This week we’re chatting with Paul Wilson, the founder of PR Wilson Media, your social media personal trainer, and a Guinness World Record Holder. Check out the interview below to hear about Paul’s interesting journey into entrepreneurship and to learn what’s going on in the U.K. Then be sure to subscribe to Paul’s channel on YouTube and to follow him on Twitter.
This week we’re talking to Berta Lázaro, Co-Founder of TeamLabs, about the entrepreneurial ecosystem and startup scene in Madrid.
This week’s Startup Nomad interview is with Scott Mackin, an American who has relocated to Barcelona and is the Founder and Managing Director of Barcinno, the top source for English language information about tech, startups, and innovation in Barcelona.
Check out the interview below and let me know what you think in the comments.
Welcome to Europe, Nomads! I’ve been here in Spain for a little over a month now and have only started to scratch the surface of what’s going on in the entrepreneurial ecosystems on this side of the pond. The energy is quite a bit different here than it was in most of Latin America, but the struggles are the same.
I kicked things off in Barcelona speaking to Damien Bruneau. Damien is co-founder of TutoTOONS and an organizer of Startup Weekend Barcelona. While he and his company call Barcelona home, Damien is French and has also lived in Italy and the UK, so I was excited to pick his brain about what’s going on in the entrepreneurship world in Europe.
Damien and I started out talking about how Barcelona’s entrepreneurial ecosystem is expanding:
“It is growing really fast but it’s still small,” he told me. “The city has big potential and that’s what driving a lot of talent and entrepreneurs to come to Barcelona…[but] there are not enough success stories or big experienced entrepreneurs to really inspire. That’s what’s missing but I think it will come quickly.”
The idea that this startup community lacks success stories to mentor new entrepreneurs and to show them that success is possible outside of the major startup hubs is something that I heard throughout Latin America, so it was interesting to see that the same is true outside of the so-called “emerging economies.”
Damien attributes part of the lack of major success stories to the fact that entrepreneurship has not, until recently, been seen as a desirable career choice.
“There is still not yet this big wake-up for the Spanish to be entrepreneurs,” he told me. “They’re still just starting.”
Additionally, regulation has made Spain undesirable as a place to legally locate a company, despite Barcelona being an attractive place to physically locate it. “Usually a company is based here and somewhere else, either in the US or London,” Damien said, “because investors don’t want the company to be based here,” due to things like a complicated process for issuing stock options and a slow regulatory system.
But foreigners have been flocking to Barcelona recently and breathing energy into the city’s entrepreneurial ecosystem in a way that is different from the country’s other ecosystems. “There’s more startup energy and more of an international feel here [in Barcelona than in Madrid],” Damien said. Additionally, “Barcelona has a number of good MBA programs and so attracts a lot of MBA students, so usually those MBAs start to become entrepreneurs at the same time [that they’re studying].” He also mentioned more than once that there were lots of talented people in Barcelona and that it was fairly easy to find people to add to a growing startup team, though he felt it was harder to find co-founders as the pool of talent lacks experience in what it actually takes to build a business and is instead attracted to entrepreneurship as the “sexy” career option.
As the ecosystem matures, however, that will become less of an issue.
“I think it will grow fast and then it will be quite stable because of the quality of life,” Damien said about Barcelona’s entrepreneurial ecosystem. “Maybe in 5 years it would be like Berlin and in 10 years it will be like London, that would be nice.”
The unavoidable question, of course, is how does Spain’s troubled economy affect its entrepreneurial ecosystems? Damien had an interesting answer:
“It affects it in a positive way,” he told me. “People actually start to say, ‘Okay, I’m going to do my own business,’ because they lost their job, or because they don’t see a good future in the economy, or because they can’t get a job so they create it, and I think that’s good. That drives people to be an entrepreneur. You see a lot of young Spanish kids too that get really motivated and enthusiastic about being an entrepreneur.”
Wrapping up the interview the same way I always do, I asked Damien to share some advice for new or aspiring entrepreneurs:
“Focus, focus, and focus,” he told me. “When you do a startup, do one thing at a time, know where you’re going, and really focus.” Also, “don’t be afraid to fail. Try things, learn from it, and move on. Learn how to manage fears and get that feeling of being able to go for that thing that is difficult, that is new, and that you don’t know how to do.”
My Startup Nomad interview this week is with Michael Goldberg, a visiting assistant professor of design and innovation at Case Western Reserve University’s Weatherhead School of Management and the co-founder and managing partner of Bridge Investment Fund. He is teaching the upcoming Coursera course, Beyond Silicon Valley: Growing Entrepreneurship in Transitioning Economies (which I am taking) and was gracious enough to meet up with me on a Google+ Hangout to talk about the differences between mature entrepreneurial ecosystems – like that in Silicon Valley – and those that are still developing or in transition.
Check out the interview below and leave a comment to let me know what you think of what Michael had to say.
If you’d like to sign up for Michael’s Coursera course: Beyond Silicon Valley: Growing Entrepreneurship in Transitioning Economies, just click the title of the course to see the Coursera page for the course and sign up. Please let me know if you sign up and we can work through the course together!
The book Michael mentioned in his interview is Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed — And What To Do About It by Josh Lerner and you can buy it at Amazon by clicking the title.
The podcast he mentioned is Plant Money podcast and you can check it out by clicking the title
This week’s Startup Nomad interview is with Santiago Zavala, a Venture Partner with 500 Startups Mexico – one of the most active funds in the world, especially in emerging markets – and a former Founding/General Partner at Mexican.VC.
Unlike with many of my other interviewees, Santiago and I spent more time speaking about the development of entrepreneurial ecosystems throughout Latin America than just the situation in his native Mexico. He sees many similarities between all of the cities in the region vying for their place in the world’s startup ecosystem, but he also recognizes the distinctiveness of each.
“I think that we all have in common great talent. We’re really hungry, we’re really resourceful, and we’re really hard-working,” he said. But, “I would say every city…has a very specific context that makes them do things in different ways.”
“The economy in Argentina changes the way you target a market. Colombia, has a very specific culture that makes them think more on a city level rather than a country level and makes them more city oriented than continent oriented. Similarly with Mexico: very specific things in different parts of Mexico lead to different entrepreneurs and different startups happening in different places. So there are differences everywhere and I think anyone who is trying to hide that and just saying that they have access to the whole Latin American region because they have offices in one or two places is probably wrong.”
Because of these differences in cultures and economies, Santiago recognizes that Mexico City may not be the ideal city for every entrepreneur, though it certainly has a lot to offer to many.
“Anyone who is thinking that they can make their city or region or country the go-to place for everyone is probably going to have a really hard time,” he said. “It’s different for every entrepreneur.”
If an entrepreneur is building a company targeting the Spanish-speaking market, however, Mexico City can provide an abundance of opportunities. “We’re in a city of more than 20 million people,” Santiago explained, “so the odds of you being able to find your customer here are pretty big. The odds of you being able to validate with a big corporation here are pretty big, since most of the world’s major corporations have offices in Mexico City.”
If, however, you can acquire your customer online or your target customer is not in Mexico City, there may be other, better options for you for where to base your business.
“If you are building a product that you can acquire your users through the internet,” Santiago said, “and you can tell me that you’ll have a longer runway somewhere else…that’s fine. We don’t have the accelerator here because we think all companies should start here.”
As far as Santiago is concerned, each company has different needs and part of learning to be a good entrepreneur is being able to make the decision that is right for your startup and not necessarily the one that is most popular at the moment.
Despite not claiming that Mexico City is the spot for every new entrepreneur, Santiago is confident that the local ecosystem here will continue to grow and mature over the next few years.
“I’m literally betting everything on it being an awesome ecosystem,” he told me. “We have the same challenges as any other emerging market and we need to face them very clearly,” he continued.
“We are not sophisticated in almost every part of what it takes to build a successful startup because we haven’t seen any success stories…Every city, every entrepreneur needs to start thinking how we’re going to get more sophisticated…The goal is in 3 years to have companies in the Series A/Series B stage…
…I’m sure there will be 1 or 2 cities in Latin America that will have a very vibrant ecosystem in the next few years. I’m not sure if it’s going to be Mexico City. If not, I will have to move.”
Santiago also had an interesting take on the idea that the majority of startups in Latin America are “copy-cat” companies: companies recreating a business that’s already proven successful in another part of the world.
“Of course we see a lot of people that are trying to solve problems that are already solved in other places,” he said. “That’s the reason that you want to invest in emerging markets: there are still problems to be solved…I see a lot of people trying to solve similar problems but the solutions are so different [so] I don’t think there are copycats at all…
…All entrepreneurs need to be building on the shoulders of giants and there is absolutely no reason to reinvent the wheel, [but] the reason that the market was not using [the solution that exists in another region] was that it was not possible to use [the other solution] as it is in this geography…Anyone who thinks that you can just copy a great company is going to realize that it’s really, really, really hard…and when you try to do it in a very different place you are going to realize that there are very different challenges.”
Finally, what’s Santiago’s advice for aspiring entrepreneurs?:
“Try to understand what’s right for you,” he said.
“You need to make sure that you have a very clear compass. One bad decision is not going to lead you to serious problems – you will be able to figure a way out of it – but many bad decisions are going to take you to a place where it’s really hard to solve it and that’s why I think people need to be more sophisticated.” He urges entrepreneurs to really analyze the needs of their startup and not get swept up in the glitzy grant or accelerator programs that abound if they don’t actually add anything to your company.
“Try to talk with a lot of other people in your region about what is the right thing for your startup right now,” he said. And then, “work really, really, really, really hard and make sure that you know why you are doing it.”
This week’s Startup Nomad interview is with Angela Cois, the COO and Cofounder of LastRoom. She’s an Italian who relocated to Mexico many years ago and has been involved in the startup community practically since it began to grow in Mexico. The idea for her company was actually born during a Startup Weekend back in 2010.
Like many of the other people I spoke to in Latin America, Angela says that a lack of capital is really holding the ecosystem back.
“It’s a big problem,” she told me. “There is money but it’s difficult to catch the interest of an investor. There are plenty of traditional investors…but e-commerce or digital tech companies are quite far from their knowledge or perception and they see it as a very high risk investment.”
In her opinion, this is especially true in the so-called ‘valley of death,’ the time between a startup company’s initial seed funding and when it can generate enough revenue to sustain itself. Here in Mexico, specifically, she noted that accelerator programs and other seed funds have helped improve access to the very initial seed money needed to create a minimum viable product and launch; between this initial investment and the time that the company is generating revenue and needs growth capital of $1 million dollars or more, however, there are almost no options for funding, “unless you know people.”
“It’s a pity that very good projects just die because they run out of money,” she said.
She thinks that aversion to earlier stage investments in tech companies can and will change, however.
“It’s a culture,” she said. “It’s a culture that is gradually growing the last few years thanks to events and to a lot of initiatives that people are doing to promote the ecosystem, but this kind of sensibility or culture is not so strong here [yet].”
She believes that the cultural change and the growth in access to capital must come from the people on the ground in the entrepreneurial ecosystem here, not from government initiatives.
“It’s a matter of entrepreneurs, of people,” she told me.”And of investors; because without money you can’t keep on trying. You could have the best business model but if you don’t have money you can try for 3 months or 6 months and then you have to stop, you have to give up…
…I think that this organic growth can come from both sides:,” she continued. “From entrepreneurs and investors. We have to learn, both sides, we have to learn a lot.”
Along those same lines, Angela expressed another common sentiment among the Latin American entrepreneurs with whom I’ve spoken: that the ecosystem needs to see local role models in order to reach its full potential.
“We need to learn a lot because we don’t have great role models here,” she said. “We are the first doing this. It’s not the same as Silicon Valley.”
So what is Angela’s advice to aspiring entrepreneurs?
“Start your own business when you have personal savings [to fund it] and when you’re more mature in how you utilize your personal resources” she said. “It makes you more serious if you’re trying to figure out the best way to spend your money, focusing only on your priorities and on your core business, and this is very important because it makes you more concentrated. It’s a great thing for entrepreneurs.”
Next up in my Mexico remix of Startup Nomad I spoke with Santiago Saviñón of PingStamp, a digital loyalty program for merchants.
While Santiago noted that, “it’s exciting to see,” the entrepreneurial ecosystem in Mexico City rapidly growing and maturing and that, “the market is definitely ready,” to be able to sustain a thriving startup community, he still considers it to be, “a struggling ecosystem.”
“It’s not even close to the sophistication that you guys have in the States,” he told me. “There are definitely many things missing from the ecosystem here.”
Just like many others that I spoke to in Latin America, he feels that access to capital is perhaps the biggest hurdle that the entrepreneurial ecosystem currently faces.
There are entrepreneurs that “know how to get a company and actually make it happen,” he told me, “but sometimes they don’t get the opportunity to do it because there’s no money around…It’s a lot harder to get a next round and just keep the ball rolling…[Latin America] is growing at an incredible pace, internet and smart phone penetration are growing exponentially, but still the money is not coming.”
He continues on to clarify, however, that there are plenty of investors and plenty of money in Mexico. The problem is that most of these investors are not comfortable with early stage investments in tech startups and prefer to focus on bricks and mortar operations who’ve already been able to produce sizable profits. “The money is there in Mexico,” Santiago said, “educated people, and VCs, and angel investors, they’re all there. They’re just not still comfortable…They still haven’t wrapped their minds around the fact that a startup needs a lot more runway.”
That’s at least partly due to the fact that the investors don’t have any major success stories to turn to as examples of the opportunity that lies within early stage investing.
“Not having exits is definitely a problem,” Santiago said. “I think it’s going to take at least a few years to have a few success stories that can maybe lobby their way into some kind of change in terms of legal and banking issues.”
At the same time that Santiago sees access to capital as a major hurdle to the entrepreneurial ecosystem’s growth, however, he does see a number of positives that position Mexico for success as an entrepreneurship hub and indicate that it will continue to develop rapidly over the next few years.
“The companies every day are getting more and more competitive,” he said. “In the last year I’ve seen so many people that have had a foreign company acquire or acqui-hire them.”
While the valuations are still relatively low (“If you went to the US you could probably add another 0 to the negotiation,” he told me), the fact that they’re happening is a sign of development.
Additionally, according to Santiago,
“the funding you have is a lot more efficient [in Mexico]. $300,000 in the US would maybe buy you 6 months of runway. In Mexico, $300,000 could let you run your company for 24 months. We take more advantage of every penny here.”
Because of these signs of growth, Santiago is extremely optimistic about the startup scene’s development and expects to see a mature ecosystem with many of the problems that are currently holding entrepreneurs back ironed out in less than 5 years. “At the rate it’s growing now I think maybe 2 or 3 years,” he said. “There’s definitely a lot going on…The few funds are really pushing everything forward because they’re the guys that know how to break down those political barriers, that know people from other countries that can help, that can really move this forward, because…
…the companies, and the entrepreneurs, and the young people with ideas and potential are definitely there.”
Between the involvement of the few investors that are active in the startup space and that of the entrepreneurs and aspiring entrepreneurs,
“[the startup community] is completely cooperative; it’s really fun,” Santiago told me. “We all know that if you don’t help someone out then the community will never grow as it should. Most of the time it’s a pretty awesome vibe and you feel important because it’s still a really small circle.”
Santiago believes that once Mexico’s startup ecosystem is able to produce a few success stories, that the ecosystem will turn a corner because entrepreneurs and investors alike will have an example to turn to. Interestingly, however, he feels that a few famous failures are just as important to the ecosystem’s development as the success stories are. “Once you get that money you need to know how to use it, what to do with it,” he said.
“There are no success stories like a big exit…but there are also no magnificent fuck ups, which I think is necessary as well: someone to raise money and then burn it all to the ground to add value to let people know that raising money is not the final goal.”
So what’s Santiago’s advice for aspiring entrepreneurs? He has quite a bit actually:
Firstly: “Do it,” he said. “Just take the leap and brace yourself… and get ready for the roller coaster.”
“Surrounding yourself with the right people is key,” he stressed. “It has more of an effect than you could ever imagine, even more so in a community that is just starting out.”
And finally: “A startup that’s focusing on Mexico or Colombia or Brasil is making a mistake; you have to have a regional, a Latin-American view of where you want to go, where you want to be…and that’s a challenge: making something that’s scaleable in Latin America.”
After my Latin American adventures last year I felt like Mexico City is just too big a city and I needed to come back and dig a little deeper into the entrepreneurial ecosystem before I head off to Spain (and maybe some other parts of Europe). My first interview back in D.F. was with Beto Marquez, the Marketing and Project Manager for NextLab Ventures Group.
Now that I’ve had time to explore a large chunk of the rest of Latin America (Mexico was my first stop on the Startup Nomad tour), I have a bit of a broader perspective on Mexico and its ecosystem, so it was interesting to come back to where I started with a more mature view of the overall Latin American ecosystem and Mexico’s place within it.
According to Beto,
“Mexico is seen like this country that is more Americanized than Latin Americanized…we’ve been kind of segregated from all of the activity and all of the agreements that they make. We’re not really a part of it.”
This is partly because of Mexico’s physical proximity to the U.S. and partly because of its sheer size. With a population of roughly 121 million and a GDP of just under 1.2 trillion USD (the next largest Spanish-speaking Latin American country has fewer than 50 million people), Mexico’s in a bit of a different position than it’s much smaller Latin American neighbors. That could explain why, despite its separation, it’s been attracting foreign entrepreneurs who want to set up their companies and lives in Mexico City.
“[The entrepreneurial ecosystem] is a really nice mix of Mexicans and foreigners,” Beto said, “but not as many from the United States.”
While Mexico has a large enough market to sustain major business growth, however, there are still a number of issues holding back its entrepreneurial ecosystem, one of which being a lack of a mature investment ecosystem.
“The exits here are much more difficult than in the US,” Beto told me.
“Going for an IPO is not really a likely exit option here, so it’s not attractive for investors to take risks on startups here. What I have seen is a VC invests and then a bigger VC buys out the first VC but, eventually, the biggest VC firm has to IPO the company and that’s where it gets it’s return. But here that cycle gets cut off because there isn’t a proper way to make a company public” and so investors have reduced potential for successful exits.
Because of that, Beto believes that,
“the biggest challenge [to the ecosystem] is the investor part.” He continued to say that, “we [Mexico] have some firms but we are really green. We are not even close to being mature yet.”
At the same time that the economic factors hold back the growth of Mexico’s entrepreneurial ecosystem, there are also cultural factors in play that make it more difficult for the startup scene to develop. “There are two issues that I’ve seen that I really struggle with in young people,” Beto said. “The first one is that, I don’t know why, but they are somewhat apathetic. You have to really push this entrepreneurial view of life…The other one is our culture. This is a country that has suffered a lot of macro-economic devaluations …and our parents have this way of seeing things that you have to work, you have to make money as fast as possible, and, most of all, not to take risks and not to take loans. So most young people still have this way of seeing things from their parents…
…We are not raised to take risks, just to get a job and ‘yeah, that’s life, deal with it.'”
Beto believes that mentality is slowly changing, however.
“A lot of people more and more are trying to get out of this square way of thinking and be more entrepreneurial,” he said. “It’s definitely a trend here.”
Startup Nomad will have to come back to Mexico in a few years to see how the ecosystem has developed.
What’s your take on what Beto had to say about Mexico’s entrepreneurial ecosystem? Do you agree that both cultural and economic factors are holding it back? Please weigh in in the comments section below.
Also, please let me know where I should go and whom I should interview next. Let me know below 🙂