I think we are at a tipping point. The Silicon Valley has seen the waves of technology innovation from the exuberance of the 1990′s to the boom and bust of the dot com era and to a more sustainable boom of the past few years. We’ve come a long way in understanding how the world can be changed by technology and how to make the progress constant and exponential.
Hollywood and Silicon Valley are starting to build deep ties. This will have a huge impact when new products are launched. You saw a snippet of the possibilities when Sean Parker launched Airtime. From my point of view that was a test to measure the impact and the beginning of a collaboration with endless possibilities. I am sure we will see more of this in the near future after all Kanye just visited Shervin, so something is brewing. Super influential folks like Marcelo Claure and Arturo Duran are setting up operations here. You know big things are about to happen when they show up somewhere. They are innovators and a force of nature all in one. They play well and disrupt mentalities and processes. These are true and tried entrepreneurs who are not afraid to think different.
However, in the rush of speed and “move fast and break things” mentality, the Silicon Valley is leaving a few things behind. The diversity of people and markets that can drive innovation and growth for years to come has not been an important topic at the entrepreneurs table. Frankly, there seems to be no need to think beyond the beautiful box that is the US mainstream market. That fosters a rather homogeneous way of doing things where you have the innovators coming up with the ideas, the imitators trying to cash in the innovation closely followed by the fools. All of them targeting the same market.
So who is going after the unexotic underclass, as C.Z. Nnaemeka likes to call it? Basically no one in the Valley is doing this.
The entrepreneur’s profile in the Silicon Valley, though incredibly good, falls within a stereotype that VCs call pattern matching, which is successful as long as the pattern followed keeps up with socio-economic progress and assumes an innate curiosity to understand people and markets beyond your close circle.
Because, at some point patterns change, shattering old ones and disrupting markets and no market is immune.
But why should you care? ”You should care because the unexotic underclass can help address one of the biggest inefficiencies plaguing the startup scene right now: the flood of (ostensibly) smart, ambitious young people desperate to be entrepreneurs; and the embarrassingly idea-starved landscape where too many smart people are chasing too many dumb ideas, because they have none of their own (or, because they suspect no one will invest in what they really want to do). The unexotic underclass has big problems, maybe not the Big Problems – capital B, capital P – that get ‘discussed’ at Davos. But they have problems nonetheless, and where there are problems, there are markets.” That is C.Z. Nnaemeka again.
Before you start looking to emerging markets, lets look at the US.
The numbers below tell a story of a market in the US that a handful of Silicon Valley startups are serving properly. Thanks to Isaac Cuevas, VP of Interactive Marketing at Grupo Arenas for the data below.
88% of the population growth among adults 18-34 coming from this group in the next 10 years. They will be consuming more technology than any other age group before them. The power and influence of this group in the U.S. will be driven by technology. Census data shows that 50% of population growth came from this group. They are early adopters of technology and reaching them with culturally relevant information will be a must-have strategy for any political message or marketing campaign.
Hollywood knows that they can be the deciding factor in opening weekend especially since this demographic is now outpacing teens as the biggest consumer of movies. The dollars that are spent in marketing blockbuster properties goes much further if the messaging is culturally relevant. Online and mobile is where they find information.
Innovation and the growth of technology means products are better and more accessible at a lower price point. Products like mobile phones and tablets will be more accessible over the next few years. Data consumption will increase and their habits will be forming now and influenced by people in the same social circles.
The Valley continues to hit home runs and it will for a long time to come. However, competition is mounting and other countries are finally putting their money where their mouths are and they have no other option than to target the juicy US mainstream market in addition to the underserved markets that the Silicon Valley is not paying attention to and they have the advantage.
I started writing this right after watching Julie and Julia and as it so happens, movies move me emotionally into action. The movie from my point of view was more about entrepreneurship and doing what you love than it was about food or the characters themselves. The main thread tying film together is the deep connection with the topic they chose to learn about . Julie and Julia were driven to a something they’ve never really explored before. A passion so profound it drives you to be the best you can be at something.
I wanted to explore the reasons why people do what they do. Why people choose to become engineers, coders, cooks, teachers, businessman, traders, entrepreneurs or heartless money making machines. And it all boils down to where come from and who you know growing up. As simple as that. I’ve always managed to do what I like. Sometimes successfully and many others simply a flop but somehow it has worked out.. The main lesson I’ve drawn from many trials and failures is that there is really no match to the feeling of experiencing something you always wanted to do. Nothing.
Wealth depends on your ability to create something from nothing. Paraphrasing Jason Calacanis, creating something from nothing as an entrepreneur is one of the hardest things that one can do and people that are doing it deserve our support.Â This is the case in any country or culture. It is simply very difficult to get other people to believe in your idea or to understand the need–the fire inside– that pushes you to start something on your own. That’s part of the challenge and great entrepreneurs thrive on it.
In a series of posts that we are calling Creating Something From Nothing: Exploring Startups and the Latino Influence in the Market”. we will highlight stories of outstanding efforts to create value as well as practical advice on how to get there. We will focus around the efforts of the South American Â and US Latino Talent and the value of its Market as we believe that it Will Soon Reach The Tipping Point.
Many people cite the year 2030 as the year where the Latino community will reach critical mass. My take is that we don’t have 20 years to wait. Furthermore, this is already happening but people are not paying enough attention.
I’ve had the luck to gain perspective into this in the US and in Latin America and one thing that strikes me as very different is the mindset of people in both markets. In Ecuador and in many of the other countries I’ve worked and visited across South America, the need to start your own business is key to your financial progress unless you come from a family that has already done that, then that need rapidly disappears or it is masked in the form of smaller ventures always under the umbrella of the family business.
If you are middle class and have a great technical or business education in South America in general you have two routes.
The first one is to work for a company for decades and try to make it into the small group of people at the top. It certainly can be a rewarding life if you are able to get the right job. There is not a lot of upward or parallel professional mobility and the rewards for a job well done are minimal as raising stars need to be kept under control as they threaten the established top management. This sounds similar to any company but the difference is that the C-suite and senior management is not for the best and brightest but for the better connected regardless of the skill level. This is a sustainable practice as the competition in large local industries is usually non-existent thus a poorly managed monopoly is still a monopoly with power and financial well being.
The second one is to start your own business. To start an adventure travel company, an environmental practices consulting, a construction company, a restaurant or an Internet cafe.Â All of these are real examples but not all of them have websites so no links could be provided. The latest trend is starting an outsourcing practice to support software development projects from the US and Europe.
Creating a company in an environment like the South American bureaucracy is quite an accomplishment on its own right. Maybe except for Chile that is trying to embrace technology companies by asking for a 5 year commitment and a$500K investment that would be matched to a degree with some government funds.Â Beyond keeping up with theÂ bureaucracy is only part of it. The culture is not as welcoming to successes as it is in the US or Europe.
Beyond all these issues there continues to be a fire that ignites the need to create value and to compete in the worldwide market. If you look at the Argentine success in Spain (Spanish) you can see the success of the creative talent that is bottled up in that country.
Ecuador is another example of a country that produces quality management and scientific talent that cannot flourish within the country. Friends of mine are sprinkled across the world. Heading financial operations in Dubai, coding for a startup in Barcelona, getting an MBA in Australia, selling Ecuadorian fruit across the world, importing clothing from Miami, working for a bio tech company in the Silicon Valley, etc.
Little by little this South American and Latino talent is coming together mainly through the internet.
They are collaborating and letting that fire inside flourish into better and more influential startups and communities. It will be hard to see this come to live in South America itself due to the ridiculous restrictions on businesses but the United States in particular is poised to see a strong growth of Latino lead companies that will succeed based on the sheer smell of opportunity.
This is part of the series “Creating Something From Nothing“. A highlight of the challenges and benefits of doing a start up and views on how to tap into undervalued and under served markets.
I found this essay by Cecilia Munoz to be inspiring. She touches upon something thatÂ could be dangerous if only the negative part of it is played: Outrage.
But many times outrage can be the inspiration you need to get something done. Michael Arrington was outraged at the level of coverage and criticism that start ups were getting so he started TechCrunch.Â Another great example is Aaron Patzer and Mint.com. He saw an under served and underdeveloped market that needed a big dose of practical innovation and hard work.
Here is an excerpt that summarizes the good use of outrage and how she fills the hollow it leaves within.
I am deeply familiar with that hollow place that outrage carves in your soul. I’ve fed off of it to sustain my work for many years. But it hasn’t eaten me away completely, maybe because the hollow place gets filled with other, more powerful things like compassion, faith, family, music, the goodness of people around me. These things fill me up and temper my outrage with a deep sense of gratitude that I have the privilege of doing my small part to make things better.