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View: Public-private efforts help create startup ecosystem, breed success

By Boris Hirmas Said

BHS File Photo 2As dreamers and optimists, entrepreneurs are capable of envisioning many different scenarios to carry out their projects, even under unfavorable conditions or in the best of cases, a rapidly changing environment. However, this capacity to endeavor and insist on moving ahead in creating businesses is perceived by society in different ways depending on the region.

In the United States, the failure of a project does not stigmatize the entrepreneur with either failure or incompetence, becoming only an opportunity to learn from past mistakes and improving the odds on the next round. The new generation of American entrepreneurs, especially the “silicon” and “serial” ones, often boast of past failures and how they took the lesson and survived, going on to their next and best project yet.

Unfortunately, this is not the way entrepreneurial failure is perceived in our Latin American countries and even in Europe for that matter. I read in a well-known Chilean business magazine that the large investment funds operating in the country often resist the idea of investing in startups since, given their nature, they could easily lose the investment; even when the amount in question has a ratio of size and timing that, given their total assets, would be considered far from an irresponsible risk. All
of this is in reference to the Israeli Arnon Kohavi, who arrived in Chile to establish an investment fund, highly enthused and with much fanfare, declaring that the next Facebook would be Chilean. He would ultimately leave in disappointment because in his view, the country’s financial elite lacked the
necessary commitment to build it.

The case of Chile is striking to me in that the country boasts one of Latin America’s most favorable
entrepreneurship climates, a dynamic working environment and a renowned spirit of business and innovation that, while not quite up to the heights of Palermo, Buenos Aires, certainly moves forward at a very nice pace. However, I believe that Chile’s chronic lack of small and medium sized businesses hinders the country’s ability to make the final leap necessary to replicate the great secret of success found in American entrepreneurship.

The Chilean government has been criticized for the support it offers to entrepreneurs through institutions such as Start-Up Chile, which offers generous grants to startups in exchange for incubating in the country during the initial stages of the venture. It might seem, although it is not, simply a matter of giving thousands of dollars to any entrepreneur from abroad that shows up to launch a business and leaves soon after the subsidies have ended. But in the world of social networks and viral marketing, these entrepreneurs have a critical role as the chroniclers of modern financial
history, which is hard to quantify during the early stages of their efforts. If we consider that Chile is far away from the large markets and the business capitals of the world, it seems to me that using the two greatest elements of change in the world today, social media and technology, is a very smart and
effective strategy for a country to position itself in the global entrepreneurial ecosystem.

Another interesting aspect about the incubation of entrepreneurs is that it begins in colleges and
universities. As pointed out to me by Mark Rosenberg, president of Florida International University, the challenge for his institution is to train students not only so that they can find good jobs, but also so that they can create good jobs for others. While this may sound obvious, it is important to remember that only a few years ago, the greatest ambition of many, if not most, top students was to be hired by a big Wall Street firm, not necessarily to create the next great American company.

It has become quite fashionable to talk about the establishment of entrepreneurial ecosystems that
mimic Silicon Valley. The Valley, however, is a ruthlessly competitive place with quotas that restrict
opportunities for newcomers, leaving entrepreneurs to look for other places where they can prosper. This talent surplus represents a great opportunity for several cities, and while it is true that the research generated by top universities such as Stanford is impressive, it is not the only element necessary when seeking to spur innovation and entrepreneurship. That is why Massachusetts, with its long and storied history of academic and research leadership, is having a hard time keeping up with its west coast counterparts. We have all heard of how Mark Zuckerberg emerged from Harvard with the idea for Facebook in hand leaving Boston for Silicon Valley’s flush investor community and deep talent pool to develop what has become one of the world’s most valuable companies.

The point I am making is that in terms of entrepreneurship and innovation, the ecosystem is a state
of mind in which many combinations of private and public assets may be brought to create environments that breed success. The “crowdsourcing” of a city or region’s best entrepreneurial and investment minds coupled with a meritocratic system of social mobility are essential components in building these ecosystems. It helps to have a local investor community that, along with a tolerance for calculated risk, understands that in the field of innovation, the business curve is not typical and that the entrepreneur’s goals may be a little out of step with those of the investors, whether they are a fund, an angel or a contributor.

Ultimately, the most important thing for South Florida to understand is that the level of success that could be reached working as a team more than justifies the effort and the risks of bringing all players together.

Boris Hirmas Said is Chairman of the Board of Tres Mares S.A. (Santiago, Chile) and Entrepreneur in Residence at the Eugenio Pino and Family Global Entrepreneurship Center of the School of Business at Florida International University.

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