe-acompanar-el-desarrollo-los-emprendedores
5. http://www.sinmordaza.com/noticia/311842-emprendedor-se-nace-o-se-hace.html

Notas de pie de página:
[1] Emprender es altamente riesgoso y por lo tanto los jóvenes son los que menos tienen que perder.
[2] Las familias pueden ser emprendedoras como así también las organizaciones a las cuales pertenecen (i.e. clubes, escuelas, iglesias, etc.) dado que ellas abrazan la innovación en sus actividades.[3] ya sea que sean públicas, privadas, familiares, Co-operativas, etc.
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Reflecting on the role of Government in Latin America (and other Emerging World Regions)

As I mentioned in my prior blog, after my intense three week travels late last year across Latin America, I am convinced that the democratization process, enabling more and more Latin entrepreneurs to access the innovation revolution is irreversible.

However, governments across Latin America are slowly “getting” the importance of developing their innovation/entrepreneurial ecosystems as a matter of national interest to promote their economic development, national competitiveness and productivity as an engine of sustainable and equitable growth and prosperity.

Multiple actors need to work simultaneously to achieve positive impact on the ecosystem

Multiple actors need to work simultaneously to achieve positive impact on the ecosystem

Unfortunately, the minds of many in the region are still focused on large infrastructure projects, multi-billion dollar financings, debt swaps, etc. As governments approach the topics of innovation and entrepreneurship, their methods often, remain unchanged from such larger scale investments. As an extension of their past behavior, governments want to “control” the process and apply traditional metrics. As it happens, innovation and entrepreneurship is inherently chaotic, unmanageable and long term. These governments would be well served to focus on enabling policies, levelling the playing field, establishing the right incentives and getting out of the way, leaving the rest to Schumpeter, Smith and the Darwinian market forces. I often address these issues at my conferences as I try to be provocative to the government officials who might be in the audience. A summary of these key points follow below:

  • It is about incentives and NOT subsidies: the transformational effect of these innovation ecosystems will not happen by fiat; therefore, it will be necessary for governments to provide the right incentives to tempt the right sectors to take some risks that otherwise would be very “unreasonable.” The design of these incentives will need to be intelligently crafted to reach the right target audience and provide the desired outcomes. A point of caution is to recognize an invisible thin line that separates incentives from subsidies. Subsidies have a perverse impact in the development of these ecosystems, since they promote undesirable behaviors of clientelism and undue benefits.
  • It is about experiential diversity and not uniformity or standardization: Let a thousand flowers bloom, and let most die quickly, publicize the lessons learned, and capitalize on these lessons learned as positive, not negative, experiences. This approach will help to create a culture that failing is fine. Failing fast and forward even better!
    • It is about the right level and types of immigrants to increase the diversity of the “gene pool”: Start-Up Chile started right opening this program exclusively to foreigners. However, in later editions politicians gave-in to the public outcry of “giving money to strangers…” and opening it up to Chilean nationals. In the case of Start-Up Peru foreigners can only participate if they are able to join a Start-up formed by Peruvians. In either case, politicians struggle to welcome foreign entrepreneurs from Shanghai or Warsaw to enrich the diversity and richness of the national ecosystem gene pool.
    • It is about making it easy to operate in the legality and transparency of rule-of-law. Across Latin America in varying degrees, entrepreneurs operate their ventures at some level of informality (you can read more in a prior blogpost: http://carlosbaradello.com/2012/05/15/formal-informal-and-semi-formal-investing-in-early-stage-latin-american-ventures/ ). Why? Because these entrepreneurs are crooks and love to cheat their governments? NO! Instead, the answer is because the cost of compliance it is too high! This challenge presents one of the most fertile areas for public policies to resolve. Public policy reforms that would help include:
  1. Flexibilization of labor laws: Young, dynamic start-ups cannot commit for long-term employment due to their uncertain futures. Hence, the ability to hire-and-fire-at-will can incentivize the creation of employment without unbearable separation costs in the likely event of failure.
  2. Tax holiday for the first 3 to 5 years of operations of any new start-up: This simple law would make every start-up automatically in compliance for the first 3 to 5 years. This is an excellent opportunity to require, during this tax holiday period, a “compliance simulation” period. In other words, during the tax holiday period the Start-Up would need to meet all the filing requirements with the social security, corporate taxes, etc., and other fiscal obligations without any financial or legal consequences other than keep the tax holiday status. A sort of training wheels as you learn how to ride the bicycle.
  3. Simplification of venture creation and closure: The incorporation of a Start-Up and its possible dissolution (in the likely event of the failure, since most start-ups do fail), must be a simple procedure whose implementation should be measured in few days and few hundred dollars (or less). There is no justification for such processes to take months, be cumbersome requiring legal and tax experts, and cost thousands of dollars or more!
  4. Simple bankruptcy laws: Let’s face it. Most of start-ups go under (fail) well before they have any sign of success. Hence their founders and corporate officers should not be stained with the presumption of wrong because of their ventures failure, for years into the future!
  5. No Imputed taxation for stock options: Stock options are one of the better incentives and forms of compensation for start-ups. They align the interests of investors and founders with directors, executives and employees. Taxing an imputed value at the time of granting stock options makes this compensation instrument unviable. The requirement to pay income tax upfront on a presumed value of the option kills its intent as an incentive vehicle. Since, you will be paying taxes on a presume value that very seldom materializes as most ventures fail,
  • Find your niche in the global economy and leverage your uniqueness. What is unique about your city, region or country’s economy? How you can rally the society towards a national identity that can distinguish it globally? Each country needs to develop its “man-on-the-moon” vision and have its leadership articulate it as clearly as J.F. Kennedy did during his Man-to-the-Moon Speech at Rice University on September 12, 1962 — https://www.youtube.com/watch?v=TuW4oGKzVKc (in particular between 8’24” and 9’15”). This is a tall order but completely doable!
  • Do not waste your time by attempting to re-create Silicon Valley in your city, region or country. Silicon Valley happened because it happened. It is the result of over one century and a half of “accidents” from the Gold Rush to the accidental re-settlement of William Shockley (co-inventor of the transistor and Physic Nobel Prize winner) to the San Francisco Bay Area. Furthermore, the “Silicon Revolution” provided the region with an exceptionally virtuous cycle of value creation of over five decades of device miniaturization, lower costs, faster devices and lower energy consumption. This “Moore’s Law on Steroids” enabled the creation of an ecosystem of stakeholders who all benefitted from an ability to predict price/performance points years ahead to target specific applications and/or market sectors. This enabled multiple waves of innovations from integrated circuits, to PCs and software, to networks and the internet, to web applications and mobile, and so on. A formidable sequence of value creation hard to match!

On a weekly basis, delegations from the four corners of the world descend onto the Bay Area to learn its most treasured secrets, best practices, and recipes to recreate its success in their own locales. I call these visitors the “alchemists of the XXI century,” since they are searching for ways to enrich their countries or regions by transforming plentiful and inexpensive commodities – such as sand or silicon – into new sources of wealth.

It is not too difficult to identify a set of best practices that make Silicon Valley (or “The Valley” as it is often called) the premier innovation and entrepreneurship ecosystem in the world.

In fact, I anticipate that the fundamental lessons learned by our visitors to take back home center around three principles:

  1. Free circulation of people and ideas
  2. Circulation of capital
  3. Promotion of a risk-taking culture permeating all levels of society

Drilling deeper into each principle, we can identify specific areas of public policy reforms, cultural changes in society, and institutional adaptations that can together enable entrepreneurs to take risks, unleash creativity, and promote innovation across all sectors of society. However, it is in the specifics that the best-intentioned changes can result in failure.

In my travels, during conference Q&As, and when I welcome visitors to my office, I am often asked why it is so difficult to replicate Silicon Valley. I have concluded that recreating any semblance of The Valley in any other locale (regardless of its socioeconomic stage of development) is VERY DIFFICULT, if not impossible.

In fact, Silicon Valley probably could not have recreated itself today, even if we wanted. By many measures, Silicon Valley’s genesis was a fluke of nature. The Valley flourished by accidental twists and turns, without a master plan and without a blueprint from enlightened bureaucrats. Instead, The Valley was borne from the aligned self-interest of multiple stakeholders, a favorable geography and climate, and a series of fortunate historical circumstances.

While there is no “secret sauce” to recreate Silicon Valley in new geographies, countries can take pro-active steps to improve the odds of success by:

  1. Working to develop ALL ecosystem stakeholders simultaneously (not sequentially) to affect change;
  2. Planning and committing actions for a transformation that will take decades; and
  3. Managing expectations accordingly to sustain long-term support.

Initial progress will be painfully slow and early successes will need to be well-publicized and celebrated. Unfortunately, the transformation sought by emerging Latin American countries from commodity-based to knowledge and innovation-based economies will take longer than any presidential term to achieve. This transformation will take concerted and sustained effort by multiple stakeholders. Unfortunately, politicians tend to focus on the crisis of the day or the urgency of the moment. However, the initiatives I have discussed will require long-term commitment, over decades, to bear fruit.

A successful transformation will create a legacy of sustainable prosperity for future generations, but achieving it will require political, business and civil society leaders to think and commit to a lasting vision. Are they up for the challenge? 

Until my next posting – Carlos B.

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Farewell to my Mom: Nelida (Pupy) E. Bonetto de Baradello

Dear Reader,

While I had written a blog about my dad, I had never written one about my mom.  Today, I write this brief entry to let you know that my Mom passed tonight (Dec 23, 2014) battling multiple organ failure in the intensive care unit in Neuquén (Argentina).

Carlos and his  Mom during one of his last visits to Neuquen, Argentina.

Carlos and his Mom during one of his last visits to Neuquen, Argentina.

Farewell Letter — English version  (Version en Español abajo)

Dear Friends,

I have often pondered the unfairness in the Christian tradition of the role of women.  Throughout the last two millennia of Christianity, women have played a subsidiary role to a male domination, and Latin America has been a prime example.  Yet, when it comes to affection of her children, women have always had an unfair competitive advantage.  The Mother Mary of the Christmas we are about to celebrate, is held as a role model, a beacon of hope or a source of forgiveness.

Today, I just received the news of my mom’s passing and the emptiness is particularly acute as memories of my existence rush through my mind from childhood, adolescence and adulthood in her presence.

Now, I need to acknowledge her strong character and oversized will as a middle class woman who married my dad and her lifetime companion, by love, in spite of the economic differences.  My dad was haunted by the poverty of his youth, while my mom was the infinite source of hope and optimism.  It was my mom who had the vision that I could (and should) go to college and at every turn encouraged me to move on from scholarship to the next and from one job to the next advancement opportunity.  She did suffer immensely over the years our separation living overseas and enjoyed her visits as she could mother me just a bit more!  She was passionate, an extraordinary hard worker, with beyond human ability to sacrifice for the future of my younger brother, Juancho an older friend who integrated as an additional child, and I.

I will be always grateful because in spite our low middle class status and limited economic means, my mom made sure that we never felt poor; she planted in me the seed to think beyond the (very real) constraints of growing up in Villa Maria (Province of Córdoba, Argentina) and to think big.  She transformed me from a dreamer to envision the future, stretch reality just an inch of what it was possible and apply myself to reach it!  It’s difficult to talk about my mom without mentioning my dad as it was a journey that they made together.  In fact, my parents are now reunited almost to the day of their 68 wedding anniversary.

At each one of my departures from home, whether I was leaving for college 100 miles away or off to the other side of the world, each farewell brought tears to her that often I felt were unreasonable as we would meet again in few weeks or I would call her the next day.  Today it is my mom’s departure that has left me a gaping hole that cannot be filled and tears in my eyes.

Thank you for sharing this moment with me.

Until next time my friend, Merry Christmas and my best wishes in the New Year — Carlos B.

Carta de Despedida – Versión en Español

Querido Lector, Si bien he escrito un blog sobre mi papá nunca lo hice sobre mi mamá. Hoy escribo este breve post para compartir la triste noticia de su muerte que ocurrio anoche (23 de Dicciembre, 2014). Como resultado de una fractura a la cadera, fue necesario una intervension quirurgica. Su recuperacion se vio afectada debido a fallo multiorganico  en la unidad de terapia intensiva, en Neuquén (Argentina).

A todos mis amigos,

A menudo he pensado sobre la aparente injusticia del rol de la mujer en la tradición Cristiana. En los últimos dos milenios, la mujer ha jugado un rol subsidiario con respecto al hombre, fenómeno que se acentúa en América Latina. A pesar de ello, cuando se trata del afecto de sus hijos, las mujeres han gozado de una enorme ventaja comparativa. Esta ventaja nace de María, la madre del niño Jesús que celebramos esta semana en Navidad, fuente de esperanza y perdón.

Hoy al recibir la noticia de su muerte sentí una sensación de vacío, que se hizo particularmente aguda cuando una avalancha de recuerdos de mi niñez, adolescencia y vida adulta en su presencia acosó mi mente.

Ahora, necesito recordarla con su carácter fuerte y extraordinaria fuerza de voluntad. Una joven de clase media que se casó con mi papá, compañero de toda la vida, por amor a pesar de las diferencias económicas que los separaba. Mi padre nunca superó la pesadilla de su pobreza durante su niñez y juventud, pero mi mamá lo complementaba con una fuente incansable de esperanza y optimismo. Fue ella quien tuvo la visión que yo podía (y debía) ir a la universidad, y en cada oportunidad me alentaba a aceptar la próxima beca o el próximo ascenso que representaba oportunidades de progreso, aunque fuera lejos en otros continentes. Ella siempre sufrió enormemente tantos años de separación y disfrutaba sus visitas para “malcriarme” un poquito más!

Mujer apasionada, con una capacidad extraordinaria de trabajo y de sacrificarse más allá de las posibilidades humanas por el futuro de mi hermano más joven, un amigo de mi odolescencia (Juancho) que se unio al nucleo familiar como un hermano mayor y yo.

Yo siempre le tendré una inmensa gratitud porque a pesar de nuestras limitadas posibilidades económicas, ella aseguró de que nunca nos hayamos sentido pobres. Ella plantó en mi la semilla de pensar más allá de las limitaciones naturales de crecer durante la década de los 60’s en la Provincia de Córdoba (Villa Maria) en Argentina. Ella me transformó de soñador a desarrollar visiones del futuro, a estirar la realidad al límite de lo posible y dedicarme con disciplina a obtenerlos! Se me hace difícil hablar de mi mamá sin mencionar a mi papá, dado que fue su companero de viaje; juntos unidos por el amor, lucharon, hicieron enormes sacrificios y progresaron juntos. Hoy, ellos se reúnen nuevamente justamente  dos días después del que hubiera sido su 68 aniversario de matrimonio.

Cada una de mis partidas le trajo lagrimas a sus ojos, independientemente que mi destino haya sido para regresar a la universidad en Córdoba a 140 Kms de distancia, o por que regresaba a mi casa en California, o donde viviera en ese momento. A menudo me parecía exageradas sus demostraciones de afecto dado que nos volveríamos ver en semanas o meses o la llamaría al día siguiente. Hoy es su partida que me deja a mi lágrimas en mis ojos y un vacio que se agranda.

Gracias por compartir este momento. Hasta siempre amigo, Feliz Navidad y mis mejores deseos en el Ano Nuevo! — Carlos B.

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Reflecting on my recent “tour-the-force” across Latin America

From October 23 to November 15 of this year, I embarked on a whirlwind journey that brought me to Lima, Peru; Cordoba, Argentina; Sao Paulo and Rio de Janeiro, Brazil; Mexico City, Mexico; and Bogota, Colombia. I returned to San Francisco for two days, at which point I returned to Lima, Peru for three days to join the Global Entrepreneurship Week celebrations organized by Prof. Karen Weinberger Villarán, Director of Emprende UP and her team at Universidad del Pacifico, one of the leading business schools of Peru.

Global Entrepreneurship Week closing ceremony at Universidad del Pacifico, 12/14/2014.

Global Entrepreneurship Week closing ceremony at Universidad del Pacifico, 11/14/2014.

I was grateful for the opportunity to experience the vitality and progress of these unique Latin American ecosystems and am happy to report that innovation and entrepreneurship is alive and well across Latin America. In this blog, I would like to share my distilled view that resulted from over one dozen conferences delivered and hundreds of conversations with entrepreneurs of all ages and nationalities, university professors, business executives and government officials. I would also like to reflect on what I learned from dozens of pitches for for-profit ventures, social ventures, and innovation challenges. Here is a summary of my views for you my dear reader:

1. Most Latin American entrepreneurs have a tendency to think small. Their target market is their city or at most their immediate region. I’m unsure if this small thinking is due to their desire to remain in their comfort zones or if it’s due to their fear of the unknown. Very seldom on this trip did I hear a pitch that positioned a new Latin American-bred venture globally that sought international markets, technology partners or funding sources.

Creating a start-up it is a risky and challenging endeavor, which reminds me of a saying from my youth: “The difference between a difficult and an impossible job is that the difficult one takes lots of hard work… The impossible one takes just a bit of additional work!” Since envisioning/developing the new ventures that I met with suggests that Latin American entrepreneurs have embraced the idea of working hard, why not encourage these entrepreneurs to work a bit harder to become global players? The rewards can be enormously higher!

2. Most Latin American entrepreneurs do not “copy,” “plagiarize” or simply attempt to learn from other similar or comparable global ventures. This unwillingness to study the global competitive landscape limits the horizons of their ventures in their immediate locations and is possibly compounded by the discomfort of accessing information in foreign languages (English being the dominant one). Very seldom did I come across a competitive analysis, benchmarking or stakeholder studies that included global players.

Launching a start-up is not a classroom exercise, where budding entrepreneurs are penalized by plagiarizing, imitating or copying someone else’s work. While we must respect the trade secrets and intellectual property of our competitors, everything that is in the public domain is fair game. Hence, we must leverage, learn, avoid similar mistakes and be ready to explain how we will succeed where others have failed, or improve in our go-to-market strategy, pricing, internal processes or internal culture. Doing so can save months and/or hundreds of thousands of dollars.

3. Most Latin American entrepreneurs do not sufficiently leverage technology. Many pitches I heard were timid in the technologies that their start-ups used and simply started with a multi-lingual web site, an e-commerce platform, and a strong digital/social media presence. Furthermore, there are hosts of technology tools to increase the internal productivity of the team as well as those optimized to enhance the customer experience.

Technology is one of the great value creation points of leverage for new Latin American ventures. We must embrace its use and be aware of the constant disruptions it potentially brings to all human activities. It is in fact one of the greatest insurance policies for our venture to remain current and viable over time. Developing your own Intellectual Property (IP) and protecting this IP is an essential element of a Latin American entrepreneur’s value creation journey!

4. Most Latin American entrepreneurs fail to recognize that they cannot go at it alone. They are neither heroes nor saints willing to endure extraordinary sacrificies. Instead, Latin American entrepreneurs are bright, hard-working human beings that need ALL the help they can get. Therefore, it is essential that they share their vision with other like-minded individuals they trust, form coalitions and a broad network of supporters, and tap hard into their respective ecosystems. It is also important that these entrepreneurs align all the tangible and intangible resources they can get during the bootstrapping period.

Latin American entrepreneurs must recognize that is unlikely that someone will fund their PowerPoint (even in Silicon Valley is hard to get a PPT funded and Latin America is NOT Silicon Valley… yet!); investors funds teams (not individuals) and compelling solutions to large market pains. Therefore, Latin American entrepreneurs should get their pilot MVPs (minimum viable products) into the hands of their customers fast, get their feedback to their respective teams and iterate quickly until they get it right!

5. Most Latin American entrepreneurs are great “small” salespersons. They have developed great visions, identified compelling value propositions, built great teams, and demonstrated stratospheric levels of energy, passion, and commitment. All this is wonderful, but is of limited value if nobody knows it.

Latin American entrepreneurs must be the “salespersons-in-chief” of themselves and their ventures. They need to be almost obnoxious in their persistence. They cannot miss a future client, employee, investor, partner because these people are unaware of who they are and/or what they do! The world is their audience and entrepreneurs only have one shot to make a first great impression!

I finished my whirlwind trip with the conviction that the democratization process is well underway that is decreasing barriers to entry and enabling more Latin entrepreneurs than ever before to participate in the innovation revolution. This is irreversible. Governments across Latin America are slowly “getting it.” Unfortunately, often they want to “control” the process and apply the wrong metrics to a journey that is inherently chaotic, unmanageable and long term. These governments would be well served to focus on enabling policies, levelling the playing field, establishing the right incentives and simply getting out of the way… leaving the rest to Schumpeter’s creative destruction, Darwin’s survival of the fittest and Smith’s invisible hand!

Carlos Baradello during a keynote: Is Entrepreneurship a source of hope for a more equitable and sustainable  development in Latin America?

Carlos Baradello during a keynote: Is Entrepreneurship a source of hope for a more equitable and sustainable development in Latin America?

I am glad to be back writing after a one-year “sabbatical.” I hope to be back more frequently with my thoughts and continue the conversation with you my dear readers.

Until my next post – Carlos B.

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Is the Western World Testing the Limits of Incrementalism? An opportunity for foreign entrepreneurs from emerging countries

I have been reflecting on the consequences of incrementalism for a while and have come to recognize a disturbing pattern manifested in our western world across multiple aspects of our daily lives (not only in businesses, but in many aspects of everyday life). In fact, I have become convinced that incrementalism across developed countries opens a unique opportunity to entrepreneurs from the developing world.

This idea is captured by the boiling frog story. This well-known anecdote describes a frog slowly being boiled alive. The lesson is that if a frog is placed in boiling water, it will jump out and survive, but if it is placed in cold water that is slowly heated, it will not perceive the danger and will be cooked to death.

Companies and leaders try to make the most out of their strengths. At business school, we teach that companies, people, and even countries should focus on what they do best.  Certainly, the frog feels incrementally better as the cold water becomes a bit warmer. Likewise, businesses benefit from each incremental improvement of their products or services, while often the overall process could be harmful for the enterprise. Every strength, once at its limit, becomes a liability and after a while we become unable to see the consequences of the long sum of these incremental changes. Even in the rare case that the adverse consequences are seen, we might be unwilling to speak-up  against the dominant corporate orthodoxy (what I have called during my corporate career the “conspiracy of silence”).

Incrementing to the deadly cliff

Incrementing to the deadly cliff

Today, globalization and the lowering barriers to access (technology, markets, capital, etc.), are creating unique opportunities for foreign entrepreneurs; in particular in emerging countries. Since they are not invested in old/established paradigms, they are able to scale globally the opportunities they have developed for their local markets. However, these solutions become more compelling when the market needs of the developed and developing markets are in alignment. In these cases, innovations from emerging countries are not wed to the status quo (or as Machiavelli called “… the established order of things…”) but rather seek cost-effective/superior solutions to their market pains.

The consequences of incrementalism are being exacerbated, as time accelerates and side-effects happen faster and more frequently. Furthermore, the population growth is aggravating this trend, as we anticipate in about a dozen years we will share the planet with 8 billion people and moving quickly to 9 billion well before mid-century.

Some evidence with a few examples:

  • How did we get over a hundred chemicals in our processed food? One at a time! Each had a unique benefit making our food taste a little bit better, prolonging its shelf life a little bit longer, making its color a little bit more appealing, making its manufacturing a little bit cheaper, etc. I can almost imagine every corporate meeting when every decision was being made––in fact I have been in some of them.  And I can also remember how the meeting participants felt after each incremental improvement (in isolation) was fully justified. As the market responded positively, raises/bonuses/and stock options were distributed and each corporate executive felt pumped, paving the way for the next executive team seeking a larger reward by seeking the next incremental improvement. Unfortunately, the end result is that the initial tasty natural product became more a product of a chemistry lab than of nature, and sure enough decades later we discovered that, in the aggregate, these chemicals have had harmful effects on our lives. It made us more obese, raised our blood pressure, caused diabetes, or even created a dependency we previously didn’t have!
  • We now look back at the demise of Arthur Andersen, an auditing company that shined for integrity and ethical standards. However, tempted to emulate the revenues and margins of their consulting cousins, Arthur Anderson started to push the envelope and add creativity and imagination to what it was the “predictably dull” auditing activities. Every time, they were more aggressive in pushing the line enabling management to unleash their “innovative” practices for financial reward. Eventually, the ethical line was irreversibly crossed for the benefit of a few senior partners and the ruin of the entire firm.
  • Kodak was once the undisputed leader of film photography and was driven out of existence by incrementally improving film photography (does anyone remember “Aptiva”?) and ignoring digital photography.
  • Digital Equipment Corporation (“DEC”) was a revered start-up from Route 128 (remember when Boston’s Route 128 was in the same sentence as Silicon Valley?) and my former employer.  DEC was extraordinary successful in democratizing the access to computers by bringing the Mini (computer) out from the data center and into the department, in the cube next door. Yet, DEC was driven out of existence developing more and more powerful minis, in the process coining the term “Maxi-Minis” missing completely the PC market.

In the last four examples the frog is boiled to death!  And these successful enterprises disappeared.  It would be overly simplistic to point all reasons to incrementalism, but I would argue that it did play a significant role in their demise!

At this point I would be tempted to open the debate on how incrementalism is having a perverted effect on society at-large, and venture into the world of moral relativism and the globalization of superficiality[1].  However, I’ll resist the temptation, leave that for my coffee discussions with my close friends and family, and stick with the relevance of this post to the business world.

The relevancy of incrementalism as a theme for this blog-post is that its best antidote for enterprises incrementing themselves is innovation. And the likely consequence for those who fall victim of its lethal addiction is to become a “boiled frog”. Its end-result is corporate atrophy, carefully developed year after successful year yielding as end result its inability to perform a paradigm change.

Every business strength successfully utilized year after year,

 at its limit could become a liability to the entire enterprise…

Enter foreign entrepreneurs from emerging countries, who aspire to tackle the preeminent market opportunities of this era, including: providing better education for growing numbers of people, enabling participation in a knowledge/networked economy, increasing life expectancy by improving the effectiveness of and access to health care, and applying innovative green technologies to mitigate and prevent further global environmental degradation. These entrepreneurs are free to choose new solutions unconstrained by the dominant logic and unsettled in the psychological comfort zone of “on-the-job-retired” executives. This allows them to be maximally innovative in their selection of business models to enable the viral penetration. If proven successful these frugal innovations from emerging regions can also expand globally into the developed world!

JobsAt what point does incremental innovation becomes harmful? And at what point does that perilous comfort afforded by managing the “known” open up the flanks of established enterprises to attack by the young entrepreneurs from the fledging South who are willing to plunge into new disruptive paradigms?

In a future post, I will connect human centered design and design thinking as radical departures from incremental revenue maximization/cost minimization centered design.

Let me know what you think, especially if you disagree.

Until my next blog  – Carlos B.


[1] Nicolás, Adolfo, “Depth, Universality, and Learned Ministry: Challenges to Jesuit Higher Education Today.”  Remarks for “Networking Jesuit Higher Education: Shaping the Future for a Humane, Just, Sustainable Globe.”  Mexico City.  23 April 2010.  Available online: http://www.sjweb.info/documents/ansj/100423_Mexico%20City_Higher%20Education%20Today_ENG.pdf.

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Mining the Silicon Valley Mind — Part II: A Perspective for Foreign Entrepreneurs

The content of this blog-post was presented during the keynote titled “Success Favors the Prepared Mind”, I delivered last Friday (June 21, 2013) at the 2013 Endeavor Entrepreneur Summit, in San Francisco, California, USA.

What makes Silicon Valley[1] unique?  Does the Valley’s success lie in its geography or in the mindset of the people who live here? While many of my posts focus on the Valley as a model to learn best practices and emerging trends, today’s post picks up the historical perspective of an earlier post published exactly one year ago — on June 29 2012 (http://carlosbaradello.com/2012/06/29/mining-the-silicon-valley-mind-a-perspective/). In this post, I share the ten attributes, which emerged over the past century and a half, which help to explain this region’s dynamism. Today, I expand on a new perspective on the required characteristics of today’s arriving foreign entrepreneurs to be effective and seize the opportunities that Valley offers.

I don’t believe it is Silicon Valley’s water or air that makes its people more creative, innovative or entrepreneurial than others. Instead, I’d like to share my perspective that the Valley’s entrepreneurial mindset has been 165 years in the making. In fact, this mindset has roots in Northern California’s infamous Gold Rush in the mid-19th century.

The early West Coast of the United States was largely inaccessible to the rest of the world. It was a harsh continental landscape away from the established East Coast, vast oceans away from Asia and Europe, deserts and mountains away from its even closer neighbors in Latin America. As a result, Northern California remained sparsely populated and isolated from the rest of the world for a long time, and people did not consider it worth the trouble to “Go West.” However, all this changed when gold was discovered in 1848.

Sailing to Northern California at the start of the Gold Rush

Sailing to Northern California at the start of the Gold Rush

Northern California’s Gold Rush started in 1848. Among the first to hear news of gold were people in East Asia and South America, and many chose to immigrate. Interestingly, these migrants’ motivations were very different from that of migrants who had arrived from Europe to the American Northeast two centuries prior. While the Mayflower Pilgrims came to the New World seeking the political or religious freedoms denied to them in Europe, migrants to Northern California fundamentally sought economic rewards.

The personality profile of Gold Rush migrants consisted of two key attributes: (a) a natural self-selection of risk-takers willing to migrate over vast and harsh terrains, and (b) a no-nonsense desire for economic rewards. As a result, the region’s DNA was self-selecting: people who chose to “Go West” were overwhelmingly risk-taking, adaptive, flexible, tolerant of discomfort, and even ready to die in their pursuit of economic prosperity. Seen through another lens, these migrants in fact were quintessential entrepreneurs. These gold-seekers, called “forty-niners” (in reference to the year 1849, when immigrants arrived in large numbers), often faced substantial hardships on their journeys to get here. Once they arrived, they faced mining accidents, diseases, and in many cases, death.[2]

Today’s foreign entrepreneurs mimic certain characteristics of the gold rush migrants of the 1800s. Instant broadband communications keep foreign entrepreneurs connected to the Valley prior their arrival and keep them connected to home upon their arrival.

What is the mindset required for an entrepreneur to be World Class?

What is the mindset required for an entrepreneur to be World Class?

The unique characteristic of this rugged, dangerous and isolated terrain had an enormous influence on the early settlers of the “Wild West.” I have concluded that the key attributes of the Gold Rush mindset can be summarized with 10 key characteristics that capture the spirit of the early settlers. Interestingly, these characteristics are not in isolation. They have much in common with the enabling characteristics of the 21st century’s Silicon Valley mind.[3] Furthermore, I have added a third column to the original mindset table published one year ago. This column addresses the required characteristics of the foreign entrepreneurs today to fully benefit from Silicon Valley’s resources and opportunities.

Northern California Dreaming:

Key Enabling Mindsets in the Mid-19th Century & Now[4]

and what it means for Foreign Entrepreneurs arriving today to the San Francisco Bay Area

 

Gold Rush Settler-Entrepreneurs in the Mid-19th Century[5]

Current Silicon Valley Mindset[6]

Characteristics required by Foreign Entrepreneurs to take full advantage of Silicon Valley

1

An independent and individualist mindset evidenced by their willingness to defy the naysayers in their home countries.[7]Ecosystem: NatureCost of Risk: your life (and possibly your family) The same individualistic and independent mindset is an essential characteristic of entrepreneurs attracted to Silicon Valley today.[8]  Pragmatic, confident and prepared to deal with the unknown — Willingness to defy naysayers in your home country. Become fully aware of what is required to perform, and prepare fully before arrival.Required actions before arriving:

  • Lived the Valley experience before coming,
  • Improve English knowledge and learn the business lingo,
  • Network virtually like crazy.

Ecosystem: Innovation/Knowledge Economy

Cost of Risk: your time  (and possibly some savings and/or your investor funding)

Be yourself: real and pragmatic

2

Risk taking mentality and tolerance of failures the adversity was such that failing was often the norm and accepted, as leaving was not an option. A climate that rewards risk-taking and tolerates failure — no stigma is attached to failure.  Readiness to deal with rejection, proven wrong, learn fast, adapt quickly, be energized by adversity Recover quickly and no one remembers. Demonstrate ability to listen, by your “improved” answers incorporating feedback. If you persevere unchanged with your perspective, you better be right! Be ready to be humbled.Required characteristics:

  • Fast learner,
  • Unfazed by adversity,
  • Quick to react/adapt; flexible,
  • “Smart” persistence and perseverance.

You will be transformed from a big fish in a small pond to a very small fish in a very large ocean!

3

Diversity reinforced by opennesssettlers were heterogeneous, arriving from across the world to begin their lives anew. A high-quality and mobile work force — the Valley is a global magnet for talented engineers, scientists and entrepreneurs.  You are adding to the diversity, so be yourself! — Do not try to be what you are not. However, do play by the valley rules and business protocols. Everyone expects you to master pitching and networking, and play win-win at a hyper fast-pace.Required actions:

  • Willingness to compete with the best and hold your ground,
  • Master the ins and outs of your business/industry globally,
  • Master you pitch,
  • Design your one-pager.

4

 Friendliness with an open mind as a consequence of diversity and isolation. They were one of the few committed to do something really hard.  Open business environment — win-win exchanges of knowledge. Rapid circulation of ideas enabling free exchange of information and experiences.  Leave the non-disclosures and confidentiality agreements in your home country Your best insurance policy is your brilliance and speed. Share as much as it is reasonable. It is likely you are not alone or the first to think on what you think is “the great idea”. However, be aware: the Valley is paved with great ideas!Required characteristics:

  • The Valley is open for business 24/7/365, are you?
  • High energy and optimist,
  • Balance between thinker and doer,
  • A connector that is willing to share,
  • Seek win/win outcomes.

5

 Natural cluster formation in the mining sector — by necessity to specialize was to increase overall efficiencies. Distinctive features of Gold Rush towns included bankers, goldsmiths, miners and traders.  Collaborations among stakeholders — business, government and nonprofits develop a coherent infrastructure of information sharing.Specialized business infrastructure — Financial, Legal, Investors, Headhunters, Accounting, Consultants, etc. The most distinctive feature of the Valley’s ecosystem is its array of support services for new high-tech businesses, including over 30% concentration of US-based VCs and angel investors.  Partner, partner and partner You cannot make it alone. You need help from many. Make explicit decisions on your value creation proposition (your uniqueness) and leverage the rest from partners in win-win relationships. The name of the game is to create wealth…. And share it!Required actions:

  • Identify what is core to your business,
  • Identify key partnership,
  • Be able to develop win/win relationships with the supporting stakeholders. You need all the help you can get!

6

Trial and error consciousness — the problems encountered had to be resolved locally with practical results.  Knowledge intensity — pro new ideas for new products, services, markets, and business models. The Valley generates the highest flow rate of ideas about information technology globally.  Global grand vision and great execution You have already demonstrated in your home country. Do you have the right stuff to play in the global business Olympics?Required characteristics:

  • Know your stuff; you will not be able to fake it!
  • The things you do not know, admit and learn quickly.
  • Get plugged in to the key information avenues either by networking or reading the right web sites/blogs.

7

Passion for success it was more than economic success; Gold Rush settlers loved the chase!  Passion for success that is paired with a results-oriented meritocracy — Talent and skills are king.  Age, ethnicity and seniority do not dictate opportunity or level of responsibility. Passion for success — Your success depends on your

MIND + HEART + EXECUTION

Required characteristics:

  • No one cares about your family prestige or wealth (unless you are investing part of it in your venture). Your degrees were helpful to get the first meeting, the rest is up to you,
  • Demonstrate your passion and commitment for your venture,
  • Walk the talk!

8

Creation of wealth — not just money but creation of a community. Universities and research institutes that interact with industry — rich sources of well-trained, experienced scientists and engineers willing to transform their knowledge into entrepreneurial ventures.  To get from the community you will have to give to the community ­Your pressure to capture the window of opportunity is very real and your limited resources are omnipresent. Yet your success depends on others and the successes of others depend of you. You will be asking favors and you will be expected to return them.Required characteristics:

  • “T” type of individual: focused and deep in their core discipline yet broadly knowledgeable and able to reach across different disciplines,
  • Success will be measured financially, but how you get there is also important,
  • You are creating your track record, success or failure, how you conduct yourself is important.

9

Pitching as a way of life!each Gold Rush settler was his/her best salesperson. Pitching is the essential skill of an Entrepreneur[9] as he/she attempts to obtain the initial customers, employees, funding, etc.  Your Pitch is your currency — Like the early gold rush settlers you are the best sales person of YOU and YOUR VENTURE! Perfect Pitch = Content + Structure/Organization + DeliveryRequired actions:

  • Master the knowledge of your business
  • Develop dozens of capsules
  • Master its delivery under ALL circumstances.

10

Eternal Optimismovercoming the challenges was the only available option. Favorable rules of the game — pro-business formation.  You will participate in the most sophisticated ecosystem on the planet It depends on you to take full advantage of the resources and opportunities it offers!Required actions:

  • Meet, read, follow, and network with successful entrepreneurs,
  • Learn from leaders in your industry,
  • Form a support network with peers and friends,
  • Mentors could be an incredible asset, find them and use them!

Bonus

 An attractive place to settle with mild weather and abundant natural resources. Attracted initially by gold, but later most stayed.  High quality of life — a beautiful place to work, live and play.  The Bay Area is a great place, enjoy the ride and make it memorable! — Whether your venture succeeds or fails, this will be a memorable period of your life. Your start-up is important, but it does not define you fully as a person. On the contrary you define your venture, Therefore, enjoy the ride! By every criterion your stay in the Bay Area will be a period of personal and professional growth! Required actions:

  • Organize your start-up so you can manage it remotely. Your stay in the Bay Area might be longer than what you anticipated,
  • Your ventured takes center focus, but leave a bit of time for others,
  • It is a marathon interspersed with many sprints in-between, manage your time efficiently and leave space to “smell the flowers”

 

Every day, foreign entrepreneurs bring their ventures to Silicon Valley in their quest to scale them up globally. Their goal is to leverage the SV ecosystem’s advantages to catapult their ventures to stratospheric success. However most of them fail. Actually many fail because the nature of this endeavor is very Darwinian, but there have been many others that were never in the running because they were not properly prepared, or had misaligned expectations, or probably some of both. The objective of the table above is to bring into focus the evolution of the Silicon Valley mindset from its early gestation days to today and what it means for the arriving global “gold seekers” of the knowledge economy. In fact these ten characteristics will help the entrepreneurs not only in Silicon Valley, but anywhere. Furthermore, as these ten characteristics are embraced by many they will help to transform the local ecosystem in a more dynamic and effective. As a summary these 10 characteristics are:

  1. Prepare for the unknown
  2. Adapt quickly
  3. Be yourself!
  4. Openness brings rewards
  5. Partner, partner, partner
  6. Global grand vision
  7. Passion for success
  8. Give back to the community
  9. Your pitch is your currency
  10. Eternal optimism

Hundreds of ecosystems pursuing innovation and entrepreneurship are sprouting up throughout world, and each one is seeking to create its own color and texture, learning from one another and improving and adapting the Silicon Valley model to local characteristics, norms and codes. Most have wisely given up any effort to replicate Silicon Valley after recognizing that the Valley could not replicate itself even if it wanted, since the conditions that fostered its creation are impossible to replicate! Without a doubt, though, gears are in motion to create such a “Global Valley”. However, this will take probably decades — note that SV construction did not happen overnight – in the meantime globally minded entrepreneurs will seek to come to the Valley, as actors dream to go to Hollywood or athletes crave to participate in the Olympics.

What do you think? Do you agree or disagree? Let me know, especially if you disagree!

Until my next post. – Carlos B.


[1] In my posts I often use three terms, Silicon Valley (SV), the Valley, and the San Francisco Bay Area (SFBA) or simply the Bay Area interchangeably.
[2] Levy, Joann (1992). They saw the elephant: Women in the California Gold Rush. Archon:N.p., pp. xxii, 92
[3]  Adapted from The Silicon Valley Edge, Edited by Chong-Moon Lee, William F. Miller, M. Gong Hancock, and Henry S. Rowen, Stanford University Press, 2000.
[4] http://carlosbaradello.com/2012/06/29/mining-the-silicon-valley-mind-a-perspective/
[5] This is the personal perspective of the author.
[6] Adapted from The Silicon Valley Edge, Edited by Chong-Moon Lee, William F. Miller, M. Gong Hancock, and Henry S. Rowen, Stanford University Press, 2000.
[7] In 1861, the telegraph connected San Francisco to the East Coast enabling cross-continental businesses and news-share; however, it had to wait until 1869 when the railroad connecting both coasts was completed to trigger the physical integration process to the USA. Still, the ten attributes described in the table below were so deeply rooted that continued to evolve becoming a distinguishing characteristic of this region.
[8] This is not part of today’s 10 key enabling characteristics shown in reference 2.
[9] This is not part of today’s 10 key enabling characteristics shown in reference 2.
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Being an Entrepreneur in Argentina is the “Best Revenge”

As my plane reaches cruising altitude after taking off from Ezeiza (Buenos Aires’ international airport) for the long journey to Beijing via Frankfurt, I plunge into my laptop to capture some of my experiences during this journey that began ten days ago.

The world continues to cry for you, my dear Argentina, as we watch your determination to underdevelop yourself, and as Argentines hopelessly adjust to unavoidably lower “new normals.” Against this challenging backdrop, I would claim that being an entrepreneur in today’s Argentina is an Argentine’s best revenge. Why? Stay tuned…

I arrived to Argentina last week from Lima. I was invited to deliver a keynote and be part of a fireside chat during Wayra’s Demo Day. My periodic visits to Lima make me a witness of the fast transformation of Peru as a vibrant economy and its integration to the global concert of nations. Wayra, Telefonica’s corporate incubator, is making an effort across 12 countries (mostly across Latin America) to move the needle in the evolution of the entrepreneurial ecosystems within the countries where it operates. Wayra represents a kind of enlightened Corporate Social Responsibility with great multiples!

Alberto Yepes, Managing Director of Trident Capital,  Juan Francisco Rosas, Executive Director Wayra Peru  and Carlos Baradello during the Wayra Demo Day Fire- Side Chat, Lima, Peru. (May 22, 2013)

Alberto Yepes, Managing Director of Trident Capital,
Juan Francisco Rosas, Executive Director Wayra Peru
and Carlos Baradello during the Wayra Demo Day Fire-
Side Chat, Lima, Peru. (May 22, 2013)

In vast contrast from landing in Peru, landing in Argentina is like returning to the past. The country refuses to learn from history traversing similar failed paths and repeating parallel mistakes. Every week a new corruption scandal shifts the public discourse and the dinner table conversation from the prior week’s scandal now already forgotten. Argentina’s reality show exceeds any possible fiction, making the TV news program lead the ratings as the most entertaining, surpassing even a soccer game!

The institutional lies permeating every aspect of Argentine society has eroded the public trust requiring a bigger lie to cover the prior one. Its magical realism make the lyrics of Enrique Santos Discépolo’s 75 year old tango “Cambalache” more relevant today than even in the past!

 

Cambalache – Spanish Lyrics

 

 

Cambalache – English Lyrics

(by Google translate)

“Hoy resulta que es lo mismo
ser derecho que traidor,
ignorante, sabio o chorro,
generoso o estafador…
¡Todo es igual!
¡Nada es mejor!
Lo mismo un burro
que un gran profesor.
No hay aplazaos ni escalafón,
los ignorantes nos han igualado….
¡El que no afana es un gil!”
“Today it is the same
to be a traitor,
ignorant, wise or thief,
generous or swindler…
Everything is the same!
Nothing is better!
The same a donkey
as a great professor.
There are no failing grades or ranks,
we have been matched by the ignorant…
He who does not steal is a fool! “

While Argentina is preoccupied in its de-construction, Argentine entrepreneurs are hard at work constructing new dreams. This apparent contradiction is fueled by the quality of the country’s human capital.  Historically, Argentine professionals could use the escape valve to emigrate as they were welcomed in the USA or the European countries of their ancestors. However, the global crisis, has made that possibility largely unavailable.

Cristina Fernández de Kirchner, Argentina’s President surprise herself as well as to the Argentines with her leadership and policies.

Cristina Fernández de Kirchner, Argentina’s
President surprise herself as well as to the
Argentines with her leadership and policies.

Today, Argentine entrepreneurs are enabled to start their own ventures by the lower barriers to entry in certain technology sectors and facilitated by low opportunity costs. Young and confident, the country’s innovators and entrepreneurs are giving up very little to take the plunge and launch their new ventures. Corporate salaries are low (even lower when computed with the dollar blue, the free market floating rate) and careers are doubtful in enterprises that are afraid to plan for the uncertain medium term (forget about long-term planning). To conclude, Argentine business’ daily existence is driven by constant required trade-offs to assure its own immediate survival giving up any semblance of excellence.

Competent programmers, engineers and able business managers have made arrangements of continued support from family and friends for their personal survival and pursue the “next big thing.” Their quest to build their new venture is facilitated by (1) low barriers of entry, due to the democratization of technology, (2) their professional competence, enabled by what remains of a good educational system and (3) a global mindset, still a society constant since these Argentines are the product of immigrant parents or grandparents. Furthermore, they have grown up in an environment that has trained them in an environment that requires smart optimization of their limited resources and street smarts that require extreme flexibility, due to the country’s increasing unpredictability. In other words, Argentine entrepreneurs are well prepared to lead their start-ups. They are resilient, flexible, resourceful and adaptable to tackle the unknown global markets and optimize their venture development with very limited means.

These dreams are constructed often through a focus on foreign markets, where their ventures will unavoidably migrate. They will likely retain their product development team in country as long the cost arbitrage can justify the use of Argentine human capital. Their globally minded leadership will consider opportunities offered by programs like the now popular Start-up Chile, and similar programs offered by countries including Brazil, Portugal, Singapore and others in exchange for basing some aspects of their ventures to those locales.

Argentina’s entrepreneurs are today’s hope of the country to retain some relevance, and for the rest we will continue crying for you Argentina!

Until my next post – Carlos B.

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