Category: Startup Chile

How to Make Chile a Better Place to Do Business

A Chilean newspaper asked me an interesting question this week:

What should Chile do in 2014 to make it a better place to be an entrepreneur?

I don’t think my entire answer will get published in the newspaper, so I’ll republish it here. What do you think? And what would you do to make Chile a better place to do business?

1. Continue to push ASECH inspired entrepreneurial reforms

ASECH, the Chilean entrepreneurs association, has pushed laws like making it possible to incorporate a business in one day, for free, without going to a notary, pushed banks to allow entrepreneurs to open bank accounts much more easily, a entrepreneurship bankruptcy law, and has pushed for laws that force large companies to pay in 30-45 days, instead of 90-120 that’s fairly common in Chile. It’s been an incredible success and should be continued.

2. Force large Chilean companies to follow Chile’s competition laws

If you want to foment entrepreneurship, you need a level playing field. Chile currently doesn’t have a level playing field, as large companies routinely price fix and squeeze out new entrants to the market. And many large companies receive little to no punishment when they break the law. No laws need to be changed. Just enforce the ones on the books.

3. Push for a law that requires payment in 30-45 days for most sales

The majority of large companies in Chile pay suppliers, especially new ones, in 90-120 days. In the US its 30. Sometimes 45. If you start a new company in the US, you only need two months or so of operating capital before your sales start to pay your bills. In Chile six or seven months. This kills most people’s ability to start a business before they’ve even started.

4. Pass a personal bankruptcy law

I think it’s very unjust that a bank can loan you money without taking risk. Chilean banks know that they’ll get 100% of their money back at some point because there’s no personal bankruptcy law to discharge a debt. Chilean loans are very one sided contracts, which makes it more difficult to take risks and be an entrepreneur.

5. Tell the truth about entrepreneurship

Entrepreneurs are NOT rockstars or superheroes. Having your own business is a lifestyle and it’s not for everyone. It’s really difficult, but there are many benefits. I’d like to see the government and entrepreneurship groups talk about the reality of being an entrepreneur, rather than blinding building up entrepreneurship as rockstars and superheroes. I fear that when the first crop of entrepreneurs who’ve been told they’re superheroes just for starting a business fails, as most entrepreneurs do, they’ll be so burned that they won’t start another business.

Three Years in Chile

Three years ago last week, I was in New York getting the last few things together before my trip to Chile. I’d never been to South America, barely spoke Spanish and really had no idea what to expect when I got off the plane. As I waited in the airport lounge at JFK, it still didn’t feel real. It was just like any other of the numerous flights that Jesse and I had taken during our year and a half running Entrustet.

It didn’t feel like we were going to a foreign country that had promised us $40,000 (that we couldn’t verify we’d actually receive), to a place where we didn’t speak the language, 16 hours from home.

Three years later, I’m still here. I’ve spent 27 of the past 36 months in Chile, learned Spanish, immersed myself into another culture, pushed myself out of my comfort zone, made incredible friends, started multiple businesses, taught at three universities, wrote two books and received my permanent residence. It’s been a long road, but after three years, I think I finally pretty much get Chile.

What have I learned over the past thee years? What’s changed in my life and in Chile? And why am I still here? Why did I stay? And what’s next?

It was a big change coming from the US and resettling in Chile. I’m very privileged in that in the US things usually came easily for me. I almost always knew what to say, how to talk my way into and out of situations, all the cool local tricks, the best places to eat, the best parks, the hidden treasures. I knew what body language meant and what each local reference or slang word really and truly meant. It wasn’t very difficult to be successful.

When I first got to Chile, I was completely lost. I could get around the city, order food, get a drink at a bar, but could barely keep a real conversation. I had to concentrate all the time. I wasn’t myself: I couldn’t be the leader that I was used to.

I didn’t know the culture, I didn’t know what slang meant. Even though most people were very friendly, I really learned what it is like to be an outsider. I wasn’t in on the inside jokes, the turns of phrase, longstanding friendships and so much more. It really made me appreciate how hard it must be to be an immigrant in the US. When people say “immigrants should just learn English” I used to think, yea, they should. But it takes a big effort and it’s not as easy I used to think.

Even after three years, I’m still not truly able to express myself perfectly in Spanish. I’m still not fast enough to make the same jokes I do in English. I probably tell half the stories that I would in English. And the ones that I do tell are half as good as the ones I tell in English! It’s really made me realize what it’s like to be an outsider, or at least someone without all of the built in advantages that I’ve been lucky enough to have.

I certainly miss things. First, my family and friends. In the US I lived my entire life in Milwaukee and Madison and was always within 90 minutes of my family and friends. I miss good customer service. I miss good cheese. I miss being able to listen to every conversation that’s going on around me without actually trying. I miss 250 different beer choices. I miss having a yard. I miss telling an awesome joke with perfect timing. I miss top quality, spicy and flavorful food that doesn’t cost an arm and a leg. I miss my bike. I miss going to northern Wisconsin. Kopps ice cream. Watching all of my favorite sports on a big HDTV instead of illegally streamed on my little computer.

chilean beach

But I can get used to many of the small things because Chile really is an amazing country. I love being close to the pacific and the beach. Amazing seafood. Some great new friends. Playing more soccer. Sun 80% of the year. Being close to Argentina for long weekends. Traveling and exploring in South America. Peruvian food. Pisco sours. Going out dancing. Friends that have taken me into their homes, their families. Asados. The metro. Incredible business opportunities. An amazing $7 bottle of wine. Hearing the entire country scream goaaaaaal, when Chile scores. I certainly miss these things when I go back to the US.

As with all things, there are things that I’ll never get used to. Santiago’s pollution, especially in winter, makes the city just a few notches above unlivable. I’ll never get used to the massive amounts of dust. The classism. The Chilean “two dogs meeting” interview ritual. The rigid conservatism and class structure. Price fixing in big businesses. Going to three separate cash registers to buy an empanada. Waiting in long lines. Customer service reps who flat out lie to you. Living in small apartments. My new expat friends leaving every 6-12 months. So many smokers! Massive inequality and the inability for many people to see outside their own bubble of their own experience.

santiago smog

 

Chile’s changed, mostly for the better, since I arrived in 2010. My two favorite changes are the smoking ban in public places, plus the crackdown on drunk driving. Both of these laws have made Chile much more livable. I might not even still be in Chile if they hadn’t passed the smoking ban. It used to be terrible!

There are way more foreigners in Chile now compared to 2010. When I first got to Chile people asked us incredulously “why are you here???” Now it’s fairly typical to see foreigners in parts of the city. Rents have gone up 30-100%, depending on neighborhoods. I wouldn’t be here if it weren’t for the ban. There’s been a micro brewery renaissance, with a huge increase in of good beer. People seem to be more accepting of foreigners. Chile has become much more livable over the past three years.

Business-wise, from 2010-2013, the startup scene is completely different. While there were a few successful Chilean startups and entrepreneurs prior to Startup Chile, the program really has changed the mentality in the country. In 2010, people would ask me what I did and when I answered that I had my own business, they’d ask “where do you work” again, then look at me as if I were homeless. Now its cool. Probably too cool. I worry that the country has been sold a narrative of startup rockstars, heroes, gurus and celebrities that when the first round fails might ruin entrepreneurship in the country.

Asech, the Chilean entrepreneurs association, should be the model for the rest of the world. They are a lobby group that pushed through a law that allowed companies to register online in one day, for free. Before it cost $2000+ and took 2-3 months. They’ve convinced banks to let entrepreneurs open bank accounts, which was nearly impossible before. There are way more coworking spaces. More chilean startups and some incredible opportunities.

But there’s still not much funding. Not many Chilean success stories. Big companies and established players still crowd out entrepreneurs. The people with money still generally have an aristocratic yet provincial, anticompetitive attitude that seeks to divide up the riches and keep their place in the economy, not create new innovation and grow the economy. And the new rich still isn’t thinking bigger. The government isn’t helping much by allowing anticompetitive banks and large companies to gouge consumers and price fix.

I used to socially liberal and be very free market: I believed that if you just got government out of the way, economies will work. After being in Chile for three years, I’m even more socially liberal and still generally believe in getting the government out of the way, but my zeal has been tempered.

In Chile, I’ve seen what happens when there’s little to no competition and the government doesn’t really enforce price fixing or monopoly laws or just doesn’t have big enough penalties to stop basically institutionalized price fixing and corruption by large companies. Along with tax structures that benefit those in power to keep their wealth, and be extractors, sucking out wealth from society, rather than creating new, innovation and expanding the economy for everyone.

I have a better realization of what its like to try to move up in the world and how hard many people work for little money. I see what a problem inequality is and can be. People are physically, mentally, emotionally divided. The rich live physically separated from the rest, consuming different entertainment, different food, different clothes, everything. They never meet and talk, which causes misunderstanding, jealousy and a lack of empathy. This phenomenon is happening more and more in the US and I don’t want it to happen after I’ve seen what its like in Chile.

Overall, coming to Chile has been an incredible experience. I’ve learned so much about myself and about the world, made great friends, learned spanish and gotten to explore an incredible country and part of the world. I’m currently teaching entrepreneurship at three universities and working on a two projects that I think have the potentially to be very interesting over the next few months. I don’t know what my future really holds, but I’ll always be thankful that Jesse and I took the risk to come to Chile back in 2010.

Thanks to everyone who’s helped me in Chile, helped me learn about myself and this great country. I couldn’t have done it without you all. A final thanks to my parents, who haven’t demanded that I come back yet.

Startup Chile Application Round 9 Help

20120904-start-up-chile-logoStartup Chile just opened the 9th round of applications this week and will stay open from now until October 1st with the winners being announced December 9th. In the round eight application process 1500+  startups from more than 60 countries applied for the right to come to Chile for $20m Chilean pesos (US$40,000). Chile invited 100 of the 1500+ companies who applied and they will begin to arrive in the next months.

Startup Chile has become more competitive as the number of applications has grown. Round eight saw applications grow and more than 1700 companies will likely apply to Round 9. More than 1000 companies have already gone through the program since the pilot round in 2010.

It’s a great program, especially for entrepreneurs who are bootstrapping or already have developed a product but need more time to figure out the correct business model for their business. It’s a perfect fit if you’re looking to target the South American market.

My company, Entrustet, was part of the pilot phase of Start-Up Chile and I’ve been in Chile since November 2010. I blogged extensively about my experiences in the program and in Chile, along with advice on how to get selected for Start-Up Chile. I tracked down the stats from the pilot round companies a year later, which was published on The Next Web. I also wrote Startup Chile 101, the book that will tell you everything you need to know about living, working and doing business in Chile and Chile: The Expat’s Guide

Since the third round, I’ve helped startups review their applications and prepare them to get accepted into Startup Chile. Overall I’ve now reviewed, 35 applications for prospective Startup Chile teams and 20 have been accepted.

Round 3 – 6/9 66%
Round 4 – 3/4 75%
Round 5 – 3/6 50%
Round 6 – 3/6 50%
Round 7 – 5/10 50%
Round 8 – 3/5 60%

Overall: 23/40 58%

In rounds five through eight, 6.2% of applicants were accepted into the program and 52% of the applications I’ve reviewed have made it. Many companies that have applied as many as three times previously were accepted after we worked together.

I can help you craft an application that emphasizes the criteria that the judges are looking for, correct your grammar into perfect English and give you the tips you need to have the best chance at getting selected.

If you need help with your application, please contact me. Editing, writing, review, advice. I charge a small flat fee to review and edit your application, plus a larger success fee if you are selected for the program after I’ve helped you.

Want help? Got questions? Want a quote? Email me: nate at nathanlustig dot com or fill out my contact form.

Note: I WILL NOT write paid letters of recommendation.

Chile: The Expat’s Guide Released!

I’m excited to announce that my newest book, Chile: The Expat’s Guide is now out and available for purchase on Amazon! The book gives you the inside scoop about living, working and traveling in Chile from my perspective as a foreigner who has been living in Chile for the better part of the last three years. Whether you’re traveling to Chile for pleasure, coming for business, studying abroad or relocating, reading the book will arm with the knowledge you need to make the best of your stay.

chile expat guide

I cover everything from Chilean culture, history and food to practical tips on where to live, where to go out, dating, travel and much more. Rate five stars on Amazon, the book is 216 pages chock full of the useful information you’ll need to enjoy your time in Chile.

The book comes with a companion website that includes my most updated restaurant guide, service providers that will be useful while you’re in Chile and tips and tricks to survive in the Chilean jungle. For more information, check out the Chile Expat’s Guide website for a full table of contents, the introduction and much more.

Special Offer! If you purchased my first book about Startup Chile, I’m offering 50% off the electronic version. Shoot me an email with a picture of you reading the book and I’ll send you a discount code!

buy startup chile 101 amazon