Ep 19 Andres Barreto, International Business Strategy That Cuts Cost and Increases Profit

The term International Business Strategy is typically used to describe U.S. or Western companies looking to maximize profits through offshoring or outsourcing, or extending their sales into foreign markets. But Andres Barreto is doing things in the opposite direction. He’s working to encourage Latin American startups to focus on the U.S. market and scale there, as well as encourage US companies to look to Latin America for the talented engineers and developers they need. But instead of outsourcing, they’re building integral startup teams in Latin America.

Talent is everywhere but opportunity is not. What does it mean for US companies?

One of my favorite quotes from this conversation with Andres Barreto when he said, “Talent is everywhere but opportunity is not.” He was speaking to the fact that many Latin American software engineers are immensely talented, equal to their U.S. based counterparts but simply don’t have the opportunity to put their skills to use. I believe this to be true too and Andres put it succinctly.

Andres believes that U.S. companies that are able to get over the cultural difference and search out team members in Latin America can not only cut costs but give worthy individuals the opportunity to improve their lives and their local economies. Even better, they can invest the same amount of money that they would in hiring a junior employee in the US and hire a Latin American with 10 years of senior experience. Andres is passionate about this topic so you’ll get a much better feel for how he views it by listening to him describe it on this episode.

Follow the advice to move to Silicon Valley to begin your startup and you’ll waste money.

Traditionally, Silicon Valley has been the place founders are advised to move in order to make a go at a tech startup. But is that the smartest decision? With the advances in technology that enable remote work and communication, being in the heart of Silicon Valley is no longer the only viable option.

Andres Barreto shares how he has seen many Latin American companies build a huge presence in the U.S. Market without making the shift to a Silicon Valley location. He also shares insights into the benefits those companies experience from staying in Latin America and the impact it has on the value they deliver to their customers.

When going up against a big competitor, build less and do it better.

Andres Barreto says that he’d much rather build an online marketplace to compete with Amazon than try to build a company that is attempting to be the “Amazon of Latin America.” In his mind, the key to success is to focus on building less and doing it better than the giant competitor. This not only enables the company to scale faster, it also sets it up for a very profitable acquisition down the line.

As a venture capitalist, if you think you’re doing a startup a favor, you shouldn’t invest in it.

Though we talked a lot about International business strategy, Andres Barreto is a venture capitalist, running a very successful venture capital firm, Firstrock Capital. His advice to those who want to invest in ventures is to keep their perspective clear. He says as a VC partner you need to find companies where you believe the founder will do a much better job than you ever could. That’s a team you can believe in and put your money behind.

If you ever find yourself getting excited about a potential venture because you think you’re going to be able to help them out with your money and your expertise, you should walk away from the deal – because if what you’re thinking is true – the company isn’t ready.

Outline of This Episode

[0:03] Andres Barretto, Colombian entrepreneur turned venture capitalist.
[2:12] The types of companies Andres’ fund is looking to invest in.
[4:15] Why it’s advantageous for US companies to use Latin American engineers.
[9:09] Andres’ three-part test for startups.
[11:00] What Andres says to Latin American entrepreneurs who are intimidated by entering the US Market.
[14:12] How Andres moved to the US initially.
[19:50] The ignorant notions US companies must overcome.
[31:34] Why Latin American VCs are missing Latin American market deals.
[43:37] Andres’ advice to entrepreneurs in Latin America considering US Markets.
[48:33] The top mistakes startup founders make when pitching to VCs.
[54:41] Andres’ advice to beginning entrepreneurs and beginning VC investors.

Resources & People Mentioned

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