Accenture Startup Ecosystem

How To Replicate Silicon Valley

Summary:

This blog post will provide an overview of what it takes to clone Silicon Valley. I will also review Yachay, the latest Ecuadorian effort to replicate the Valley and in order to provide more in-depth understanding of the current startup landscape, I reflect on Andreesen’s thoughts on creating 50 different valleys as well as an essay by Vivek Wadhwa on how the Silicon Valley can’t be replicated in combination with other resources like Paul Graham’s essay about buying Silicon Valley.

Also, to explain Silicon Valley’s culture to those who don’t live here, I list my top reasons why the Valley works and what other parts of the world should be doing to make it work (see table below). We will look at the mindset during California’s Gold Rush and match it to the current “software-eats-world” era to establish the underlying entrepreneurial culture that is at the core of innovation. I also talk about my personal experience starting Tangelo by building a high caliber team that has helped launch three startups and has delivered over 200 technology projects for our clients.

Silicon Valley thrives in a Gold Rush mentality. Silicon Valley has found gold in software development and technological innovation and everyone around the world wants a piece of it. It just seems so easy from far away to make a quick fortune in only a few years by selling a startup or going IPO. Let’s look at the history of the San Francisco Bay Area and the monumental Ecuadorian initiative to clone it.

For the past few decades, Silicon Valley has attracted top talent from all over the world. Highly skilled people move here with hopes of working for a high growth startup. The motivations vary widely. Some are looking to tackle the ultimate technological challenge and others are comfortable working as hired guns looking to cash in the crazy exuberance of startups loaded with venture capital.

During the original California Gold Rush in 1849, people from all over the world came to northern California in search of fortune.  The first few got lucky and made quick fortunes. Just as it happened during the Gold Rush, a few of the top tech companies of our day got lucky as well. Companies such as Yahoo!, Facebook, Google, and Twitter to name a few have grown to become sustainable high-growth companies.

But for every smashing success there are thousands of losers. As it happened during the gold rush, not everyone found gold but everyone drank the kool-aid and wanted in. According to American History, the Gold Rush made some extremely rich, but not necessarily who you might think:

The first lucky arrivals were able to find nuggets of gold in the streambeds. These people made quick fortunes. It was a unique time in history where individuals with literally nothing to their name could become extremely wealthy. The gold was free for whoever was lucky enough to find it. It is no surprise that gold fever hit so heavily. Yet the majority of those who made the trek out West were not so lucky. The individuals who became the richest were in fact not these early miners but were instead entrepreneurs who created businesses to support all of the prospectors. It is easy to think of all the essentials the sheer number of new inhabitants would need in order to live. Businesses sprang up to meet their needs. Some of these businesses are still around today including Levi Strauss and Wells Fargo.

San Francisco represents an opportunity for people now as it did in 1849 and it continues to capture the imagination of entrepreneurs.

But sometimes it is better to sell the shovels than to look for gold and that is exactly what Levi Strauss and Wells Fargo did and they became extremely successful by clothing the hopefuls and securing the money they made.

This Gold Rush is different. Software can be created anywhere in the world and that possibility ignites people’s imagination. They don’t have to necessarily come to Silicon Valley to make it happen anymore. Chile, Brazil, Argentina, Colombia, Canada, Germany and a long list of countries are actively trying to clone Silicon Valley.  The same is happening in American cities such as New York, Miami, Chicago and many others.

One of the main hurdles to success is that they are trying to replicate Silicon Valley’s surface not its culture. To paraphrase Steve Jobs, what matters is not how it looks, it is how it works. There’s is nothing inherently special about the geography of the Valley. If anything, the location of Stanford and Palo Alto in reference to San Francisco or San Jose is inconvenient and the suburban sprawl often makes the commute unbearable.

But then there’s Silicon Valley’s culture –– the things that you don’t see on the surface, the things that you learn only if you’ve been here and have started a company or have joined an early stage startup.

Marc Andreesen, the co-founder of Netscape and Andreesen-Horowitz recently wrote an article about Silicon Valley and what it would take to create valuable models and not just worthless copies. He argues that the value lies in specialization rather than governmental support or controlled innovation:

…the freedom to create new technologies without having to ask the powers that be for their blessing. Entrepreneurs can take advantage of the difference between opportunities in different regions, where innovation in a particular domain of interest may be restricted in one region, allowed and encouraged in another, or completely legal in still another. For example, the laws and guidelines for using drones or taxing bitcoin already vary widely across the globe, just as they do for ride-sharing services across different cities in the U.S.

I largely agree with this framework. If a country reduces the regulatory hurdles to starting and growing a company and it has an inviting immigration policy, it can benefit immediately from the digital revolution.  There’s no better way to illustrate this than a current and real life example.

Yachay And The Ecuadorian Bet For Technological Supremacy

There is a small country on the equator, abundant with natural resources, that has a burning desire to leapfrog into the wealth-generating era of technological innovation.  The President of this tiny but fiery country is the visionary-in-chief and he has set aside one billion dollars to fund the implementation of this technological paradise.

This utopian scenario is happening in Ecuador, the place where I was born. I have been living in Silicon Valley for over 14 years and I am extremely excited to see this idea take shape. Though my hope is high, I have a great deal of concern that the vision can sink in a sea of highly inefficient processes and policies that are so typical of any South American country.

There are things that make Silicon Valley’s innovation engine fire sparks and that is largely due to the culture.  This culture would not have been able to flourish without the support of the government.

Here’s a side by side comparison of what works in Silicon Valley when starting a company and the current policies in Ecuador

Silicon Valley Policy and Culture Current Ecuadorian Policy and Culture
Starting a company takes a few minutes and it can be done online for a minimal fee. Starting a company can take many weeks to months following many complicated steps.  Many fees and taxes are required and you have to prove a dollar value of the company before it has even been formed and have money in the bank to show you can support the company.
Hiring people is easy. There’s no red tape or any type of strict regulation. If you pay your taxes you are in good standing, the government will not interfere. There are many governmental protections for workers, so it is difficult to have a trial period for employees and and there are many restrictions in firing employees.  Firing employees can be cost prohibitive for a small company.  Long-term contractors are prohibited and must become employees of the company.
Investors and companies understand that traction trumps profits in the short term.  Highly valued companies such as Google, Facebook, Pinterest, Twitter reported losses and took many years to figure out how they would be profitable.  (Some companies are still figuring it out.) Companies that report losses for more than 5 years are shut down by the government.
Business processes such as hiring, paying taxes, accounting and banking is highly efficient and can be automated to a large extent. Many transactions must happen in person instead of online.  The entrepreneur is often concerned  about obscure regulations that can shut down the business from one day to the next.
Credit is easily accessible Interest rates are high and it can be extremely difficult to obtain loans.  There are even many obstacles in simply opening up a savings account.
Equipment is readily available and fixable and anyone can get computers and software quickly and efficiently.  For example, if I am starting a software company I don’t have to worry about my laptop failing and having to wait months to get a new one or to having to pay a government-driven protectionist tax on foreign goods. If computer equipment fails, people often must wait months to get for replacements and then they must pay high tariffs, or government-driven protectionist taxes on foreign goods.  The latest technology is not readily available.
Unless you are completely careless, the government will not shut down your business. The IRS wants the income from your business and does not want to shut you down. In South America, government officials are keen on “catching” noncompliant businesses and then shutting them down.
The entrepreneurial culture of the Valley gives entrepreneurs a ready-to-go support network where people help each other while at the same time competing against each other. Entrepreneurism is lonely and isolating and there is no vibrant community of support.  Corruption rules the culture.

How can Ecuador actually make this vision a reality? Start by systematically considering and creating their regulatory competitive advantage. Here are some points that can help make this happen:

Get the infrastructure right

Hector Rodriguez, the current General Manager, understands that a new city should include a robust university with comfortable amenities such as stores, health clinics, schools, child care centers, transportation and other basic infrastructure that will attract and foster a vibrant community.  Though the vision is extremely lofty, it is actually sound and comparable to other pie-in-the sky ideas set forth by folks like Peter Thiel and the Island Nation project he supports.

Build an ecosystem not only a university

Building a top tier educational institution that is at the heart of Yachay is a smart move that will attract top talent.  But that alone is not enough to spur an entrepreneurial culture. If you look at Stanford and the innumerable companies that its graduates have started, you can see how a top notch university helps fuel an entrepreneurial community.  However, without the support of investors these companies would have never existed.

Culture trumps location

Yachay is located two hours from Quito, the capital of Ecuador. The best parallel is Palo Alto, CA which is located in between two major US cities: San Jose and San Francisco. This small city became the capital of the world for startups and there were other factors that ignited the startup revolution in this area.  Yachay’s disadvantage is that the culture could become homogeneous. If you have a mix of people with diverse backgrounds and experiences, it helps to build a creative culture.  According to Vivek Wadhwa in an article titled “Why Silicon Valley Can’t Be Copied” he explains the success of  Silicon Valley and attributes it to culture malleability.

The reasons were, at their root, cultural. It was Silicon Valley’s high rates of job-hopping and company formation, its professional networks and easy information exchange, that lent the advantage. Valley firms understood that collaborating and competing at the same time led to success—an idea even reflected in California’s unusual rule barring non-compete agreements. The ecosystem supported experimentation, risk-taking, and sharing the lessons of success and failure. In other words, Silicon Valley was an open system—a giant, real-world social network that existed long before Facebook. 

Can Ecuador, or any other developing country copy the Silicon Valley startup machine? That is the question that Rafael Correa’s government is trying to answer right now as they embark in possibly one of the most ambitious South American initiatives.

Yachay’s Opportunity And What Ecuador Should Do

Ecuador is building Yachay, a standalone city that is currently an uninhabited Andean Valley. It’s a literal blank slate in terms of infrastructure, policy and human resources that can be an ideal location devoted to serve what  from M.I.T calls the unexotic underclass.

This is Ecuador’s attempt to leapfrog into the next economic frontier. The “City of Knowledge” as it has come to be known, is surrounded by mountains, Andean valleys and its purpose is to help Ecuador evolve from an oil-based economy into the innovation hub of South America.

In a recent article in the Miami Herald, Jim Wyss provides an interesting point of view into Yachay. His analysis, at no fault of his own, is similar to other articles written by CNET and other publications and it is reflected in the type of people that are interviewed for the articles. They are academics, not entrepreneurs and there is a big difference between both. Academics are great at analyzing markets, not at creating new ones. For instance, a civil engineer that is building noble malleable materials in a lab does not know how to actually build a construction company. Steve Wozniak designed the first Apple Computer but it would have been highly unlikely that he would have built Apple, the company. Academics fuel research, not entrepreneurship.

For this great experiment to work, there needs to be a complete culture shift and government reform to incentivize, not punish new businesses.  The great opportunity for Ecuador lies upon deregulation and specialization of resources that are available within the country.

This city can become a magnet for talent from across the globe and to entice the local and foreign talent to stay, the immigration and economic systems need to accommodate the new arrivals by welcoming them and not putting burdens to financial success.

Yachay’s system should be such that a company can incorporate quickly and start hiring local talent right away. The tax system should provide stability so that entrepreneurs can attempt to build moon shots without the concern that the government might come after them if they fail. Big corporations need to see the value of investing in innovation rather than stagnate in old school business and governmental models.

The opportunity is ripe for the taking and Ecuador has the opportunity to succeed where many have failed.

Tangelo, the company I founded over six years ago, is based on my personal belief that innately talented people from abroad can compete with top Silicon Valley companies. My job is to find those opportunities to prove it.  Over four years ago, we established a program called the Tangelo Startup House to bring Silicon Valley’s culture to Ecuador and Argentina and we are succeeding. We have built three companies from scratch that have been highlighted at conferences such as Google I/O and DEMO.

We have experienced the ups and downs of building an ecosystem around Tangelo and have learned an incredible amount about the intricacies of building an innovative team and we are eager to share it just as every other entrepreneur in Silicon Valley is eager to support a new one.

Accenture Startup Ecosystem

Accenture Startup Ecosystem

 

 

How Two Tech Moguls Are Reshaping Silicon Valley

“Never doubt that a small group of thoughtful, committed, citizens can change the world. Indeed, it is the only thing that ever has.” –Margaret Mead.

The conference I just attended made me realize how quickly things are changing in the Valley technologically and culturally.

I’ve followed the debate on pattern matching and funding inequality closely and I was greatly disillusioned with the VC and Angel community. It just seemed so backwards and such an impenetrable boys’ club. The organizations and products that were being created emphasized that disparity even more.  The products, originally conceived as a channel to democratize access to content was suddenly becoming an invitation-only playground for the influential. Networks like svbtle and ‘LinkedIn Influencers’  deepened this divide even more by giving a bigger megaphone to the already loud and authoritative leaders.

It started to feel like my high school, filled with entitled  cliquey rich kids.  A country where the wealthy own all the opportunity and the poor and middle-class truly depend on trickle-down economics. The trickle-down is more of a slow and slimy drip to feed the masses.

Shortly after a period of  innocuous cultural revolution, a new crop of folks started to come out the woodwork. First, Marc Barros launched a Hardware Workshop and charged $50 bucks a head for a kick-ass hands-on workshop. Looking back, that was a faint signal of good things to come.

Then, out of the blue, Marc Andreessen, one of the smartest and most influential entrepreneurs (turned VC) started tweeting tirelessly and interacting mercilessly with the community. Twitter basically turned into “What is Marc Tweeting Now.” Marc pushes the edges of technological innovation beyond the comfort or social media iterative copy-cat innovation.

After that I get an email from Jason Calacanis about the LAUNCH Conference.

I’d forgotten about this event and I’d dismissed it as yet-another-twitter-love-fest with no depth. Boy, was I wrong.  It was fantastic, eye opening, engaging and most importantly, inclusive.  Startups from Atlanta, Detroit, Redwood City, New York and other cities showed up en masse.

There was one of particular happy accident that can only happen at conference like LAUNCH. A little Detroit startup called visionboards.co caught the attention of Marc Cuban as he walked down the startup corridor. The founder of Vision Boards told me that he tore up the interface but said that he liked the idea and left the door open to a possible investment.

That sense of inclusiveness and possibility is what is missing here and Marc Andreessen and Jason Calacanis  are renewing the dream with their actions.

This is at the core of what the Silicon Valley is and why people come here.

 

How TV Networks Fail Latinos And What Two Startups Are Doing To Win Them Back.

Over the past few months, two media companies (CNN and NBC) had two major failures in the Latino space. CNN and NBC shut down their media initiatives covering and serving U.S. Latinos.

Within the same time frame, two Latino-focused startups, Hispanicize and LSA, showcased  some major successes. They’re targeting the same market and with infinitely less resources they’ve been exponentially more successful.

Why the giants are failing and how the underdogs are winning will make you think twice about the power of this market and how to approach it.

There’s one thing that is important to understand. This is not by any means a reflection on the market or the journalists that worked for them.  It is rather a reminder that the news business is evolving at every level and for every demographic. This is especially true when you are targeting  Latinos, a demographic that is leapfrogging desktop in favor of mobile.

Let’s look at the giants’ failures first.

NBC and CNN hurried to join the flock into the Latino space. They joined Fox News, Fusion and UnoTV, an Internet-only TV channel back by Carlos Slim’s CARSO Group. NBC and CNN offered a lackluster and poorly designed experience from the start and within the first year of operations they were shut down.

NBC and CNN Latino were destined to failure due to a lack of commitment to the idea. They were the ugly stepchild at the newsroom and to add insult to injury, they were playing within the sandbox of a dying media business model.

The news business is evolving to be real-time, highly collaborative and relevant and the CNN and NBC Latino initiatives were anything but cutting edge.

There is a very interesting  post-mortem in BuzzFeed by an ex-staffer. It reads as a love letter to the tireless and penny-less journalist covering the poor and forgotten. I liked the prose but the analysis left much to be desired. We need critical views instead of romanticized story-telling.  One thing the author has going for him is that he had the good sense to have go work for a thriving media company where his journalistic voice gets amplified exponentially.

Now let’s look at the underdogs.

These startups are attacking the same demographic and they are having much more success with a different and refreshing approach.  Two of the best examples are Hispanicize and LSA (Latino Startup Alliance).

Hispanicize is a technology and marketing conference that has grown exponentially over the past few years. They have been able to secure big brands as committed sponsors including Google, Toyota, P&G, 3M and more.

Thousands of people attend the conference every year.

Hispanicize is lead by Manny Ruiz who built and sold Hispanic Wire prior to starting this conference. He has the drive, the experience and the passion to make things happen.

Then we have LSA or Latino Startup Alliance. LSA is a highly efficient  grassroots networking organization that connects top Latino innovators in the U.S. and abroad. LSA’s founders are more about actions than words.  LSA is lead by Jesse Martinez, a veteran of the technology startup community in the Silicon Valley.

LSA and Hispanicize are lead by tireless entrepreneurs that look at the Latino community not as a token word to accompany a well-known brand, but as thriving and growing community that is part of a multicultural country and not a subset of it and they treat it as such.

2013-05-15 08.22.35

Interesante.com: Demo Day At Google

It has been almost a year since we launched Interesante.com to the public. It continues to be a fantastic ride and there are a lot of things that we’ve learned that I’d like to share. The main thing we learned is to be clear, concise and truthful with our users, investors, and advisors. To that end, I’ve prepared this post that explains who we are, how we came to be, and where are we going.

Interesante.com Intro Slide

 

Interesante is the place where you can find the most interesting things in the world. A smart engine that learns from your culture, location and favorite activities. Interesante will change the way that people discover content and will allow brands and advertisers to have access to a largely untapped market of 260 million people across South America, Central America and North America.

Interesante Pitch v1.002

Before I go on, I want to clarify our approach and the way we see the Latino market, especially in the United States. To do that, I’d like to share two numbers with you. 80% of Latinos in the US are of Mexican descent. That number dwarfs whatever difficulty people  have understanding a seemingly complicated and multicultural US Latino market. Mexican-Americans dominate the so-called Latino market in the US and for a startup like ours, that delineates a path to user acquisition that is much more straightforward.  The other number is $58 billion dollars. That is the amount that Latinos spend in travel in the US alone. Interesante can help them find what they want, when they want it.

Interesante Pitch v2.003

If you are going after such a big market, you need a great team of smart  and accomplished folks that understand the problem and know how to build the solution. Our team is extremely diverse. 50% of our team is women. We have biologists working population ecology and artists building user interfaces.  We have folks that have worked for Accenture, Intuit, Sun Microsystems, Tangelo, Stanford and more.

Most importantly, we understand the problem. Most of our team is in Argentina so three times a year we all meet in Buenos Aires. Buenos Aires is a beautiful city with wonderful places to visit. But none of us live there so we would spend our free time after long coding hours searching for things that we like. Let me tell you, the first few trips were not as fun. We spent hours searching for places we  liked. There was no cultural, location, or interest layer that could help us discover people, places, or products that matched our interests. We talked to people and many had the same problem. Even the locals!

So, we built Interesante.

But a team, no matter how good, needs a set of advisors that have done it before. These are the people that have been with us from the start. These are the people that believed that we could do this even before we launched.

 

Interesante Pitch v1.004

You now know the team behind Interesante and the genesis of the idea.

Now let me dive into the problem. Content discovery is fragmented. For users it is hard to find the content they like.  Brands that want to reach this demographic have to resort to small buys in niche sites or large display buys across content producing networks. I mean, it seems that a new Latino-focused TV channel launches every week.

Interesante Pitch v1.005

Our solution distributes content based on geolocated moments and affinity. We start with creation by users and aggregation of content. We curate the content through algorithms and distribute it to our users based on their interests, location, and favorite activities.  We allow for discovery of people, places and products based on affinity. All this data is then turned into insights for the users themselves and for brands.

Interesante Pitch v2.006

 

What is the impact?

Interesante Pitch v1.007

As soon as we launched, we were covered by over 200 publications. Giovanni Rodriguez from Forbes was the first to write an article about Interesante. Over the past four months we’ve achieved a 20X traffic growth and we have over 500,ooo interests in our platform. Because of this, hotel brands came to us and wanted to use Interesante as a marketing platform to engage their guests at their properties. We have helped hundreds of hotels increase their traffic and reduce their bounce rate by 15 to 20%. We achieved that in the first week.

We offer this solution to the hotels as a freemium model. They can use the platform for free with ads or pay a monthly subscription for an ad-free platform.

Interesante Pitch v1.008

We have competition. Pinterest is a platform to share content, not for discovery. MercadoLibre is a person-to-person e-commerce platform but it is not a marketing or discovery platform. We are different because of the algorithms that power our discovery engine and the laser focused approach in our target market.

Interesante Pitch v1.009

We are Interesante.com –– where you can discover the most interesting things in the world. We closed a $425,000 seed round last December (2012) and we are bootstrapping right now. We are open to receiving investment and most importantly, to partner with folks that can help us grow faster.

Interesante Pitch v1.010

Why is Andy Kieffer in Mexico?

I was happy to see this post about Andy Kieffer in Pando Daily. He moved to Mexico after a successful exit in the Valley and  started Agave Labs.  I don’t know him, personally,  but I love what he’s doing and I wanted to add my perspective since I’m from Ecuador, I’ve been running remote teams from South America, and I’ve lived in the Silicon Valley for over a decade.

You see, I did the reverse as most people do. Techies come to the Silicon Valley to chase their startup dreams just as actors go to Hollywood to be discovered. However, many do not make it and the pressure and cost of living can be extremely prohibitive. We have our own version of 50 year-old waitresses still hoping to be discovered.

There are a lot of techies in countries like Mexico, Argentina or Ecuador that do not want to move to the United States or to any developed country for that matter. For millions of techies, quality of life in these countries is just too good to give it up.

A lot of folks in the Valley would find this statement completely preposterous.

I understand.

After all, the elite residing in the Valley has a completely skewed version of success– aiming to be the next Steve Jobs or follow in the footsteps of Elon Musk.  Truly, when you have a magnificent intellect and off-the-charts drive to make things happen then the Valley is the place for you.

This wasn’t the case in South America fifteen years ago. The best professionals from South America would jump at the chance of coming to work in the US. There was no concept of remote work and you worked for whatever pay the government or the private monopolies would give you. The internet was slow and completely useless. For years, the internet cafes would only allow you to visit two websites: Yahoo! and Hotmail. Nothing else. There was political and economical instability to the point that your money was worthless from one day to the next.

A lot has changed since then in South America.

Internet connections are faster. You can sit at your house for hours and do video chat over GoToMeeting and work with someone remotely and actually build a personal relationship. You have options. People’s minds are also more open to new things. A gringo is not seen as clueless tourist wandering the streets of a city, but as a person with a different culture. Still a bit clueless, but a person none-the-less.

Thousands of technical graduates see themselves as the generation that will change everything. They see the US as a resource, not as a goal. They are learning from the mistakes made here and building better and more localized products and services.

Finally, they wouldn’t give up a quality of life that makes them happy.

Most of my team is in Argentina and when I go there to run Startup Houses, which we’ve been doing before startup accelerators were popular in the Silicon Valley, we  rent a mansion for 15 people. We spend two weeks there, with copious food and drink for the entire crew, living in the best neighborhood in Buenos Aires.  We go on outings to excellent  restaurants. All of this for less than a third of your standard startup run rate.

We not only have a lot of fun, but we launch products.

When I ask them if they would move to the Silicon Valley, they answer,  “but why?”

And I, too, understand them.

 

 

Steve Jobs

The Latinos Of Silicon Valley

The Latinos Of Silicon Valley

A great article by Giovanni Rodriguez in Forbes (The Latinos Of Silicon Valley) describes with ease the role that Latinos are playing in the Silicon Valley.  He mentions Rebecca and I as emerging leaders. We’re thrilled to see a community of new leaders emerging in the Silicon Valley and to be considered among them. But truly, our team makes all of this possible.

I wanted to expand on the article with my point of view and explain why his article matters so much.

The Latinos of Silicon Valley –– We are about technology. We are like a startup. We are about the world. (Giovanni Rodriguez in a Forbes article dated May 11th 2013)

We’ve been in the Silicon Valley for well over a decade. We came directly to Stanford after a full year of traveling abroad.  Over the years, we’ve learned that the Valley can be fun, unpredictable, exciting, rewarding and sometimes even heartbreaking. There’s a reason why people from all over the world come here –– it all boils down to an insatiable feeling of curiosity and the unstoppable need to create something, to put a ding in the universe, as Steve Jobs would say.

I’ve always been curious about the most random things. As a kid I wondered what would happen if I used my dad’s computer. I reformatted the hard drive and it took him hours to restore it. It was thrilling and scary at the same time.   I wondered about luck and class differences. As a kid I was acutely aware of the socioeconomic differences we had to face as a family. I think experiencing that and being aware of it has helped me strive for something better throughout my life.  I was part of the have-nots and though it was tough, I enjoyed being the underdog and rising above it –– and still do.

I wanted to know more but I didn’t know where to start. My mom was pivotal, as she implanted the seed of curiosity by filling the gaps of knowledge with new and mesmerizing facts and stories about far away lands. Even though I had a great coach, after a while the oppressive environment with a revolving door of presidents and coups brought me down, so I stopped looking and I became a follower. But thankfully not for long. It was hard because it meant being completely aloof and putting my head down, which has never been one of my strengths, so I started looking again.

When I arrived to the Silicon Valley, everything changed –– not overnight but it was a pretty fast transition. I took up computer science, though I’d never programmed in my life and I was lucky enough to get an internship at Sun Microsystems. I didn’t know anyone but as things happen here, we met a super cool guy who happened to be a director of marketing at Sun and he happened to be looking for interns. Plus I happened to be persistent. I worked Saturdays and Sundays at the office. I was thankful that they would let me come to the office on the weekend and also surprised that not many people did, except the director.

My family’s emphasis on education, hard work and risk-taking was a great platform where to stand. Then I came here, to the Silicon Valley, as an outsider and now I feel part of the fabric of it. The platform my family built helped me stand tall and face challenges, accept failure and to always strive to be better. I believe we have a big responsibility to open up doors and to build up our presence in business, technology and innovation.

As Giovanni said in his article, we  “expect others — Latinos and non-Latinos alike — to begin investing.  For one of the most remarkable things about Silicon Valley is that it is fast emerging as one of the world’s new melting pots.”

 

Easy maths

How To Make A Capitalization (Cap) Table For Your Startup

The capitalization table or cap table is key to a startup and should be understood and managed accordingly. To understand what a cap table is and how to build it, please read my post below which explains some the basics. Also read Brad Feld’s introductory post on cap tables. Gust has some great resources as well to understand how to value your technology startup.
If you want to skip to the nuts and bolts of creating a cap table, visit CapShare and give it a spin. You’ll need all the details laid out before you plunge in so that things make sense to you.

The financial responsibilities that come with launching a company properly can be confusing, especially if you have not done it before. In some cases the company is launched and before you know it, you have hit hockey-stick growth and you are surrounded by people that are very knowledgeable and that can take care of the legal and financial aspects of running a company. That is the entrepreneur’s dream. Focus on product and hire other brilliant people to take care of the rest. However, that is not the norm so many entrepreneurs need to learn the basics quickly because as much as you want to, you can’t rely on third party folks to advise you on how to run your numbers. It is key that you understand the financials so that you can make decisions quicker. This becomes extremely valuable once you are negotiating a big partnership or your first big client. If you are seeking the partnership, then it is very likely that you will be dealing with sophisticated business people. Also, the opposite could hold true. Your potential investors or partners might be savvy in other business verticals (that’s why you might be seeking them) but they might not be familiar with what it means to invest in a technology startup and how to do it while minimizing the risk.

One of those things is the capitalization table. I will run you through the process that I went through to figure out the cap table for Interesante.com –– hopefully this will serve you as a template to follow or at least a base to start.

CAP Table Basics First.

Who are the founders, how much equity each one gets and what is your employee incentive pool (EIP). This really depends on your company but typically you want to set aside somewhere between 10 to 20% of your total equity to attract new hires to your startup. There’s a great post from Fred Wilson about equity compensation. It reads a bit  dated but still has valid points of view. Investors like to see that entrepreneurs are thinking long term and that are realistic about hiring and growth needs.

Equity Incentive Plan.

Think about how are you going to compensate your advisors, employees and partners. What is your plan for advisors and how many are you going to seek and why? Your advisors will be your lifeline to knowledge, VCs, potential hires and business strategy. You need to honor their experience and compensate them with the most valuable asset that you hold, which is your equity. Plus they will be in a position to be paid in equity. Depending on the commitment they are willing to make you can decide on the amount of equity you are willing to pay. Here is a great explanation of how Michelle Wetzler negotiated her compensation and the factors she looked at. Take a look and learn from it.

Think long term and offer a deal that fits within their current workload. It should be firm enough that they pay attention to you but flexible enough to allow for some breathing room. You’ll need to define a contract that you can offer to all your initial advisors. There needs to be a cliff  for the initial options to be vested and a long-term commitment should be agreed upon. A contract between 24 to 48 months is reasonable and established on-going meetings. Once or twice a month should be enough.

For your key employees you need to make it worthwhile.  Depending on experience and seniority, the range could vary.  Keep in mind that anything above 1% of shares will affect your pool in a big way. What you give away needs to be measured against the employee incentive pool and not the total of the company pool. That will give you some constraints and will force you to be more creative.

Beyond The Basics Of Cap Tables.

Fred Wilson has a great post on cap tables. As he points out, the cap table shows you all the major stockholders of the company,  major option holders and option holders. It shows all of the classes of stock and how much was paid for them. For each investor, shows how much of each class was bought and how many shares of that class are owned as a result. Total up the cost and shares and then calculate ownerships on a fully-diluted basis (which means you include the options, whether issued or non-issued or vested or non-vested).

Santa Maria Startup Weekend

Why Is Startup Weekend Important?

Why Is Startup Weekend Important?

 Startup Weekend is now a global success taking place in major cities and now is entering smaller communities and becoming a lot more diverse. Santa Maria Startup Weekend is a great example of this. Communities that have entrepreneurial potential that needs to be unlocked.  I will be one the speakers. The coaches are great and the judges come from very diverse backgrounds. The event promises to be exciting and dynamic.  There are only a few seats left, so make sure to register.

We’ve all gotten that “aha” moment, when we’ve realized that a product or service can be much better than it is today or that a brand new servicecan help people be more efficient.  We have that little voice inside our heads that suggests solutions to problems we are experiencing in our daily lives. A brand new idea or an improvement to an existing product that could make our lives much better. These ideas are a mixed bag –– sometimes they are inspired and unique and some others they are, well a bit too thin. But none of them are worthless. All the creative process serves a purpose. A “thin” idea is the first step you take to form a well thought out and worthwhile idea.

Unfortunately these ideas stay at an empirical level. Friends of mine often see the task of creating something new as a monumental task devoted to the geniuses of design and engineering.  This is where Startup Weekend comes in. It helps you realize that you can create things and that your dreams can become a reality much faster than what you thought.

I attended one of the first Startup Weekends in San Francisco and San Jose and the events were amazing. It changed my point of view in terms of what a person can accomplish. Before Startup Weekend I had already started Tangelo, my own services company (clients include: Intuit, Padnos, Zuberance, etc.) and was trying out the entrepreneurial path. It was my first year and it was tough. I went to a Startup Weekend not knowing what to expect. What I found was amazing –– a group of people with the drive to do something big. Every single one of them emanated great entrepreneurial energy. I learned that I didn’t know much but that it didn’t really matter because we were there to figure it out together. I learned that you need to continue to improve because this group will be supportive but that you need to keep up with the pace. I learned that Startup Weekend is more about the people you meet that the idea that you bring in.

There are very few startups that have gotten funding or that have continued after Startup Weekend. FoodSpotting (acquired by OpenTable) and InDinero (financial services for small businesses) are the ones that people usually refer to. This should not stop you from going. The purpose of Startup Weekend is to open your mind and to light your entrepreneurial fire. To meet folks entrepreneurs and investors that could help you at the event but most likely in the future.

Come with an open mind and all the energy you can muster.

 

Interview with GigaOm –– How To Build a Distributed Workforce For Your Startup.

A few weeks ago, I had the pleasure of sitting down with the team at GigaOm to talk about our experience building a distributed workforce for your startup. I’ve had the opportunity to work with excellent people in Argentina that have made this possible for over five years and for startups and established companies.

As GigaOm says,

Daemonic Labs was built from the ground up as a distributed company. It’s headquartered in San Francisco, but also has offices in Argentina. In this interview, Daemonic co-founders explain how they built the company, what they look for in employees, and the benefits of building this way.

I think that to build a lasting and successful cross-border startup, one needs to be motivated by a love for your product and a deep trust in the people working with you.

Here is the video of the interview.

Dabble, launched.

It’s been a wild ride at Daemonic Labs, the startup I cofounded with Pete and Santosh. A couple of weeks ago, we released our first public version of Dabble, the product we’ve been working on for almost a year.  Plenty of publications picked up the news including the New York Times in their article titled, Could These Start-Ups Become the Next Big Thing?. This happened organically shortly after our official launch at DEMO.  Other publications include CNET, TheNextWeb, betakit and VentureBeat. La Nacion in Argentina, Wayerless, infotechnology and many others wrote about us as well. We’re stoked about the outpouring of support and coverage for Dabble. We know this is the first step of an exciting journey and we want to bring our supporters along by explaining in more detail the thinking behind the first version of the product.

Let’s start with smartphones. I view smartphones not only as geographically aware multipurpose interfaces but also as devices that understand and measure significant daily metrics which give more context to social interactions online. According to Clive Thompson of the New York Times, “Social scientists have a name for this sort of incessant online contact. They call it “ambient awareness.” It is, they say, very much like being physically near someone and picking up on his mood through the little things he does — body language, sighs, stray comments — out of the corner of your eye.” Metrics like weather, distance, time of day, calories burned are now measured in real time and are easily accessible. The work of a properly designed application or service is to give them contextual meaning and to make them highly relevant to the user.

The new crop  of geolocation apps needs to be a lot smarter and evolve dramatically from the status quo. As technology evolves and people demand more from their devices, real time data and time become factors that help deliver a better user experience without dominating. Is it more important for a user what is happening right now or is it more valuable to deliver a crafted recommendation based on interests and relevance? –– As users get more sophisticated and application developers understand the subtleties of adding value to a person’s –not some abstract user’s– life, applications  will evolve to support real needs.

Which brings me back to Dabble and our vision. We look at the smartphone as a device to interact with your surroundings intelligently. Dabble makes the world around you more meaningful and interesting. A tool that synthesizes data and makes it relevant to you.

For instance, I traveled to New York City a year ago. I took Dabble with me (I take Dabble with me where ever I go.) and created content by placing digital postcards around the city in the places I love. With any other app I basically forget that I’ve created that content and once I’m back home, the digital breadcrumbs are gone and are rendered useless. With Dabble, I leave that content there and -literally- one year later I still see people stumbling upon these postcards. It is such a great feeling to discover postcards that were left there months before. Dabble postcards are preserved in time and space for people to discover them later and reengage with the content. I’ve had conversations with people I don’t know that have stumbled upon the postcards I’ve left in New York City, Miami, Peru, Argentina and Ecuador.

These connections happen due to the emotional charge that a Dabble user shares when creating a postcard. A postcard has an image, a location, a creation time and a piece of text. Pictures are key and they are truly worth a thousand words. The message and the location give context to the postcard. It makes it timeless, useful and magical.