Reflecting on the Art of Pitching – Part II

The capsules

While the prior posting presented an overview to the importance of the pitch, this blog-post develops a pragmatic approach to the construction of the Elevator Pitch.

The Elevator Pitch capsules’ development, step by step

It is much harder than you think to describe a complete business with multiple moving parts in a brief rapid fire sequence of statements that display your enthusiasm and commitment (a.k.a., passion) for your venture. My proposal is first to organize the script as a written set of perfectly crafted sound-bites that you can reuse multiple times in different settings to communicate your venture. By reusing the same, highly refined content adapted to the requirements of selected media campaigns: web presence, company brochures, venture one-pager, e-mails, product descriptions, etc.; you will ensure the consistency of your message and enhance your productivity.

Objective achieved. The next meeting is assured!

Objective achieved.
The next meeting is assured!


What are the opportunities emerging from alleviating such a pain?

Think of headaches… migraines would be even better, and show me that every person on the planet gets one at least twice a week!

  1. The problem you solve
  2. Why you?
  3. Why now? Too early or too late?
  4. Key opportunities
  5. Key challenges
  6. Any dominant force in the market?
  7. Current or future competitors?


Tell me about your “improved” new aspirin and how you intend to reach the billions of people who get migraines twice a week.

  1. Product/Service development status,
  2. What follows to the initial offering — v1.0,

Product road-map — Note: no one invests in one-trick ponies,

  1. Timetable
  2. What is your “unfair” advantage,
  3. Competitive differentiation,
  4. Current sales and sales potential,
  5. Market size and growth,
  6. Target customers: initially and later,
  7. Customer anecdotes,
  8. Distribution channels


How this “improved aspirin” will benefit all the stakeholders of the venture?

Cheaper, faster action, no side effects, easier pill to swallow, easier to manufacture, higher margins, cleaner process, etc.

  1. For the purchaser
  2. For the user
  3. For the payer (a, b, and c may be the same or different people)
  4. For the employees developing/manufacturing the product
  5. For the shareholders
  6. For the community
  7. Identify all the benefits across all product dimensions:
  • Initial cost as well cost of ownership. Quantify savings
  • If used as a tool. Quantify productivity increase.
  • If used as part of a process. Quantify the improvements in term of time, throughput, maintenance savings, energy savings, etc.
  • Identify sustainability and community benefits.
  • Are all benefits delivered at once? Or phased over time?


Great ideas are a “dime a dozen”. It is all about superior execution.

Manufacturing billions of aspirins every day with the quality and cost targets are not an easy task. Persuade me that you can and will deliver superior results.

  1. What are the key activities required to launch the business. Can you distinguish the trees from the forest? Every business is complex and new ventures cannot address all of them. Can you simplify and prioritize the few essential ones.
  2. Who are the stakeholders and their needs? Do you know their needs? Are their interests aligned?
  3. Which are the key partnerships you need to develop? How do you intend to leverage each one? What type of partnerships? Are they sustainable?
  4. What are the critical success factors? Can you obtain them?  Is it realistic?


Will your aspirin make all of us richer?

  1. The selected business model? Why?
  2. Funds you need to launch your venture,
  3. Cash you will generate
  4. Founding sources? How many rounds?
  5. Total funding required to break even?
  6. Profitability of your business
  7. Expenses you will manage
  8. You confidence that you will never ever run out of cash!


  1. Founding/Management team & track record
  2. The extended team (mentors, advisers, board members. etc.)
  3. What critical positions are you missing? Can you recruit them?
  4. How have you and the other members of the management team built great organizations before? Do you have the management strength required?
  5. Have they performed at peak over sustained periods of time?


  1. What are the key risks you will confront?
  2. How do you intend to manage them?
  3. Contingency plans?


Do not over do it! Please.

  1. How do you intend to sustain your “Unfair Advantage”?
  2. Your Grand Vision about the industry/the world and how you will dominate!
  3. The “greed” factor: Appeal to it, most investors are greedy!

 Step 9: THE ASK

Build momentum to ASK:

  1. If customer, for the PO,
  2. If investor, for the $$$,
  3. If a relationship, for the intro. or the referral,
  4. If a future employee, for coming on board,
  5. Etc.


  1. Alone,
  2. With your family, friends
  3. With C level executives,
  4. In coffee shops, noisy bars, over Skype, in board rooms, etc.;

Until you feel confident that you can deliver in every situation the perfect pitch in the eyes of the audience.

Manage the audience; anticipate most questions and every question must be answered, even if it means “I will mail you the answer in 24 Hrs.”.

Remember again the onion metaphor described in Part I. Pursue your discussion layer by layer, each one completely self-contained. The challenge is starting at the outermost layer and keeping the explanation whole while also consistently at the right level of abstraction. You might find it difficult to resist the temptation to dive deeply into the heart of your idea and go all out. You’ll want to show how brilliantly you can take deep conceptual dives into the heart of the business or the underlying technologies and then return safely to a more surface-level discussion.

How long is the perfect pitch? It should be few seconds less than the allocated time. Sometimes the allocated time is fixed by external circumstances out of your control. If it is within your control, it has to be a bit shorter than what you think would feel like a monologue. Just say enough for your audience to ask for more.


Perfect Pitch = Content + Structure + Delivery[1]

After everything is done, through your script away and let it flow naturally. Deliver a personalized message, customized each time to your audience. Keep it brief and clear. Time yourself to the 15 seconds you may only have to the 90’ or so when it starts feeling like a monologue. Keep in mind that this is NOT a lecture, but a conversation. Hence, keep it concrete and consistent. Furthermore, you are establishing your credibility. There are few things more emblematic of credibility than an impeccable synthesis of complexity, layering, dividing and conquering, through a sequence of sound bites of neatly assembled building blocks.

Entrepreneurs DO care about the first impressions, and your elevator pitch is one of the key tools at your disposal to make the positive impact you seek in the first 30 seconds.

Keep on pitching until you master the art! And do not forget the ASK! The responses you get may surprise you, and you will never know unless you ask.

Until my next blog-post – Carlos

[1] The delivery depends on the public speaking and business communication skills of the entrepreneur. This compounded by the fact that for most foreign entrepreneurs English is the second or third language. For this reason the development of written capsules are of paramount importance.
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Reflecting on the Art of Pitching – Part I

I often find myself explaining to foreign entrepreneurs the concept of an elevator pitch[1]. Since some of you have never heard the term before, I will explain it here today. The metaphor borders on the comical or childish, and the initial first reaction of my foreign visitors to the term is often disbelief. However, they learn quickly that ‘pitching’ is an art difficult to master, especially for some of us––the talkative Latinos!

B1The proverbial elevator pitch gets its name from the opportunity to tell-and-sell your idea/story during a 30-second elevator ride with anybody who you believe needs to hear it. The elevator only has two passengers, you and the target audience of your dreams. You will have their undivided attention for this brief span of time. You must seize the moment. How will you take advantage of it?

The 30-second parameter is based on the typical attention span, resulting from the research published by M.O. Frank in his book, How to Get Your Point Across in 30 Seconds or Less. This is one reason why politicians, celebrities and media outlets routinely deliver their messages in sound bites fully encapsulated in 30 seconds or less each!

Screen Shot 2013-03-21 at 7.38.21 AM

Whether we are consciously aware of it or not, we are always pitching all day long. We do so when we introduce ourselves to new acquaintances we meet in social or business contexts, during sale calls, while recruiting new employees, soliciting support, requesting funding, asking someone out on a date, etc. In each situation we need to identify a “pain”, problem, or personal difficulty, and then respond in kind with a solution.  In that process, we need to establish ourselves as credible actors, people that can be trusted to convert proposed visions into actual solutions.

Let’s be clear. No multi-million deals are sealed after a 30, 60, or 90-second pitch. Multiple meetings and activities take place for the customer to give you that big order or a venture investor to agree to provide millions of dollars of funding. However one pitch leads to the other and so on.

The metaphor of peeling an onion is useful to illustrate an excellent approach for structuring a pitch. Pitching is like peeling the layers of an onion. Each layer exists independently of the ones that supersede it. Each layer can be removed cleanly and independently of the others. Similarly, the multiple layers of your business concept should be explainable/approachable and offered in this tiered manner. As we remove each conceptual layer, we reveal some additional complexity of the business idea, progressing from a high level of abstraction to a low level of abstraction, where the nitty-gritty details emerge in their full glory. This evolution in abstraction needs to be clear and properly managed. Each layer has its own hook and corresponding conclusion that leaves your audience craving more, waiting eagerly for you to peel the next layer of your onion, revealing refined strategies, agendas, and implications.

Can you do this? Yes you can, but it is hard work. It requires preparation and there is no room for improvisation! It is working long hours fully understanding your business in detail first and then organizing your script as a sequence of dynamic sound-bites.

Your pitch isn’t about you. It is about your audience, and oftentimes making intricate conceptual dives (no matter how profound) will probably bore, confuse, or induce apathy in your audience. Instead, just focus on making the complex devastatingly simple to keep your audience engaged, interested, and asking quality questions. In other words, you want them “buying” your proposition and moving in the direction you want them to move in!

Finally, retain control of your audience, because you have a story to tell. Take queues from your audience, and do not be afraid to deliver two hard answers: (1) I do not know the answer YET; and (2) you will have to wait a few minutes for the answer. And do not forget to ASK questions! You have been delivering the elevator pitch of your venture for a purpose and your audience has invested their time in listening to you for a purpose… So do NOT forget or be afraid to ASK them for their insights, responses, musings, etc. If they’re a prospective client ASK what it would take to win their order, if they’re a future employee ASK them to apply to join the start-up team; if they’re a potential partner ASK them to partner with you; if you’re seeking funding ASK for it; and then ASK some more. Just a willingness to ask will bring you immeasurably closer to your goals.

Entrepreneurs DO care about the first impressions, and your elevator pitch is one of the key tools at your disposal to make the positive impact you seek in the first 30 seconds.

Next week, I will publish the second part of this blog-post. In the next installment, I will describe a novel methodology of developing the elevator pitch, by developing a set of reusable capsules.

Until my next posting – Carlos B.

[1] The word pitch or pitching comes from baseball. Often American business English adopts sport lingo to capture the essence of certain business situations or activities. For many of us who grew up with soccer and are now immersed in the American business culture, it has been an experience to learn about “home runs”, “doubles”, “singles”, etc.

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Flattening the Global Innovation Landscape — Part III: What is next?

Constructing the landing platform for foreign entrepreneurs in Silicon Valley —  From dream to reality! 

During Part I of this three part series blog-post, the pain in flattening the global innovation landscape was framed as follows:

The pain: Young ventures born in emerging countries lack access to the enabling and proven processes that will increase the probability of scaling-up quickly successfully. This is due to the lack of maturity of their own ecosystems and the barriers to entry or limited access to a network of peer innovation ecosystems around the world.

The objective is to provide efficient global scaling mechanisms to enable those ventures possessed of the “right stuff”: a team of entrepreneurs, a value proposition, investors, huge potential markets, etc., to reach their full potential globally.

Implicit in this problem statement is that the Innovation & Entrepreneurial (I&E) fever will continue in Latin America and is not a passing fad. In addition it is expected that the global commodity boom will continue providing the resources to support the development of local entrepreneurial ecosystems. Implicit is also a hope that within a finite amount of time there will be a number of success stories from local entrepreneurs and investors who will become “rock stars” and regional role models, sustaining and adding fuel-to-the-fire of the I&E fever.

If these assumptions are correct (I believe they are), then the opportunity emerging for alleviating the identified pain is as follows:

The opportunity: Create an efficient “landing experience” for entrepreneurs from emerging world regions to increase the odds of their success in the global scaling of their ventures. Implicit in the development of this landing platform is the creation of economic value for all the stakeholders involved in this activity. Equally important is the development of an intangible value or “mystique” of the landing platform, through the formation of a community and its culture, customs and bridges forged between Latin America and Silicon Valley.

First follow the Money

The starting point is the foreign entrepreneurs, their ventures, and their early local investors. A fundamental key assumption is that entrepreneurs and local investors have a global mindset and aspire to scale their ventures globally. It is of equal importance that their value propositions have already been proven in local markets and that they have grown in the conviction that their solution extends competitively to other world regions, including the developed world. Therefore, the fundamental selection criteria for these young companies targeted for global scaling are:

  1. Global mindset of their participants,
  2. Obtained funding from local investors, and
  3. Proven products and services with paying customers.

The activity of this proposed platform hinges on the local angel groups and/or VCs. These organizations are sprouting up across Latin America and are taking multiple forms (i.e., local accelerators, angel groups, leveraged VC funds, public/private partnerships sponsored by economic development agencies, etc.), as they have adapted the best practices from the US, Israel, and other advanced entrepreneurial ecosystems from around the world to their local reality. The local angels and VCs are fundamental because they have elected to place their investments in a selected group of portfolio companies from a large number of start-ups from the local ecosystem.

Local angel groups and VCs make investment decisions from the pool of local companies based on their investment philosophy, management experience, track record, area of expertise, etc.

Local angel groups and VCs make investment decisions from the pool of local companies based on their investment philosophy, management experience, track record, area of expertise, etc.

Typically the local angels or VCs are successful business executives and entrepreneurs who are most likely philosophically grounded in the “old” economy paradigm but nonetheless tempted to participate in the new wave of internet and mobile platform ventures. They are the pioneers in the ecosystem participating in an activity that at large did not exist 5 to 10 years ago. They are risking their own money as well as the funds of other business associates who have been persuaded to participate. In many respects they are learning how to become an angel or VC investor in the incipient industry of risk capital. A good deal of their prior experiences will apply however many of the rules of the old (atom/physical) economy do not. Furthermore, they bring with them a number of “bad habits” since historically they have benefited from information and access asymmetries, which in many of the advancing Latin economies are being eliminated due to an increase of transparency and rule of law.

As their portfolio companies progress, soon they realize that the true opportunity of adding real multiples to their initial investments exist by scaling to international markets, particularly the Bay Area. This is a quantum challenge since the typical Latin fund lacks the resources to have a meaningful presence here in the Valley. Therefore, the proposed solution in this blog-post is to pool the resources of many of these small funds dispersed across Latin America,[1] contributing/sharing the three key assets at their disposal:

  1. The most successful portfolio companies that are ready for global scaling,
  2. The collective business experience of the investors and limited partners, and
  3. Financial resources

As portfolio companies are selected from many local funds (Angels/VCs) a number of key questions are triggered: where, when, how, how long, cost, etc. An equal set of questions are also triggered of a more personal nature affecting the daily life of the foreign entrepreneur(s) emerging from the possible relocation.

The Landing Platform

For the landing platform to be a sustainable enterprise it has to be economically viable and meet the needs of all stakeholders. It is envisioned that there are 5 key stakeholders:

  1. Foreign Entrepreneurs,
  2. Foreign Investors,
  3. US based VC/Corporate Investors,
  4. Landing Platform, and
  5. Community of which the Landing Platform is located.

As the Landing Platform is designed, the expectations of the five stakeholders are at its center. Interests must be aligned and centered with the success of the start-ups scaling globally quickly and efficiently. The success criteria could be different for each company: increased sales, wider markets, increased profitability, patent protected technologies, sufficient funding, excellent advisors, etc. Great success will lead to the creation of extraordinary economic value to the benefit of all stakeholders.

The Stakeholders: each one has unique set of needs and should be matched against clear expectations. Five key stakeholders are identified: the Latin entrepreneurs, the Latin investors, the US/Bay Area based investors, the Landing Platform and the surrounding Community.

The Stakeholders: each one has unique set of needs and should be matched against clear expectations. Five key stakeholders are identified: the Latin entrepreneurs, the Latin investors, the US/Bay Area based investors, the Landing Platform and the surrounding Community.

Some of the resources made available to the entrepreneurs are: The Landing Platform is the place where the resources are available just-in-time as required, and the advice is provided to empower the entrepreneur throughout the initial steps and beyond. To be effective, this resource delivery needs to strike the right balance of supporting while leaving the entrepreneur in charge, and in the process developing a sense of community with shared responsibilities and accountability as well as shared benefits. At the core the platform should retain its Darwinian character and never intends to create a process that could guarantee the success of most. However, foreign entrepreneurs have embarked in a very demanding personal and professional journey, which is hard enough and it should be not made any harder!

Resource Area

“Light” Services

Mastering the Art of Pitching Learn by pitching then more pitching and the capsule development process (stay tuned on future post on pitch development)
Business Formation Foreign incorporation, capitalization table, accounting, banking, governance, etc.
Venture Acceleration Marketing, competitors, business development and intelligence,  intellectual property, etc.
Communication and Connectivity Networking, events directory, connecting with peers, community of learners, etc.
Partnership Development Distribution, technology, market development, funding, etc.
Community Formation Events, community calendar, activities and services scheduling, network/printer, etc.
Personal Housing, immigration, Bay Area navigation, gym, wellness, etc.

Having covered the first two services of the landing platform, the hosting space and the resources made available and the companion “light” services; now we need to ask for what purpose? It is clear that the ultimate goal is the creation of the highest possible valuation. This success can come from different sources based on the current or expected future performance of the venture. A great entrepreneurial management team complemented with a unique technology, supported by an innovative business model and large addressable markets constitute the fundamental elements to fuel an exponential valuation. However, the story has to be well told (pitched) to the relevant audiences.

So who is this relevant audience? The output of the landing platform needs to connect with corporations and VCs who are interested in a unique deal flow of Latin ventures who have succeeded through two selection funnels (the local and the global scaling funnels) and are ready to go through a third one. The expected benefit of the cascade of these three funnels is a higher yield and geographical diversity to enable finding the “right” Chilean or Colombian start-up in a very cost and time efficient manner.

The Landing Platform provides hosting facilities to the various stakeholders, makes resources available empowering entrepreneurs with the needed knowledge for the quest of scaling-up their ventures. Furthermore, it provides the opportunity for those successful ventures to pitch to corporate investors, large global customers and key technology or market partners.

The Landing Platform provides hosting facilities to the various stakeholders, makes resources available empowering entrepreneurs with the needed knowledge for the quest of scaling-up their ventures. Furthermore, it provides the opportunity for those successful ventures to pitch to corporate investors, large global customers and key technology or market partners.

Closing Comments

As I was formulating these ideas, I discussed them a few weeks ago over lunch with Elton Sherwin (Ridgewood Capital) at Il Fornaio in Palo Alto. As we ordered coffee he posed the following question; if given the opportunity between two choices:

a)    Bringing an exciting start-up from Latin America to Silicon Valley and participating in their scaling up into the USA and/or other global markets, or…

b)    Bringing an equally exciting start-up born here in the Bay Area to Latin America and assisting them in accelerating their south-of-the-border expansion…

Which of these two scenarios would I pick?

It was a disarming question because of its simplicity and yet I had never before dichotomized the two scenarios in my mind. While he was picking up the tab, I paused to reflect and thanked him for the question and its timing (and lunch), and promised Elton to develop the answer in this up-coming post.

The proposed structure enables both, since most of this posting has been devoted in how the landing platform will enable a soft landing of Latin American start-ups here in the Bay Area, it will create a flow of knowledge in the opposite direction enabling Bay Area investors to connect with foreign peers and their portfolio companies enabling the scaling of the SV born companies to explore growth opportunities in the Latin American markets. And so my answer is, why choose? The Landing Platform can support global scaling in both directions, creating a win-win north/south partnership.

It is all about connecting quality individuals with aligned interests: let the music happen, “and the sounds will take care of themselves (from Alice in Wonderland).

Until my next blog-post amigos! – Carlos B.

[1] Spain and Portugal are added to the Latin America geography. The focus in the Spanish and Portuguese speaking countries in the world is retained; bringing together their cultural affinity, shared values and historical roots.

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Flattening the Global Innovation Landscape – Part II: Scaling-up Globally

Reflecting on the optimal time for foreign start-up’s to come to Silicon Valley

If the world were truly flat, many innovation centers would already be developed around the globe and each one would be distinguished by a unique competitive advantage given its location, industry addressed, type of venture, participants, level of funding available, government incentives, connection to trading partners, market access, etc. However, this Global Valley is still a work in progress. In the meantime, high potential entrepreneurs with fast growing ventures are probably well advised to test their mettle in the “World Olympics of Entrepreneurship” and come to Silicon Valley (SV)[1]. I am reminded of Frank Sinatra’s song, New York, New York, only exchanging SV instead of the Big Apple.

 “…If I can make it there 
I’ll make it anywhere 
It’s up to you 
New York, New York…”

Former USA president John F. Kennedy in his visionary Man-to-the-Moon speech at Rice University Stadium (Houston, September 12, 1962 – ( ), also glorified the idea of striving for seemingly unattainable goals—emphasizing that this was intrinsically valuable, not foolish:

“…But why, some say, the moon? Why choose this as our goal? And they may well ask why climb the highest mountains? Why, 35 years ago, fly the Atlantic?…We choose to go to the moon in this decade… not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win…”

Coming to Silicon Valley is a decision that cannot be taken lightly. This is a great challenge that will require many sacrifices for entrepreneurs (and their families), as they parachute into a foreign territory with different customs.  They  will be pushed to compete and perform at the highest level, in a different language, surrounded by some of the smartest innovators on the planet, and challenged by very sophisticated investors and experienced partners. To commit to Silicon Valley means that the entrepreneur will have to invest months and possibly years, spending tens of thousands of dollars just in living expenses, and for what purpose? This is a question that requires a thorough answer.

Often successful entrepreneurs bring their start-ups to Silicon Valley to benefit from the extraordinary resources of this leading ecosystem.

Often successful entrepreneurs bring their start-ups to Silicon Valley to benefit from the extraordinary resources of this leading ecosystem.

My personal experiences, and those of my colleagues—suggests that less than 10% of those foreign entrepreneurs arriving here are prepared to perform and take advantage from the Valley resources upon arrival. Over half of the remainder, 90+%, has no business of coming here other than for techno-touristic reasons. The rest have probably arrived prematurely, as they have not yet prepared for this challenge.

But as with any successful journey, it is best if started with the end in mind. So why come to the San Francisco Bay Area? In short, the answer is to play with and learn from the masters. Specifically, the foreign entrepreneurs will benefit because of the opportunity:

  • To share experiences, compare and learn from others,
  • To practice pitching in a variety of forums and receive feedback,
  • To explore potential clients and channel partners,
  • To find technology partners and identify the technology trends,
  • To learn about different business models and market trends,
  • To meet investors: angels and VCs,
  • To find mentors and advisors,
  • To obtain legal, financial or management guidance,
  • To explore partnerships with established or young ventures,
  • etc.

Contrary to conventional wisdom, obtaining funding is just one of the (many) reasons to come to the Bay Area and the one least likely to provide positive outcomes. Hence, if this is the primary motive of your visit, it is probable that you will be disappointed. What is really important is the concentration and density of all these actors, who are often only a short drive across town away, or in the same neighborhood, or even the same building! Furthermore, referrals are extraordinarily easy to obtain and most entrepreneurs here will give you thoughtful recommendations based on your venture’s needs. Therefore, all you have to do is ask and explain your needs based on the state-of-development for your venture. In other words, just a different type of pitching focused on networking.

Some of the main reasons why a large number of start-ups are ill advised to come are:

  1. The value proposition does not apply outside the home country/region where the entrepreneur lives and/or the local market where the venture was originally conceived (i.e. a unique market friction, regulatory mandate, etc.),
  2. The business concept and/or technology are still immature or not proven,
  3. The venture has not received funding from local angels/VCs,
  4. No demonstrable business traction in the local/regional market,
  5. The entrepreneur(s) do not speak English or they are highly uncomfortable outside their own home environment,
  6. The entrepreneur is secretive or unable to engage in win/win relationships,
  7. Insufficient funds to cover living expenses beyond a couple of weeks,
  8. And many others,

For entrepreneurs that are in this category, there is nothing wrong with coming to the Bay Area for techno-touristic reasons. Typically a one/two-week visit, if well planned, can provide a “taste-of-the-valley,” allowing entrepreneurs to attend lectures, networking events, visit some of the co-working spaces, meet with other members of his/her own diaspora, etc. Some organizations and institutions offer a variety of programs of varying lengths, prices and characteristics, similar to the immersion programs I created at the University of San Francisco. An experience of this sort, all costs included, ranges from $3K to $10K US dollars for a 1 to 2 week visit, depending on many factors, in particular whether you decide to rely on an organization to plan your trip for you or make the arrangements yourself. Guess which one I would recommend? As a touristic experience you will be visiting one of the places ranked in the top ten spots in the world and likely will not disappoint you.

Some entrepreneurs rush to come to San Francisco. Even if their young venture presents enormous potential, it is often advised to delay coming to SV until such a time when a number of conditions are met to maximize the venture’s chances of success as well minimize the cost and time invested. Below I have outlined some of the key reasons why many start-ups come here prematurely:


Start-up Issue in moving to SV




Failure to do as much preparation as possible while still in the home country It is of vital importance to do the maximum preparation possible while still in the home country. It is cheaper in cost and avoids burning introductions or unwisely using key meetings due to being unprepared.
Entrepreneur is ill-prepared to start pitching from day one, either because has not mastered the complexity or is able to communicate with the simplicity and clarity required. Pitching in SV is a way of life. One needs to be ready to pitch, compare, and contrast your venture with other similar or less similar models. Be ready to pitch for many different audiences, starting with those who you will need favors from and introductions to other key contacts.
Lack of clarity on the purpose/ reason to be here? There are multiple reasons to come to the San Francisco Bay Area: Probably the first is to validate the product concept with potential customers, peers (other product or technology developers in the same space), technology partners and investors. Obtaining market intelligence and trends (including the competitive landscape) is initially the single most important activity to validate the product.
Failure to obtain funding from local angels or VCs Even if local funding is one order of magnitude less than what typically is obtained here, it will provide credibility and referrals from your local investors. As we often call early investor “smart money”, the smart part is the contacts they may provide here in the Bay Area, among other things. Furthermore, this funding will be very much needed to cover the expenses incurred while accelerating the venture in the Bay Area.
Failure to obtain a meaningful level of local/regional sales Domestic sales will be an additional proof of market acceptance, revenue generation and customer feedback, even if they are relatively small to the venture potential.
Unwilling to make the time and cost commitment to move here for several months and more To really benefit from the ecosystem of the Valley, it takes time, even if you arrive prepared to hit the ground running.Furthermore, the cost of living in the Bay Area is high and continues increasing. Therefore entrepreneurs are well advised to start preparing several months (3 to 6 months) before coming here.

The true benefits/opportunities that result from becoming a part of the SV ecosystem are:

  1. Access to the latest innovations and technologies and, more importantly, the talent behind these.
  2. Experience in connecting these innovations to markets and customers
  3. Being able to explore the “right” business model(s) to maximize the short, medium and long-term value creation of your young venture.
  4. Access to funding: Angels and VCs
  5. Becoming part of the global conversation by just being here: “…In 2011, nearly two thirds of Silicon Valley professionals with higher education  working in the science and engineering fields were born outside of the United States…” from the 2013 Silicon Valley Index
  6. The “address benefit”. While some clients would be concerned with purchasing products or services from a young company located in Lima, Peru; a San Francisco or Palo Alto address can make the difference!
  7. And more!…

In any case, before coming to SV, make sure your pitching abilities is world class. Ideally your pitch must be adaptable to a timespan anywhere between 15” (seconds) or as long as 300”, must be customizable to any audience, purpose and context. You must be able to pitch with slides or without, standing or sitting, in quiet conference rooms or in noisy bars. Your ability to synthesize what you do, your track record, your value proposition, your mastery of complexity and why you will succeed with clarity and passion will be the currency for acquiring higher access in the Valley circles. Level of access highly correlates with pitch quality (and of course a compelling value proposition), and as we all know, good first impressions are very helpful. And while you are developing your pitch develop your venture’s one-pager as well. In fact, that one-pager is far more important than your business card, to leave behind at a meeting.

Finally, this blog subject will have three parts instead of the two I initially promised. Stay tuned for the next one, in which I’ll propose a novel structure to make a step towards flattening the global innovation landscape.

Until then – Carlos B.

[1] The terms Silicon Valley (SV), San Francisco Bay Area (SFBA), the Valley and the Bay Area are all used interchangeably.
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Flattening the Global Innovation Landscape – Part I: The Motivation

Reflecting on the new beginning of my professional journey and the role I hope to play.

As it is often the case, where you are heading is more exciting than what you’re leaving behind… As those of you who know me already, I am an optimist who deeply believes that the best is yet to come!

While I enjoyed very much the creative aspects of developing and managing new global immersion programs at the University and providing new experiential learning opportunities to students, my direct contact with them was certainly the most rewarding. Moving forward, I intend to retain the classroom contact, while also focusing on a problem which remains at large unsolved: flattening the global innovation landscape!

Certainly, the world is flatter today than it was a few decades ago. The flattening process has accelerated over the last decade, as more and more people around the world get connected to the internet (in particular over mobile devices – smart phones and more recently tablets). The pace at which people get connected is increasing globally as the acquisition costs of smart devices get cheaper, they become more powerful[1] and network (cloud)-based applications become more valuable[2]. Furthermore, thanks to the ubiquitous WiFi availability, broadband coverage is improving and enabling connectivity at a lower cost or for free.

This irreversible trend is spurring the development of a new global economy for information services and knowledge transactions heretofore unseen between parties on opposite sides of the planet. These transactions do not know of national borders. No visas or passports are required.

An innovation’s value is determined by its disruptive content and timing. We have before us a web based market of buyers and sellers of “intangible” services, which was hard to imagine only one or two decades ago. The drivers of the viral explosion for this new global knowledge economy are:

  1.  Mobile Apps
  2. Social Media
  3. Big & Open Data
  4. Sensor & Networks
  5. Gamification
  6. Cloud
  7. Hyper-digitalization of society — individuals, enterprises and governments 

And, these transactions are characterized by:

  1. Constantly decreasing the transaction cost
  2. Constantly increasing its value added via innovation
  3. Flying “on the wire” and if at all possible avoiding physical objects
  4. This economy feeds on itself, since new knowledge services are required as new innovative services demand new applications and/or instrumentation.

While this flattening (or democratization) process in the information and knowledge access is taking place and market frictions are reduced; entrepreneurs find multiple ways to capture value from eliminating those frictions and/or create new value. Unfortunately, not everyone shares equally in these benefits. In other words the world is more flat in some places than in others!

Entrepreneurs here in the Valley[3] enjoy the privilege for being part of one of the most developed innovation and entrepreneurial ecosystems on the planet. And yet we do NOT have a monopoly on innovation here. In fact, extraordinary innovations are created all over the world, in particular in emerging regions. Often, in these constrained environments, by necessity, entrepreneurs embrace their lack of resources or the inherent limitations of the local ecosystem incorporating them as part of the design goal of their innovations[4].

After many years of working with entrepreneurs from emerging world regions helping them to scale up their ventures globally, I have learned that every geography from México to the Canary Islands (Spain) to South Africa to Peru, are at a disadvantage when compared with those who are based here in the Bay Area.  Quantifying these differences is the subject of a recent report entitled the Startup Ecosystem Report 2012, published by Telefonica jointly with the Startup Genome Project. This report ranked 20 entrepreneurial ecosystems around the world. In the report, about 75% of these innovation ecosystems were in the developed world while only 25% were in emerging countries: Santiago (Chile), Sao Paolo (Brazil), Bangalore (India), Moscow (Russia) and Singapore. Silicon Valley ranks as undisputed #1; and some of the key reasons are highlighted below: 

Silicon Valley
Leverage Factor[5]
Comments about SV
from the
Startup Ecosystem Report 2012
Value Creation: Acceleration (time compression) and De-risking Factors
Dynamic ecosystem constantly fed by ambitious and competent entrepreneurs,
innovators, investors, global corporations, foreign government agencies, etc.
SV has 35% more serial entrepreneurs
Rich networking environment: learn fast who has done/is doing something similar (competitors), who has done something similar and failed (and why?). Identify potential partners, employees, clients, investors, etc.
A sort of a Florence of the Renaissance, recreating the “Medici Effect”
Funding availability
(Angels & VC’s)
Capital raised in SV is 32% higher across all stages of a start-up’s development
Smart money availability leads to better valuations, avoid repeating same mistakes and rapid access to high value contacts.
Rule of law & Established practices
No comment
Many know how to get things done, established practices, stable legal frameworks, standard processes are built-in
In SV entrepreneurs are 54% less likely to engage in on-the-side consulting activities (to make the living on the side) and willing to leave secure employment and join full time the start-up.
Culture and legal framework celebrate winners and tolerates failures.
Wide availability of Mentors/ Advisors
SV has 20% more mentors
Quick access to potential customers, investors, partners, etc. Open culture seeking win/win opportunities
Wide availability of Role models
Role models abound: many Steve Jobs (Apple), Reid Hoffman (LinkedIn),  Mark Zuckerberg (Facebook), etc.
It can be done
“If others have done it, I can do it too” attitude.
Global magnet for talented people: SV brand/ mystique/
Trendsetter w/
good universities and very high quality of life
More ambitious, work longer hours and more likely to motivate themselves by the vision of changing the world, rather than just building a good product or making money
Students and entrepreneurs from all over the world flock here.
Diversity of problem solving approaches
Student/Entrepreneurs become the best technology transfer agent!
SV entrepreneurs are more ambitious and not afraid to think big
They tackle 28% bigger market sizes with their startups.
SV Entrepreneurs would rather cause disruption and create impact – 19% higher would rather create impact rather than create a great product
They are 30% less likely to tackle ‘niche’ market.
The planet earth is their market, they are not afraid to think big and at the same time are aware that ideas “are cheap” — and big ideas about the same price — unless coupled with the ability to execute!
Liquidity Event: most exits happen in SV/USA
Most likely successful ventures will be acquired M&A>90%;
While a relatively small minority will seek to go to public markets
Cash-out opportunities  for the founding team and investors, provides a tangible and measureable demonstration of success

While much more could be added to this table and any entry is probably worth a separate blogpost, constructing the same table for any other ecosystem, anywhere in the emerging world, would be a challenge. Regardless of how promising the locale might be, almost every entry would describe enormous challenges that are being worked-out and summarized as “work in progress”. No doubt that over the next decade or two other innovation ecosystems will develop to the point of challenging today’s SV supremacy, and make the global innovation landscape flatter.

In the meantime, it seems unavoidable that many entrepreneurs will bring their ventures here in their quest to globalize. Every day, foreign entrepreneurs bring their early ventures to Silicon Valley in their quest to scale them up globally. Their goal is to leverage the SV ecosystem advantages to catapult their ventures to stratospheric success. However, much work remains to be done to construct these landing platforms. Over the last decade organizations like Endeavor or government sponsored programs such as TechBA (México) performed valuable experiments at both ends of the spectrum. Endeavor, as a non-profit, went for quality, seeking elite entrepreneurs with an initial focus across Latin America[6], while TechBA did focus in quantity to appeal to the wide political support across the Mexican territory.

Foreign entrepreneurs parachuting in Silicon Valley.

Foreign entrepreneurs parachuting in Silicon Valley.

Landing here can be a hazardous activity. Proper training and accurate aim are must-have skills! Cognizant of these prevailing trends, I am led to the following conclusion:

Hundreds of ecosystems are sprouting up throughout world, and each one is seeking to create its own color and texture, learning from one other and improving and adapting the Silicon Valley model to local characteristics, norms, 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 it is a freak of nature! Without a doubt, though, gears are in motion to create such a “Global Valley” and flatten the global innovation landscape. However, this will take time (probably decades –note that SV construction did not happen overnight).

What is the problem: Start-ups created in emerging countries tend to lack access to proven processes to enable them to increase the probability of scaling-up successfully. During any given time period very few companies are able to succeed in the same fashion as Mercado Libre (Endeavor-backed), which went from Argentina, to a NASDQ IPO in 2008.

What is the opportunity: Create a “landing experience” for entrepreneurs from emerging world regions increasing the odds of their success in the global scaling and in particular in landing here in Silicon Valley. While entrepreneurship at its core is Darwinian and there is NO process that could guarantee the success of everyone. At any given moment there are probably a few start-ups which actually could succeed. Such difference, going from let’s say 1 Mercado Libre to a few (2-4) would make a phenomenal impact in the development of the Buenos Aires innovation ecosystem and spill overs effects felt across Argentina and the Southern Cone.

In my next blogpost, I will address the conceptual construction of the “landing experience” for ambitious entrepreneurs and their global ventures born in emerging countries.

Until then – Carlos B.

[1] This is due to Moore’s Law, named after Intel co-founder Gordon E. Moore, who theorized that the number of components in an integrated circuit would double every year since its invention in 1958. 50 years later, Moore theory has proven to be still accurate.
[2] This is due to the Network Effect, which was popularized by Robert Metcalfe. Also known as Metcalfe’s law.
[3] San Francisco Bay Area or simply the “Bay Area”, Silicon Valley or the “Valley” is used interchangeably.
[4] Also called frugal innovation
[5] Guestimate of the increase of the probability of success when compared with the factor not being present.
[6] More recently it has expanded its focus into the Middle East and Africa.
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Academic Global Immersions: Visiting Montevideo and the completion of the MBA students Latin America journey

Reflecting on our experiential learning from Montevideo, and our 16 day journey across Peru, Chile, Argentina and Uruguay.

After crossing the widest river of the planet or Rio de la Plata, like the porteños like to call it, we arrived by ferry to Uruguay’s capital, Montevideo. A sleepy town if compared with the bustling intensity of Buenos Aires (BA).

From our first meeting we heard similar pronouncements to those of Dr. Domingo Cavallo during our lunch in BA few days before. Several Uruguayans opinion leaders agreed: the best thing that has happened to Uruguay in the last century, is the Kirchner couple (Cristina, the current president and widow of former president Nestor) across the river, since they have tested every possible populist policy and the simple observation of their disastrous consequences, have minimized the chance of repeating the same mistake here. Furthermore, many Argentines corporations and its citizens are moving to Uruguay seeking the stability and predictable rule of law that Argentina has failed to provide.

Uruguay has recovered very well after the financial crises a contagion from Argentina’s in 2002. A decade of robust GDP growth and continuity of purpose in its public policies has fueled growth based in agribusiness, tourism, financial services and more recently since the late 90’s Global Services. They have also diversified their trading partners as China has entered the scene – as one of the top trading partners, in all countries we have visited. The business leaders we met displayed confidence and a positive outlook about the future of their country. From our visits and meetings we were able to identify some key conclusions:

  1. Pablo Brenner, General Manager of Globant Uruguay,With Carlos Baradello and the MBA students.(Montevideo, January 17 2013)

    Pablo Brenner, General Manager of Globant Uruguay,
    With Carlos Baradello and the MBA students.
    (Montevideo, January 17 2013)

    Uruguay has developed Free Trade Zones as attractive destinations for foreign companies that use Uruguay as a platform country for re-exporting their products or services to other Mercosur or Latin American destinations. We visited Aguada Park and ZonAmerica, both have been very successful and attracted companies as Globant (we visited in BA and Montevideo), Sabre Holdings, TATA Consulting Services, etc. All of them global services providers. There are about 10 of them in Uruguay and they all provide a vast regime of incentives and tax exceptions for foreign firms.

  2. Plan Ceibal was an extraordinary visit. Since 2007 the government has embarked in providing one laptop to every student attending public school (K to 9th grade), including vocational and trade schools and of course their teachers. Over 570K laptops have been deployed as well as the communication network. In addition, a vast network of repair and maintenance, phone support, refurbishing, software services and educational support services have been developed. The impact is phenomenal as the computer literacy shooting-up enabling a massive participation in the knowledge economy. We can only guess the extraordinary competitive advantage Uruguayans human capital vis-à-vis other similar countries next decade. Its budget just a 5% of the education budget or about US$50MM per year offer a refreshing experience of impact, massive spills overs and value with a cost of around US$100/student-year, the cost of one textbook in the USA. Actually they have licensed the 90 top textbooks used by the public school system and they are distributed electronically!

3. The challenge of thinking big: Uruguayans are set thinking that “small is beautiful”, justified by their relative smallness compared to the size of their two very large

Visiting Sabre Holdings located in ZONAMERICA(Montevideo, January 18 2013)
Visiting Sabre Holdings located in ZONAMERICA
(Montevideo, January 18 2013)

neighbors: Argentina and Brazil. However their country is not that small as its size would seem large when compared to most European nations. While I respect their interest to maintain their quality of life, beach surrounded/sun kissed relaxed lifestyle without the complexities the dynamic global economy brings, they may miss out. Uruguay offers the conditions to innovators and entrepreneurs to grow well beyond their country and the promise to scale-up well beyond their borders. However, an important constraint remains beyond their mindset. They are confronted with a population of 3.3MM and not growing as their fertility rate is one of the lowest of Latin America and their immigration policies are not deliberate and friendly enough to attract human capital from the world, in the quantities to position as a true “boutique power-house” of the south cone.

Reflecting on the last 16 days journey with my MBA students

Visiting places I had many times, seeing and meeting old and new friends with my students enabled to relive an already seen movie with new eyes and listen with new ears a dynamic and always changing reality and uncover surprising and refreshing opportunities. No doubt the world and its 7+B inhabitants need of Latin America now. A region endowed with incredible natural resources and entrepreneurial citizens are key to support a new world which will approach 9B inhabitants in less than 30 years. Clearly in our journey, we have seen that Peru and Chile are taking a formidable competitive posture. Uruguay is set to benefit through the success of the region, in particular its neighbors. The black sheep of the countries visited: Argentina, remains a puzzle and I already reported its contradictions and self-inflicted challenges in prior posts.

As we prepare for this journey the questions posed for this class was “Can Latin America Compete in the Global Services?” The answer is without doubt YES! They have created the macroeconomic conditions to become an attractive destination for foreign investments and attract global firms to their shores. Furthermore, they have invested a “commodities dividends” afforded by high commodity prices in their innovation and entrepreneurial ecosystem taking a solid posture to compete in the knowledge economy. This in turn, is enabling and encouraging local entrepreneurs to create companies and participate in the global services in the most rewarding (highest value added) segment: innovation and knowledge processes outsourcing. However, they are taking one step forward: creating their own stand-alone companies, to max-out the value capture from the value chain. We also recognize that Latin America, has become less competitive in outsourcing commodity services (call centers and telemarketers) and even uncertain in Business Process Outsourcing, due to rising cost afforded by higher living standards.

The net-net of this class has been a transformational experience for all of us and in particular for my students. Suddenly Latin America has become a comfortable destination in their professional careers and personal lives. They have met hundreds of professionals, managers and entrepreneurs in the same age group, they have forged relationships with peers, visited dozens of new ventures, established businesses and governments officials. I have seen their confidence and comfort level grow in dealing with the Latin realities, to venture into the Spanish language and adapt to the local customs with ease.

At one of the last company visited in Montevideo (Sabre Holdings), the young receptionist offered to drink mate when asked what was that thing next to her phone, by one of my students. To his surprise in matter of seconds he was sucking from the silver straw the traditional drink from Argentina, Uruguay, South-Brazil and others in the South Cone. Awkward as he felt drinking from the same straw, and unable to master the conversation protocol that is a required part of this ritual; this missed photo opportunity has become a great metaphor of the transformational experience that everyone in the group of 15 experienced. The willingness to adapt, engage and collaborate, breaking the old North-South paradigm to a give birth new win/win opportunities, forged as peers and grounded in mutual respect.

I am grateful to my students for the opportunity to experience the journey through their eyes, regain my ability to be surprised by the ordinary, enabling me to see many previously unseen opportunities.

Until my next posting on the flattening of global innovation – Carlos B.

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Academic Global Immersions: Visiting Buenos Aires with my MBA students

Reflecting on our experiential learning  from Buenos Aires

Since this blog post does not intend to convey a horror story, let me spare you the suspense: Argentina is an extraordinary successful country. Over the last six decades it has decided consistently to underdeveloped itself and not only succeeded, but exceeded all expectations! One of the richest countries of the world a century ago and the Latin American leader after the second world war, it has become tired, its middle class eroding, isolated from the global geopolitical scene and surrounded by an infamous short list of friends such as Cuba, Venezuela, and Iran among others. Its enormous natural resources and human capital are squandered in a constant contradiction of its huge potential vs. its sad reality.

Against this backdrop we started our visit to the innovation and entrepreneurial ecosystem (and the global services industry) in the beautiful city of Buenos Aires, where its citizens (the porteños) are finally giving in to the thought and recognize that they are part of the Latin American mosaic and NOT Europeans as they have considered themselves for the prior hundred years.

The government of the Kirchner dynasty, now Cristina the widow of former president Nestor Kirchner, has touched unrepentant two neuralgic points of the Argentines: inflation and the freedom to own dollars.  Both are indicators of the national well being used as a thermometer by most if not all the argentines. They have learned through periods of hyper-inflation that once it approaches to 1% per month it reaches the instability point and the almost certain risk of acceleration out of control. Today running between 2 to 3% a month is obviously noted in the cost of the everyday consumption of its citizens (for the cost of a “ cortado” or a doppio macchiato wet as the Starbucks have relabeled). Unfortunately the national institute of statistics (INDEC) has just reported the official inflation rate for 2012 at 10.8% while most think tanks in the financial sector report the inflation for the same period at 25.6% (and expected to reach over 35% in 2013)

The freedom to purchase at will dollars is a right exercised by a minority of the Argentine citizens, but an indicator used again by most. The average citizen knows the exchange rate, in the face of exchange restriction, create an informal (illegal) market, however the value of the “dollar blue” as the sophisticated argentines call it, is freely reported by the media. This morning newspaper reports “blue” green-bucks with a spread of over 50% above the government controlled official rate (US$1 = 5 Arg pesos), creating a distortion of prices, costs, foreign products availability, import substitutions, etc.

This fiction creates a backdrop for our visit to Buenos Aires as an enigmatic and mysterious soap opera of epic proportions indeed!

How does this affect the entrepreneurial ecosystem? I would say surprisingly very well. I would say that today in Argentina “To be an entrepreneur is the best revenge…” the internet connected to a laptop (or any other mobile device) has flattened the world and democratized access to global markets. As long as the products and services run through the wire there are no customs, no duties, no movement of atoms and its success is only limited by the creativity and innovative capacity of the local entrepreneurs. Against all odds, a few risk capital firms (including ALAYA, the fund I am part of) are providing the growth capital for these entrepreneurs to fund their young ventures. While kind of absurd for Silicon Valley standards, we have been able to identify three compelling reasons to invest today in Argentinean start-ups:

  1. Compelling start-ups reducing the great local market frictions and empowering the consumer provide excellent value propositions. Some are copycats adapted to the local conditions, other are unique innovations. Both run over the wire with fast opportunity to scale over other Latin economies, in particular Brazil, Peru, Colombia and Chile. As we experienced in Lima and Santiago, scaling up globally using as the launching pad Silicon Valley is the big dream of most Argentine entrepreneurs.
  2. Excellent human capital has been one of the key assets of Argentina. In spite of its decline, access to education is widely available and although its quality is uneven, still there are pockets of excellence. Hence, an Argentine youth unable to emigrate has two choices to find a job with mediocre pay or take the chance and become an entrepreneur. A skill sharpened and almost required to survive the complexity and uncertainty of the daily life in Argentina.
  3. Attractive valuations due to Argentina’s financially isolation from the rest of the world. Since the 2002 default, Argentina has been unable to leave behind this issue due to the bond-holders that did not accept the default conditions imposed unilaterally by Argentinean government after the economic implosion of 2001-02. Furthermore, the country risk is larger than most developing countries; it has reduced the FDI to almost zero.

Buenos Aires remains a beautiful city, its citizens are sharp, well prepared and able to think globally. They do not suffer any inferiority complex when confronted with the dramatic challenges their country faces…. They have seen worse and their creativity and entrepreneurship gives them the confidence that they will survive again any future economic/political implosion. In the meantime, the future remains uncertain.

My dear readers, you should decide if it is time to cry or not for Argentina. May be not yet, but let’s wait until their citizens return from the summer holidays, for now many are enjoyng Punta del Este.

Until my next posting from Montevideo and the synthesis of the journey with my MBA students – Carlos B.

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