Innovation and upward mobility across the socioeconomic pyramid: A reason for optimism or pessimism?

This past week, I woke-up on November 9th to learn the election results of the nasty 2016 US presidential election. The results prompted me to finish this post that was already in the making for some time. While for many this election was about issues like race, gender or even immigration or other factors, I believe this election was ultimately decided by voters who felt massive economic insecurity. Last Tuesday (November 8, 2016), the election provided a channel for Americans, particularly those living throughout the so-called Rust Belt, to voice their collective economic resentment as they are increasingly left behind in an era of globalization and accelerated technology changes. In today’s post-election post, I will make an attempt to discern the impact of the accelerated pace of technological innovations on upward or downward socioeconomic mobility.

Last September, I published Innovation: Impetus for Global Resentment?, in which I argued that for most of the last century, the professional re-invention process happened naturally as a part of generational improvement as parents sought better futures for their children. At that time, the variables of the time constant of innovation and lifetime expectancy were somewhat aligned, enabling a rather natural process for successive generations to capture the opportunities presented by new technologies.  Each new generation could potentially aspire to a better lifestyle, afforded by higher paying jobs with higher value added, by embracing businesses enabled by technologies unavailable to prior generations. For the most part, education was the great enabler[1].

Today, and over the next decade, global innovations facilitated by exponential technologies, will be deconstructing and reconstructing every industry and business, as we have known them.  Each industry will have its own “Kodak moment” as digitalization, demonetization, dematerialization, democratization or for short massive disruptions target established incumbent businesses. As they continue to operate under old paradigms supported by old technologies, they fall prey to new business models and technologies embraced by agile new firms. This deconstruction and reconstruction of industries and their associated businesses will challenge the disrupted workforce to either: (a) resign to accept lower paying jobs at the base of the job pyramid, or (b) re-invent by gaining new skills in new areas with the hope of maintaining or improving the income level they enjoyed before the disruption happened.

In this post, we explore how this deconstruction and reconstruction process will become a threat to those jobs in the mid-income range, polarizing society and increasing income inequality between the commodity jobs at the base vs. the high value added jobs at the top (see below, Figure 1, Job Compensation Pyramid). Each one of these transformations will impact firms (and their employees) on the winning and on the losing side of the battle lines. However, all these transformations will have in common, and as ultimate winner the consumer, as each disruption will bring what economists call “consumer surplus”, benefiting them by increased convenience and productivity, adding predictability to their lives at a lower cost. The consumer adoption of these new technologies will become irreversible, and once embraced, it will spread virally and get installed in our lives until the next new technological disruption. Obvious examples include digital photography and e-mail, since it is highly unlikely we would ever return to celluloid photography or post office (or fax) delivered letters.

The disruptors “uberize”[2] existing industries in few years, creating new customer value by introducing new products and services at lower cost (or no cost) and offering higher productivity and convenience. In fact, it is this new customer value that fuel the viralization and massive adoption by end-consumers or business customers, catapulting the disruptors as dreadful competitors of established companies now under threat.  Whether is the taxi coop, a hotel chain or a photo parlor, they are all assaulted by the new entrants. Likely, these disruptors have limited or no prior experience in the industries targeted, however, they master the digitalization of businesses, new technological paradigms, and business model innovations; while enjoying access to capital from well-connected VC, Super Angels and other strategic investors.

The investors’ motivation is dominated by FOMO (Fear Of Missing Out). They participate in a XXI century version of wealth transfer from the incumbents to the few global disruptors they fund. They place their bets by funding what they hope will become the future Amazon’s, Google’s or Facebook’s. The odds are tiny but the multiples enticing. Hence, money flows in the form of investments to these entrepreneurial teams seeking to build the next Uber by targeting the incumbents in the established industry to be disrupted.

The disruptors are typically bright and energetic entrepreneurs often in their 20s and 30s with some or limited experience, unencumbered by the responsibilities of family or children. In many ways they have little to lose, not because they are irresponsible playing with others people’s money, but rather share the view that the challenge of becoming a disruptor is a worthy endeavor. A few years of their lives committed to a high risk moonshot, can provide and extraordinary learning experience, which if successful could make enough money for a lifetime. The hall of fame proves it is feasible, with new names being added periodically to those like Steve (Jobs), Larry (Page), Michael (Dell), Bill (Gates), etc.

The incumbent companies are at large passive bystanders. Actually, most of the firms knew of possible threats beforehand, however, their response were lukewarm as they were tangled in their own internal processes, and management energy’s misplaced in internal politics and preoccupied in their own personal future while serving often dying customers. The incumbent firm focus was highly optimized in the established (old) technology and serving traditional customers, leaving its flanks open to the disruptors targeting emerging technologies and/or new customers.

By the time the new reality defined by the disruptors emerges, is often too late and by then, their tepid actions are unable to reverse their fate, which by now is a painful decline and an irreversible death. In other words the firm faces its own “Kodak moment”. While management bears most responsibility, employees and supply chain stakeholders will suffer the most, affecting potentially hundreds of thousands/millions of jobs. In the absence of a well-defined action plan, many will be consigned to jobs with lower earning capacities and risk being jobless all together.

For most individuals, their position in the socioeconomic pyramid is determined by their compensation. Figure 1 below identifies three areas of the socioeconomic pyramid as defined by the job compensation.

At the base of the pyramid are commodity jobs typically compensated in the US under $20/hr.[3] They tend to be workers performing highly standardized activities with little differentiation generally prescribed by simple rules or algorithms. They often require limited amounts of training and the individuals holding those jobs for the most part are easily replaceable. Examples of these jobs are janitorial service providers, painters, customer service representatives, fast food workers, etc.

At the top of the pyramid are the highly compensated jobs (>$100/hr.). These tend to be professions requiring skills difficult to standardize. They often require knowledge and experiences that the market values highly, and are likely in limited supply. Therefore, these positions are generously rewarded. Examples of these jobs are plastic surgeons, board members, physicists, mental health professionals, most engineering fields, etc.

The middle income jobs (between $20 and $100/hr.) are those most challenged. These are the positions susceptible to disruption by emerging technologies (i.e. digitalization, machine learning, 3D printing, AI and big data, etc.). These workers perform activities able to be targeted by blue and white collar robots, and are sufficiently paid to justify the ROI (return on investment) by applying these new technologies. In other words these are the jobs that large sections of society holds, often referred as middle class jobs. Examples of these jobs include traditional manufacturing jobs across many industries, first/second level supervisor and administrative roles, logistical operators, financial analysts, etc.

As new technologies disrupt many jobs, it is worth mentioning two important dynamics:

  1. New technologies, as they become established, create new jobs, requiring new skills along the three ranges of the job compensation pyramid,
  2. Technological innovations do not know of “sacred cows”. Once considered “high value jobs”, at some point their protection erodes as new technologies are able to perform their functions better and more cheaply. The health care and legal professions have long been considered untouchable, but these too will feel a downward pressure from their positions of privilege.

Furthermore, the average lifespan of each technology is shortening, often to less than a decade to complete its life cycle, instead of multiple decades, which was the life cycle of technologies for most of the prior century. Therefore, “Kodak moments” are becoming increasingly likely, with the unfortunate consequences of the destruction of shareholder value and employment.

For the affected workers holding mid-income jobs, three possible outcomes are expected:

  1. Accept lower paying jobs and suffer income decreases at lower levels in the job compensation pyramid,
  2. Work longer hours or take second/third jobs to protect income levels,
  3. Re-invent by gaining new skills in new areas often borne out of one of the aforementioned disrupting technologies.

Options (1) and (2) are self-explanatory and represent suboptimal solutions since they require accepting in perpetuity lower income levels, or working longer and longer hours to retain prior income levels. Option (3) brings some hope, yet requires the non-trivial decision of applying the time, effort and resources required to embrace the personal/professional re-invention process. However, the selection of the area of re-invention or what new skills to acquire cannot be left completely to individual choice; rather, this decision will require guidance emanating out of a concerted collaboration between government and the technology and educational sectors.

Until my next post amigos – Carlos B.

[1] My own life experience is a perfect example. My immigrant father had only a 3rd grade elementary school education and my mother only completed 6th grade, yet their two children went on to college and completed graduate studies overseas.

[2] UBER disrupted the taxi and limo industries around the world in just few years (<5 years)

[3] Fully loaded salaries, in other words, the gross salary plus the cost of the benefits paid by the employer.

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Innovation: Impetus for Global Resentment?

Seismic global events such as Brexit, the rise of nationalistic movements, or Trump’s nomination as the Republican presidential candidate here in the United States, are not isolated phenomena, but actually have something in common: both appeals to citizen fears. Over time these accumulated fears lead to collective resentment across broad sectors of society motivated by income stagnation, job losses, increased socioeconomic inequality, etc. Daily headlines in the global media identify simplistic targets, when they are actually pointing to visible consequences, rather than identifying root causes or, even more rarely, possible solutions.

In this blogpost, I would like to connect the accelerated pace of global innovation as one of the root causes of today’s painful societal structural cracks, which are exacerbated by a longer life expectancy of the population. Citizens feel increasingly disconcerted by the speed of the disruptions they experience, feeding individual fears into collective resentment.

We can commence our thought experiment by considering the introduction of the Ford Model T in 1908, which sought to replace the horse-pulled buggy, the prevailing mode of transport in society. This disruption was as big as any of today’s eminent disruptions. However, its impact was felt over decades since society was slow to adopt this new technology. Hence, individuals who made a living moving goods or people via the incumbent technology (the horse-pulled-buggy) were slowly phased out over a period of time. Not only was the adoption much slower (the automobile took about 5 decades to reach approximately 60% of US households), but the average life expectancy of those affected, or disrupted, by the advent of the motorized buggy, was relatively much shorter.

Transition Time Frame Incumbent Technology New Technology Number of years to penetrate  60% of US households
1900 – 1950 Transportation technologies:

Horse-buggies, or other animals or humans used as power source

Motorized vehicle 48.7 years
US Life Expectancy in 1911 (Caucasian) at Birth M= 50.2,   F= 53.6

at 30 years old       M= 64.8, F= 66.9

1990 – 2005 Information transport technologies: Dial-up modems, Fax machines, Postal Service Internet 15 years
US Life Expectancy in 2000 (Caucasian) at Birth M= 74.5,   F= 79.9

at 30 years old       M= 76.4, F= 80.9

2003 – 2010 Celluloid Photography Digital Photography 7 years
US Life Expectancy in 2004 (Caucasian) at Birth                   M= 75.7, F= 80.8

at 30 years old       M= 77.3, F= 81.8

Table 1: Key disruptive technologies, adoption rates and the life expectancy (M= male and F= female)

Following the same example, a Caucasian male conductor of a horse buggy in 1911 of age 30 would be expected to live to age 63.8. Assuming he would be able to work until age 55, he would likely have another 25 years in his occupation without disruptions. Given that the threat of being replaced by the new technology took decades, it is likely he would be able to retire in his mid-fifties without being significantly disrupted by this new technology[1].

Let’s envision now a more current scenario: a Caucasian male 30-year-old photographer/dark-room developer of film (or celluloid) photography in the year 2004. Here, the likelihood of his being disrupted before age 35 is extraordinary (2004 is approximately 5 years after the market introduction of digital photography), since digital photography took only 7 years to be embraced by 60% of US households. Our hypothetical photographer would be left with about 30 years of productive life before retiring. Clearly, he will need to reinvent himself, not once, but possibly multiple times throughout the rest of his professional journey.

Our hypothetical photographer is not alone in his drama. The transition from film to digital was so rapid (only 7 years to penetrate 60% of the US households)[2] that it would have been very difficult for him to reasonably foresee the severity of its impact. First, this disruption democratized ownership of a camera by dematerializing it: each smart phone included a digital camera, as well as a myriad of apps whose effects would be profoundly felt by the entire photography equipment sector. But the damage did not stop there, since that same disruption demonetized many of the revenue streams of the photography industry, e.g., the copy and print photography sub-industry. Hence, our hypothetical photographer had abundant company. The disruption of the entire film photography industry was devastating, indeed.

Our hypothetical photographer’s challenges, unfortunately, do not end there. The living wages he was able to earn as a photographer have quickly eroded as many of the tools of his trade have been dematerialized, demonetized, and in consequence democratized. This example is thus far different from our example of the horse buggy conductor, who could possibly have continued in his profession into retirement or death. But our photographer has seen his livelihood and living wages at best quickly eroding and at worst completely disappearing.

A quick summary of our discussion can be captured as follows:

  • The pace of innovations is accelerating at an exponential pace;
  • Willingness of society to adopt innovations to alleviate perceived market pains is also increasing at an exponentially faster pace;
  • If successful, each innovation wave disrupts incumbent technologies, reducing them to obsolete status and destroying the jobs of those involved;
  • Professionals of ALL ages need to re-invent themselves by acquiring new skills and training;
  • As innovation and adoption patterns accelerate, the need to re-skill and re-train may occur several times in the lifetime of an individual, requiring a constant process of professional reinvention.

Every aspect of our human activities has been, is being, or will be disrupted over the next decade. The way the incumbents created economic value has changed or is in the process of changing. While incumbent technologies and their operators fight with tooth–and–nail to preserve the status quo[3], most of the time the allure of the benefits resulting from demonetization, dematerialization, and democratization offered to the consumer become too attractive to pass up, rendering disruption inevitable and irreversible. However, a fraction of those very same consumers would become disrupted as a result of their behavior.

While it is easy to intellectualize a constant process of reinvention whereby society continually harvests ever increasing rewards from the market by increasing the amount of economic value added, the implementation of that process is far more challenging. For one, re-invention takes resources, time and dedicated effort. Even if these three conditions are simultaneously met for any given individual, it remains unsolved, the identification of the area of re-invention. Distinguishing technology fads from real strong and durable trends is often hard to distinguish, especially in its early stages, even for the trained eye. All together re-invention is often a fearful and distressing proposition, transforming the sum of individual fears into collective resentment.

Furthermore, governments and policy makers are ill-prepared to guide our hypothetical “film photographer” for his journey of periodic reinventions, because their policies are often predicated on antiquated economic models, e.g., industrial societies. Actually, government employees, due to the protected nature of their jobs, are often incapable of understanding the realities of these market disruptions, augmenting the resentment of the affected private citizens.

Lastly, the globalization of innovation adds to incumbents’ accumulating fears as new unheard players from remote geographies threaten the incumbent firms and the jobs of all those they employ. Those that lobbied hard for free trade a few decades ago, now lobby even harder to return to protectionism with the hope of avoiding the blows of disruption. The often pronounced statements of politicians to bring back old manufacturing jobs is misguided and counter-productive. If China or Vietnam wants to continue assembling combustion engine vehicles we should let them do it, while we lead in the development of electric self-driven vehicles…. But, wait a minute… did I just say electric self-driven vehicles? Then, we will need to address the fears of all the Uber and Lyft drives, gasoline station operators, etc., etc…. as they will all be massively disrupted.

My hope is that I have provided in this post a context for the unsettling reality that many today are experiencing in their professional careers. In my next post, I will explore possible opportunities for solutions. No doubt that in the meantime, we should be prepared to think carefully about the reasons for growing global resentment and challenge our politicians with hard questions that consider the complexity of the issues. Let’s not allow them to get away with the often overly simplistic solutions of the soundbites they propose.

Until my next post – Carlos B.

[1] Keep in mind that in the ensuing years many older colleagues left the profession due to retirement of death, delaying any possible effect to our hypothetical Caucasian male horse buggy conductor.

[2] Taking many casualties in the process. Kodak, the undisputed leader of film photography and, counter-intuitively, the inventor of digital photography.

[3] Performing incremental improvements, which in retrospect often result in too little––too late changes.

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My New Year Salute!

Dear Amigo, this a time of the year is to reflect, acknowledge and appreciate friendships amidst the ups and downs of our hurried lives. During these uncertain times YOUR friendship is a bedrock of confidence and optimism to continue our battles and re-double our bets!

Thank you for bringing perspective and depth,
Thank you for being the best medicine for the pessimism and negativity that seems to be omnipresent in our world,
Thank you for sharing your “joie-de-vivre” with all those who surround you, and most important,
Thank you for being you.

This is my way to recognize your friendship and express my gratitude,
extend my invitation to share many more adventures together in 2016, and wish you a Happy New Year!

Carlos S. Baradello, PhD
Managing Partner of Sausalito Ventures, and
Professor of Innovation & Entrepreneurship at HULT International Business School

Cell: +1 (415) 342 6663
Blog: www.carlosbaradello.com
Firm: www.sausalitoventures.com
LinkedIn: www.linkedin.com/in/baradello
Skype: baradello

424 Johnson St., Unit “A”
Sausalito, CA 94965
USA

Posted in My posts, Personal note | 1 Comment

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: https://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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