This week we had our Morning Coffee with Claudio Barahona, Open Innovation Manager of Movistar Chile and leader of Wayra.
Contxto – In recent years travelling to Silicon Valley and other innovation hubs under the concept of “business tour” or “fundraising tour” has become a trend.
Many institutions, incubators, and government subsidies are invested in promoting all sorts of studies tours to innovation hubs, mainly San Francisco and the oh-so clichéd Silicon Valley. Some charge for the organization of those trips, others take a percentage of your profits, and sometimes the jaunts are financed directly by the State.
Many entrepreneurs choose that option without even thinking about it.
I mean, who doesn’t like to travel? Who doesn’t like to say he or she was with some super huge investor that said his or her idea was “good”? Everyone in the digital world needs a photo in Mountain View with Google’s logo!
You must also obviously check-in in at Facebook HQ in to make your friends jealous. If you had asked me a few years ago, San Francisco would have been my favorite trip during my school days. But of course, the coffers of our guardians did not allow for us to go beyond Machu Pichu or Bariloche.
But, are these trips really worth anything to my startup? Have you ever wondered about the real results in business and investment terms of those startups that spent three weeks touring through Silicon Valley?
I’ve spoken to hundreds of those travelers and I’d dare say that 99 percent of them have not accomplished a thing. Ah, yes, but then again they do have a new profile photo at the Golden Gate Bridge!
Moreover, in many cases, when looking at it in retrospect—that is, one or two years after the fact—, many tend to realize that the trip was a distraction that cost them valuable time and money. That does not mean that a Latin American entrepreneur cannot suceed in Silicon Valley! And I will explain why…
What’s my discovery after talking to all of those founders that made their technological pilgrimage to Silicon Valley? I found out that essentially you have two options:
- Let’s say your startup is currently in Chile with interesting traction and potential expansion into larger and more interesting markets like Colombia and Perú (that is, 90 percent of cases), apply yourself to that. Don’t waste time and money going to Silicon Valley. That magical investor that’s going to finance your expansion is not coming. Why? Simply because American investors do not want the HQ of the startup in which they just invested, to be more than thirty minutes away. They want the business in which they invested to be from the United States to the world and contribute with “smart” money, as well as with networks right in the Valley. An investment in a Chilean enterprise that wants to enter the Peruvian market, where the investor does not know either Chile or Peru, has no contacts there, and needs to take a twelve-hour flight to know “what’s up with my investment”? No way! If that’s your case, I would advise you not to waste a single second on this folly. Don’t be an entrepre-tourist.
- You have a startup that has users and sales in the United States. Is it your main market? Is your innovation so disruptive that you can actually compete with other world-class startups who want to take this segment, without a globally consolidated competitor? In that case, I recommend you sell your car, lease your apartment, borrow from friends and family, pack your things and move to San Francisco for at least one year. As is; leave everything and start there from scratch. In other words, compete with you and your team’s skills right at the top of the startup league. Not for two weeks, not for a tour, but living there with all that goes with it. Play the whole game: be an American startup with Latin American founders. That’s how you can succeed… Indeed, there are emblematic cases where they “raised venture capital (VC) in San Francisco” but they actually played this game: suitcase in hand, very excited to get the chance to win the opportunity of your life in the world’s most developed tech and venture capital ecosystem. That’s how Cornershop (SF), Rappi (NY) and many others started. But forget about your traction in Chile… That will practically become an anecdote once you start your journey there. That is not being a entrepre-tourist, that’s being a Latino American owner of an American Ccompany. That’s trying your luck in the Northern Hemisphere. Your nationality ends up being irrelevant
In conclusion, and as advice to those entrepreneurs who are considering becoming an “entrepre-tourist”, I recommend that before you accept and pay for one of these trips you ask yourselves the following questions:
- Is my business from Chile/Colombia/Argentina/Mexico/etc. to the world or from the United States to the world?
- Are there businesses within my area, with the greater competitive edge of the United States?
- The people (investors, famous CEOs, etc.) whom I’m supposed to meet will really contribute to my business or will I only have meetings with a lot of feedback but without something concrete?
- With this trip, am I losing time and money that I could be directing to something else that makes my company grow?
- Talk to at least two or three people who have made that trip, ask them what their thoughts are and what the real results were.
With all of that you could probably answer your own questions and know if it is really worth buying what this institution is offering you.
I want to emphasize that it’s not my intention to sound mean or to criticize any particular institution. But in the spirit of advising all those entrepreneurs who are about to become an entrepre-tourist.
P.S.: It is important to mention that in this column when talking about “entrepre-tourist” it references trips to San Francisco, Telaviv, NY or some other innovation hub without a specific business goal. It has no relation with a commercial prospecting trip to close new sales in another country, which is, clearly, the next step of an already consolidated startup that seeks new clients.
P.P.S: This column was originally written in 2015 for the EyN column section of El Mercurio. And it is more relevant than ever!
Claudio Barahona is the Open Innovation Manager of Movistar Chile and leader of Wayra, Telefónica’s initiative that connects the company with startups and innovation ecosystems and invests as corporate venture capital in innovative technology companies with global scalability. The Chilean Financial Journal named him “Young Influencer 2017”.
Translated by Alejandra Rodríguez