Category: Startup Chile

Chile at Ten Weeks

Category : Startup Chile
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I’ve been in Santiago, Chile for about two and a half months now and have gotten pretty used to living here.  I really like it here.  The people are nice, the weather is amazing (especially if you compare it to the snowpocalypse in Wisconsin this week) and I’m making great friends in the Startup Chile program.  I had always wanted to live in another country, but couldn’t study abroad because of my previous business.  I’ve been meaning to write more about my experiences here, but nothing has been worthy of a full blog post.  Jesse wrote up a grab bag of his reflections on life in Chile and inspired me to stop being lazy and write it all down.

Why are you here and do you like it?

Most Chileans are confused by why I am here.  They always ask the question almost disbelievingly, especially when I meet them for the first time.  I feel dumb when I answer by saying, “we were working on our startup for about a year and a half an we saw the article in forbes and tech crunch and decided to apply.  it’s really cold in Wisconsin and we wanted to avoid the winter and we wanted to live in another country and the money was the push we needed.”

And yes, I honestly do like it here.  Many Chileans don’t seem to believe me and they ask what I like.  I say that the people are nice, the mountains are beautiful, I live being close to the beach and not being in winter, but again, I feel like they expect more.  It’s especially bad when I’m doing this in Spanish because I think people think I’m saying basic things because I don’t speak much, but in reality I say the same things in English.

Food and Wine

Restaurant food is expensive and most doesn’t seem to be a great value for money.  I am used to spicy, flavorful meals with lots of salad and veggies, but the typical Chilean lunch is meat and potatoes, with hardly any spices, if any.  Peruvian restaurants are a better deal because the food is better and spicier.  Chileans make great sandwiches though and if you like to cook, you’re in luck.  Produce is incredibly cheap, fresh and good.

I’m not sure why Chilean food is bland, but it’s clear that most Chileans don’t like spicy food.  I’ve heard speculation that it’s because Chile is very strict about food imports, so they don’t get all of the spices, but if you’re thinking spicy food, you’re not gonna find much.

On the other hand, wine is great here.  If you spend $10, you’ll get something really good.  If you spend $20, which is hard to do, you’ll get something exceptional.  I’ll miss cheap, good wine in the US.

Cost of Living

The general rule is that services cost way less than the US and goods cost more, sometimes way more.  Taxis are cheap, electronics expensive.  People’s time costs less here, but imports seem expensive.  Housing is about on par with Madison, which is cheap by US big city standards, but not overall cheap.

Physical Interaction

When you meet a woman you kiss her on the cheek, no matter if it’s a business situation.  I kiss my banker on the cheek when we have a meeting the same as one of my friends.  I do the same when I leave.  Men who are friends do a handshake/hug type thing.  It was hard to get used to and it’s still weird when you meet another American, because it’s hard to decide whether to do the kiss on the cheek/hug or just shake hands like we were in the US.  It’s a nice change from the states.

Walking in Crowds

The area around our office is really busy.  There’s lots of people walking fast on pedestrian only streets.  In the US, you walk on the right and if someone is walking toward you, you’ll both go right.  In the UK, it’s the opposite, you go left.  Here, there’s no rule.  You just walk forward and play a game of chicken.  There’s no rhyme or reason.  I think they should send athletes here to practice their quick cuts.

Santiago is an Orderly City

After walking around the centro with no rhyme or reason, it’s strange that the rest of life in Santiago is extremely orderly.  It’s completely normal to see 50-100 people waiting in a perfectly calm line to get on the bus at rush hour.  During rush hour, the metro is hot and crowded, but you never see any pushing and shoving.  People seem to go the extra mile to be courteous.

Classism

Chileans of different classes don’t mix much.  The rich live in Vitacura, Las Condes and Providencia, with the middle in the surrounding areas and the poor to the south and to the west.  It seems to me that people in the upper classes are generally more worried about image, whereas the middle class seems more open.  It’s sort of like the LA mentality vs. the Chicago mentality.  Many seem to look down on those lower than themselves.

There is a Chilean word “flaite” which basically means “white trash.”  It can mean anything from low class, to dangerous, to criminal or just crappy.  I’ve heard Chileans of all social classes that I’ve met describe someone or some location as flaite, but it’s all in the eye of the beholder.  Here’s an example.

When we first got here, we didn’t know anything, so we just went out and had fun.  I’ll call it Club A.  After meeting Chileans who were our age, they told us that Club A was “flaite” and they recommended new places (Club B).  We tried Club B and had fun.  Then we met some more Chileans in a higher social class and they told us Club B was flaite and that we should go to Club C.  We tried Club C, had fun and then and the same thing happened, where we maxed out at Club D, which was only ok.

What I’m trying to say is that flaite is in the eye of the beholder and the higher the social class, the more isolated they become because they think more and more is trashy and not worthy of their presence.  I’ve seen the same in the rich in LA and NYC, but it seems to be more prevalent here, or we’re just exposed to the upper class more here than I’m used to.  As Americans/Europeans, we basically can do what we want and move between classes, but regular Chileans either can’t or won’t.

Another quick example: I told a Chilean that I buy food from street food stands.  He looked at me like I was crazy.  Another time I was talking to a young professional guy my age and someone in the higher social said “be careful of him” to mean “be careful, he’s lower class.”  It’s been a fairly common theme.

Credit Cards

There’s a monopoly on credit card processing and bank transfers called Redbank.  All banks have to be a part of it.  It makes accepting credit cards easy and I can transfer money to anyone in the country free of charge.  There’s no need for paypal here.  The downside is that the rates for everything else is super high.  Interest on credit cards can be as high as 45% and there’s financing available for just about everything.  I can even pay my grocery bill in payments if I use my credit card.  Credit card processing rates can be as high as 5%, compared with 1-2% in the US.

I wonder if Chile will suffer a crash once all of this credit with high interest comes due?

Another interesting fact: when I got my bank account, I got fingerprinted.  I bet this stops identity theft.

RUT is Public Info

The RUT is Chile’s national id number, sort of like our social security numbers.  The biggest difference is that you give it out everywhere.  Nobody hides it.  Instead of scanning a card at the grocery store to get discounts, you give them your RUT, out loud, in line.  Your RUT is on your ID card and you give it to your friends/business associates if they want to send you a bank transfer.  I’m guessing the fingerprinting prevents ID theft.

Prepaid Mobile Phones

The vast majority of phones are prepaid.  You can recharge everywhere; from girls in the metro or in the street, at kiosks, the ATM, online, everywhere.  Text messages are really expensive at about $.20 per message.  It’s cheaper to have a 2 minute conversation than send a text.

Air Travel is a Huge Deal

At the airport, entire families come to see the traveler through security.  Flash bulbs are popping from the time they are getting in line to get their ticket to the last time they leave view as they walk through customs.  It’s a reminder that air travel is still an incredible luxury for most of the people in the world, even in a well developed country like Chile.

There you have it, some random observations from living in Chile so far.  I really enjoy it and am glad I am here.  If I had to choose again, I would 100% make the same decision.

Looking for more high quality information about Chile from my experiences sine 2010? Check out my book Chile: The Expat’s Guide:

chile expat guide cover

My First Christmas Away From Home

Category : Personal Thoughts, Startup Chile
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I’ve always been able to go back home to see my family during Christmas, but this year, I’m in Santiago.  I have strong memories of going to my Grandma’s house on Christmas Eve, sitting around a huge table with 10-15 extended family members.  We usually had the same food each year and then would open presents.  The youngest always had to pass out presents, so for a few years I did and then my brother took over for me.  When she moved into a nursing home, we took the festivities to her.  We’d cook at home and then head over and do a shortened version of Christmas Eve.  Although the location changed, it was still the same.

On Christmas Day, we’d stay at our house, make breakfast and then open presents with just my parents and brother.  Sometimes we’d go to a movie in the afternoon.  I have strong memories of coming downstairs and opening presents with the family.  This year, I missed our family traditions and hanging out with my family, but still had a great time with new friends.

On Christmas Eve, we had an international potluck of Startup Chile entrepreneurs on the 18th floor of an apartment building in Santiago.  Each person had to bring a dish that reminded them of Christmas from home and it was great to share Christmas with people from South Africa, Ireland, Germany, China, Portugal, Canada, Isreal and the US.  As we watched the sun set over the Andes, we were all a bit homesick, but as we talked, it passed.

We were all thankful that we all have “jobs” that allow us to travel the world, learn about new cultures and meet people from all the world, all while working on projects that we enjoy.  One month in, I can’t stress enough how happy I am to have this opportunity.

On Christmas day, most of the crew went over Shahar’s apartment where we grilled and hung out on his rooftop pool.  We spent the whole day sitting in the sun, drinking beer, wine and pisco and enjoying being away from winter.  It wasn’t quite a white Christmas (although a Chilean street musician was playing “Let it Snow” outside my window yesterday).  Judging from my shoulders today, it was a red one.

It was sort of strange being away from home and I missed our family traditions, but it was great to celebrate the season with my new friends and reflect on just how lucky we all are to be able to do what we want with our lives.  Here’s a few pictures from Christmas Day:

Meat
Jesse, Tiago, George, me
Rooftop Pool
Shahar, Me
Enrique and Jesse
George and his dog Gaston

Punishing Failure, Stifling Innovation: How Culture Affects Who Goes into Entrepreneurship

Category : Entrepreneurship, Startup Chile
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I wrote a post last week about some of challenges facing Chilean would-be entrepreneurs because of the culture.  Overall, Chilean culture punishes failure, which stifles innovation.

It got me thinking and I realized that it seems to me that a fixed percentage of people in the world are entrepreneurial.  I’m not sure what the exact number is but if I had to guess, it’s probably around 10% and I’d be willing to bet that percentage is fairly static across the world.  I believe that these 10% have the skills, desire and entrepreneurial spirit to start a business and succeed.  10% of Americans, Saudis, Chileans, Spaniards and South Africans all have the desire to start businesses, so why do some places have lots of entrepreneurship and others don’t?

Why does the US have a higher percentage of entrepreneurs than Chile, Saudi Arabia or other places around the world.  And in the US why do Silicon Valley, NYC, Austin, Boulder and Boston have a higher percentage of entrepreneurs compared to Des Moines, Tallahassee and Phoenix?

I believe that certain cultural values free up the entrepreneurial 10% to actually start businesses and succeed.  For example, in the United States, we reward risk taking, business ownership and making money.  On average, we also love innovation, learning and trying new things.  We love rags to riches stories, even if they are only partly true.  If someone’s business fails, it’s seen as experience, not a black mark.  In the US, these values are stronger in San Francisco and Austin than in Cleveland and Memphis.

In other parts of the world, there are many different cultural pressures that stifle innovation: punishing failure, punishing innovation, closed culture.  Some places even look down on successful people.

In Silicon Valley, I bet 20% of the people are entrepreneurs in some way shape or form.  In Austin, maybe 8%.  In Chile it’s .01%.  I believe that all cultures start out with the same 10% who can start businesses, but some cultures push people who may not have started businesses to do it, while others push people who would have otherwise started a business to shy away.  The most important thing entrepreneurs, government and academics can do is to try to free the people who would start a business, but don’t because of cultural pressures.

I’ve seen it first hand in Madison.  When I was 19 and just starting with ExchangeHut, there were not many young entrepreneurs.  I only knew 4-5 students and recent grads who were starting businesses.  After JellyFish sold to Microsoft, Networked Insights started to have some success and young entrepreneurs like those in the Burrill Business Plan Competition started to get press in national publications and have some success, other people started to see that they too could start a business.  Capital Entrepreneurs has accelerated the process, along with all sorts of cool initiatives from the startup community like barcamp, forward tech festival, high tech happy hour and more.  I think Madison went from a 1% to a 3% city in the last five years.  We still have a long way to go, but by unlocking the pent up entrepreneurial talent, we’ve seen an explosion in entrepreneurship.  Just wait until we see what Madison looks like at 5%!

In Chile, I’d estimate that we’re at .1%: for every 1000 people who are entrepreneurs at heart, only 1 starts a business.  That’s 1/1000!  In Silicon Valley, it’s probably 200/1000, Austin 80/1000 and so on.

Part of Start-Up Chile‘s mission is to introduce entrepreneurs from all over the world into Chile’s culture to try to break the cultural pressures that punish failure and stifle innovation.  I believe that we should be focusing on the other 9.9% of Chileans who might start a business if they were not afraid of being punished for their failure.  If we can double the amount of entrepreneurs who start businesses, it will be a huge win for Chile.  I see similar parallels to Madison and the entrepreneurial community is starting to take shape.  People just need the entrepreneurial push!

What do you think?  Are entrepreneurs distributed equally across the world or are more entrepreneurs born in one country compared to another?  What can you do to help free up the rest of the entrepreneurs who are scared to make the leap?

Start-Up Chile FAQ

Category : Startup Chile
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After our video in TechCrunch, I got a bunch of emails from entrepreneurs who were interested in applying to Start-Up Chile and wanted to know more about the program.  I decided to make a little FAQ for anyone who has questions about Start-Up Chile.  If you have any questions that I didn’t answer, put them in the comments and I’ll be sure to answer them.

Do people speak English?

Not really.  Most Chileans don’t speak much English, especially in stores, in taxis or restaurants.  People in the tech companies, top government officials and young, upper/middle class Chileans speak some English.

Do I need to speak Spanish to come to Chile?

No.  Most of the entrepreneurs in Start-Up Chile don’t speak much Spanish, or any at all and are doing just fine.  I would suggest taking some Spanish classes before you get here because your life will be much easier and more rewarding if you at least make an effort

How is the $40,000 grant distributed and what can I spend it on?

Currently, we spend our own money and then submit receipts.  We can pay ourselves whatever we want, but can only submit about $2,400 per month for reimbursement.  We can deduct our rent directly from the grant.  For everything else, we have to submit receipts and then the money will be transferred to our bank account.  We’re taking a salary and then submitting receipts for web hosting, travel, rent, ssl, employees and other costs.  We’re not allowed to submit receipts for alcohol or tips.  I’ve heard that they are trying to simplify the process, but it’s not too bad.

Where is the office?

Moneda 975, which is right in the center of Santiago, about three blocks from La Moneda, Chile’s version of the White House.  The office is very modern, open and has plenty of space for us to work.  The area around the office is very busy with lots of people, shops, restaurants and food stands.

What’s the cost of living?

Housing is between $350-$700 per person, depending on how nice of a place you want, how close to a metro stop you want to be and what part of the city.  Most of us live in Providencia, Las Condes, Bellas Artes because we want to be close to the Metro.  If you don’t mind walking or taking the bus, you can save a ton of money by checking out places farther away from the Metro.

Does the program help you connect with people?

Yes.  We’ve met many Chilean entrepreneurs, government officials and academics, along with interesting people from the US like Steve Blank and Vivek Wadwha.  We do weekly meetups every Thursday where all of the Startup Chile entrepreneurs get together and hang out with 30-50 locals.  It’s been a great way to make connections.  Even just saying you’re in startup chile has allowed many of the teams to get contacts with businesses or investors.

What is the local talent pool like?

I’m still not quite sure.  There seems to be some skilled tech people, but so far it’s been hard to find at least for us.  I know of at least 5 companies that have made successful hires since coming to Chile and we now have our own jobs portal where you can post jobs specifically for startup chile companies.

What is the weather like?

So far, 80s and sunny every day.  It’s dry, so it’s not too bad.  I’ll update this as we fully move into summer.

Is it safe?

Yes.  Santiago is a safe city, especially if you stay in the nicer areas.  Where we live in Providencia is completely safe and reminds me of parts of California.  Santiago is 1st world in infrastructure and lifestyle.

What’s the application process?

We filled out a 3-4 page form that required an executive summary, ideas about what we would spend the grant money on and information about why we wanted to come to Chile.  We submitted the app, then were interviewed by the startup chile team so that they could ask us any questions.  Next, they asked us a few more questions and then told us we were approved.  I believe there were close to 100 teams (maybe more) that applied and they picked 25.

What kinds of companies are they looking for?

Any smart founder who wants to develop their business.  Right now, most companies are IT related, but there are a few alternative energy projects.  I believe that Startup Chile would pick any smart, motivated founder and are not just looking for specific industries. Here’s some more questions I received and the responses I sent back:

Can you please let me know if you have found the program beneficial.  Has the incubation culture there and the ability to work with other startups helpful?

For me, it’s been great.  I really enjoy traveling and being in other parts of the world, so this was perfect for me.  The weather is nice, santiago is 1st world, modern, safe, efficient.  We’ve been connected to some of the best people in Chile, but there doesn’t seem to be that many people in the IT space here, so it’s going to be tough to find mentors/partners outside of the program.  It could be that I’m looking in the wrong place.

The office is really great: anytime you get 15-25 smart startup founders in the same room together, good things happen.  We’ve already partnered with one of the other startup chile teams and are doing a side project with another one as well. There seems to be a few VC/Angel funds here that are looking to invest in startup chile startups.

I was also wondering where the offices are located and how the funds must be spent?

The office is located moneda 975, Santiago (google map it, its right in the middle, right near la moneda, the Chilean white house).  The area around the office is very busy: lots of people walking around, street vendors.  The office itself is on the 12th floor of a government building and is really nice. Right now, we can take a salary of about 2.4k per month for living expenses (not including rent) and then you can spend your 40k on anything you want besides tips, alcohol and gambling.

You need a receipt to backup the big purchases.  You can pay overseas developers up to 2.4k per month without doing a “bid” but you can pay them whatever if you produce a document that shows that they are getting paid market rates.  Some of this info will change, as they’re trying to make it much more simple, no receipts and fewer restrictions on what to buy.

We are currently paying ourselves more than $2,400 per month from our own revenue or investment, do we have to take a pay cut to come to Chile?

No.  You can pay yourself whatever you want, but you can only submit $2,400 per month to be paid back by the grant.

Can you get around in Santiago without a car?

100% yes.  The metro is efficient, clean and fairly new and gets you wherever you want to go.  Taxis are plentiful and cheap and buses run all over the place.  I don’t think any startup chile entrepreneur has a car here.