I’ve said it before but I’ll repeat it. In my opinion, Silicon Valley is the most vibrant entrepreneurial ecosystem in the world. The sheer amount of venture capital available helps but there’s a lot more than money that you can’t quantify and makes it unique. It’s hard to replicate the dozens of tech meetups happening everyday where people discuss any startup-related subject you can imagine. It’s even harder to replicate the collaborative culture you can find here. Everyone openly discusses their future plans and you feel like anyone you stop on the street can give you extensive and valuable feedback for your business.

This is what I call the “insider bias”. Just by being here, you’re exposed to ideas and concepts that others don’t have access to, but you hear them so many times that at some point you think everyone knows it. Everyone knows about the lean startup cycle, the 90/9/1 ratio, or the freemium conversion funnel, right? Wrong! One of the things that impressed me the most about Silicon Valley is the level of tech-related discussions you can get. With anyone! They might not know the difference between income and revenue but they can give you a half hour talk about how UI is different than UX.

You can’t replicate that, but you can immerse yourself in this ecosystem even without being here. How? Connecting to the Silicon Valley information hubs, attending virtual events, reading, interacting with local people, even working for people in Silicon Valley. It’s an organic process and can take its time, but slowly you can start feeling as if you were here. Here is how I did it.

1. Twitter. First, I started following relevant people on Twitter. The particular list of names is personal and debatable (the list of people I follow is public and you can check it at twitter.com/hugobernardo), and it will depend on the type of business you’re running. If you’re into tech, then you might want to check Techcrunch, Business Insider, or the newest Pandodaily. If you’re going to be a founder, you should follow some VCs and angels. You can check “The Most Respected Venture Capitalists” to start with. If you’re in the wine business, like I am, follow the most relevant wine bloggers and reviewers. You don’t have to be checking every single tweet, and you should definitely curate your list, but Twitter has this strange effect that makes you feel like you’re best friends with the people you follow, which makes you a little more of an insider. Even if you and I know you’re not ;)
2. Hacker News. I find Hacker News, Y Combinator’s news and discussion forum, is an invaluable source of help and information, in a way I don’t find anywhere else (except maybe attending live events). The name says it all - most people hanging out there are hackers, a lot from outside Silicon Valley. Try to contribute whenever you can, but even if you don’t, you can read about the latest in technology, and learn from people who are the real deal.
3. eMeetings & classes. Meetups are an incredible way of learning and receiving feedback. The problem, of course, is that you need to be here to attend. However, a lot of events now stream live, and the number is increasing. Of course, you don’t get to network but you’ll learn a lot. Go to meetup.com and find the groups that interest you the most, then check which events stream live. Also, Stanford has a lot of online resources (classes, conferences, etc), and attendance is free. Here’s the link.

Do these 3 things and you’ll quickly feel as if you were here. That way, whenever you decide to come to Silicon Valley, you won’t sound as if you’re alien. Plus, you’ll likely establish useful connections in the process that will make the transition a lot easier.

 

When I first started writing this blog, the idea was to illustrate what it feels like to be an immigrant entrepreneur in the Silicon Valley, and in the process help others who, like me, wanted to make the jump. 

However, when I recently sat in a couple of panels with Portuguese entrepreneurs, I quickly realized my posts had an insider bias. Even if I’ve only been here for 2 years, there’s already a lot of knowledge I take for granted that people outside the US (or even Silicon Valley) don’t have access to.

So I decided to start a series of posts that hopefully will help the aspiring immigrant entrepreneur to better understand the (unquestionably?) world’s most vibrant entrepreneurial ecosystem. I feel most blogs I read assume that people have already a decent knowledge of how things work in the US and in Silicon Valley in particular. The idea of this series is to be basic, sort of an intro to Silicon Valley.

I’m planning to write 11 posts but feedback is very welcome and I might change the lineup. Leave your comments here or send me an email with your ideas.

Here are the planned posts:

1. Immerse yourself in the Silicon Valley community without being here
2. Forget your local market. Think global, think big, and act accordingly
3. Understand the startup cycle - team, prototype, traction, funding
4. Look for help, be connected, but don't take help for granted
5. Don't blow intros, respect everyone, manage your email
6. It’s never been easier to stay connected - use all resources available
7. Leverage your local market but don't over-invest in its uniqueness
8. The necessary bureaucracy - visas, lawyers, banks, accountants
9. What to localize and what to outsource
10. Basic rules for fundraising
11. Crossing the pond - commitment and timeline

 

Image: gaebler.com

The President of Portugal was in California last Sunday and Monday and that was big news. For most people it was big news because the last time a President visited California was 20 years ago. To me it was big news because a good part of the visit focused on entrepreneurship and Silicon Valley. Usually our politicians like to visit big companies and announce big investments that generate big headlines back home. But it’s hard to make big announcements theses days so it’s fitting that the focus turned to startups and entrepreneurs.

I spoke yesterday on a panel about entrepreneurship in Portugal vs Silicon Valley and one of thing I was very happy to hear was the enthusiasm around building strong ties among Portuguese entrepreneurs in Silicon Valley and between us and those in Portugal. A strong network means more opportunities for those in Portugal and there’s no other place in the world like Silicon Valley if you want to be a tech entrepreneur. A better network here means higher probability of success and we desperately need success stories.

One of the problems we historically had in Portugal is jealousy. Whereas in Silicon Valley we look at someone else’s success and think “how can I do the same?”, in Portugal we think “I wish she crashes and burns”. The first reaction means entrepreneurship, because we see success as a source of motivation. The second reaction generates inaction and a toxic environment where people are secretly hoping that you fail.

How do you change that? You do with repeated success and with a transparent path to success. When I say transparent I don’t mean formulaic. I mean giving people a chance to succeed the same way other did. I mean equal opportunities for real.

One of the reasons people in Portugal are suspicious about success stories is that they perceive it’s not transparent - maybe you need connections, maybe you need a rich parent, maybe you need to play dirty.

I believe Silicon Valley is an equal opportunity land (I do, despite recent disputes) and the Portuguese entrepreneurs I’ve met here are generally very down to earth. A strong Portuguese network in Silicon Valley means more opportunities for those of us here and in Portugal, which means more chances to build success in a way we can replicate.

The other key step is collaboration. That’s what made Silicon Valley so special and historically Portugal hasn't been good at collaborating. That’s why I was so excited to see such level of enthusiasm about building a community here. This is a step in the right direction and one that can help entrepreneurs here and in Portugal. And Portugal desperately needs its entrepreneurs.

 

Image: jscreationzs / FreeDigitalPhotos.net

I want to tell you a story. This is a true story; it’s about me, my family and my country, and it's not pretty. This story starts in the fifties. In the 1950s Portugal was a poor country, on par with Romania, the Philippines, and Ghana to give you some examples. We were ruled by a dictator and my family remembers stories of hunger and very difficult times to live a decent life.

Two decades later, in 1974, Portugal lived a revolution, became a democracy, and all of the sudden we thought we were a modern Western nation. My family recalls 25% annual salary increases, free everything (apparently I was fed on a lot of free baby food), and an overall feeling that “we have the right to be as rich as Germany”. Nonetheless, we were still a poor nation, so for some time we kept playing the role that China played in the last decade (and still does) - cheap labor. That kept us going.

Then came the European Union. Portugal joined the European Union (then ECC) in 1986 and we had our “drug dealer” moment. If you’re not familiar with the drug dealer life story (don’t ask) here’s a long but realistic portrait. From 1986 through the early 2000s we spent all we were given and more. Money was endless so, as good drug dealers, we bought Ferraris, big houses and luscious vacations. Unfortunately I’m not exaggerating a bit. Our politicians did the same, and we built freeways to nowhere, world expos, football (or futbol) stadiums, and even tried to host the Olympics and the America’s Cup. 

Because we were a fucking Western nation!

Now I’m not playing the saint here. My family wasn’t left behind. In 1977 my parents had an old Citroen and a 2-bedroom apartment in a poor suburban neighborhood in Lisbon. That’s how my sister and I were raised. In 2000 we had 3 houses, a vineyard, 5 cars (no Ferrari), and I was eating foie gras and drinking fancy wine. We weren’t selling drugs, we were just riding the wave. It was the Euro wave and we made the cut.

In 1998 I left Portugal, first to study, then to start my own company. I left my country thinking we were a fucking Western nation (no shit!). That sentiment was reinforced after living in Paris and Madrid. Our living standards were definitely not inferior to those of my friends in France and Spain. 

Then all of the sudden I started feeling something was changing. I was living in Madrid and my salary kept increasing while my friends talked about trouble in Portugal. I thought that was the typical Portuguese whine. But then the economy tanked and everyone started talking about recession. At that point I thought that was serious but thankfully our government came to the rescue and we kept buying fancy cars and spending vacations in Brazil and Bora Bora (that was popular in Portugal 10 years ago).

Then came 2008 and the mother of all recessions (at least for my generation). I was in the US already and I thought that was really bad but thankfully our government came to the rescue (again!) and kept things going. Ok, maybe we weren’t buying Ferraris and going to Bora Bora but BMWs and Zanzibar weren’t that bad after all.

Then came 2011 and you can read my last post to understand where we are right now. Let’s say we are a step away from being under the bridge begging for a piece of bread. That’s the unfortunate life story of another drug dealer (again, I highly recommend this link). Not only we spent all we were given, we spent thinking the inflow was never ending.

If you’re American, it’s up to you to discern whether or not the US are headed in the same direction. I was too young in the nineties to understand the implications of what our decision makers were doing. When I see the US economy I can’t help but thinking about the drug dealer story. China can bail you out now but no one will bail you out indefinitely. Either you quit early on or you’ll end up under the bridge. 

Your choice...

 

Image: David Castillo Dominici / FreeDigitalPhotos.net

This week the Portuguese government presented the budget for 2012 and I was surprised (not to say shocked) with some of the measures approved. Granted that Portugal is under siege, with the IMF and the European Union demanding hefty budget cuts to reduce public debt, but it’s hard to believe that this budget can solve the country’s short term problems and it will definitely hurt long term growth. 

When I first read the budget proposal, there was one question I couldn’t stop asking - do our politicians know math? I’m not talking about complex derivatives or even  quadratic equations, I’m talking about ratios. 

Here is a quick Math 101 for Politicians. While public debt is an absolute number, budget deficit is a ratio. And it’s not just any ratio, it’s one where the numerator (tax revenue) and the denominator (government spending) are tightly related. If you change the denominator, you need to understand the implications of that in the numerator and vice-versa. If you reduce certain types of spending and, as a result, you get less tax revenue, the final ratio will hardly change. The 2012 budget proposal ignores this basic premise. It’s an amateurish exercise, where the government tweaked numbers to achieve whatever deficit goal they were looking for, without considering potential consequences of those changes on both sides of the ratio.

I’ll elaborate. This budget hammers three classes - public workers, retirees and small business owners. How? Slashing government salaries and pensions by 14% across the board, and almost doubling sales tax on restaurants and bars from 13% to 23%.  This is not just a sign of weakness from the government by going after those who are easiest to track, but it’s also an exercise of poor math. The government expects private consumption to decline by 5%. Now you do the math. At least 15% of all consumers will be affected by the 14% salary cut and 25% of restaurants and bars are expected to file for bankruptcy. Now compute additional factors like lower consumer confidence and lower salaries in the private sector as a result of the government’s example and you see how I don’t get this math. You can't mess up with the denominator and expect the numerator to remain the same.

The saddest thing about this budget is its lack of long term perspective. None of these measures help growth, business owners or entrepreneurs (those who were challenged to be the engines of the recovery). It doesn't even send a message of optimism since further cuts are expected in 2013 and now everyone knows who’s going to pay for that. It’s bad math coupled with bad politics. And it’s too sad that it’s my country.

 

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I’ve heard a few politicians in Portugal, including the President, asking entrepreneurs to be the engines of the economic recovery. These are not newcomers, these are people who have been in the political scene for a while, and for those who don’t know, the President himself was prime minister for 10 years during the 90s. So after decades doing nothing or very little to help entrepreneurs, these men now request them to be the saviors of the country. It’s a really wrong approach to the proverb “teach a man to fish and you feed him for a lifetime”. Instead, these politicians are telling a man to fish without giving him a fishing rod.

I already wrote about how to build an entrepreneurial culture and Portugal has a long way to go until entrepreneurs can be a relevant class. This change won’t happen overnight and we need more than political statements to make it happen.

For years, entrepreneurs have fought an uphill battle due to unnecessary bureaucracy, a dysfunctional judicial system, lack of VC money, and excessive government weight in the economy among others. If we exclude some measures to reduce bureaucracy, nothing has been done to solve these issues. As a result, nothing has substantially changed to promote real entrepreneurship.

My fear is that politicians think that an empty statement will make any difference. It won’t. I feel the situation is changing. Mostly because of the dire economic situation, more people are considering starting their own business, and as I said before, we should take advantage of momentum, wherever it comes from, to promote entrepreneurship. If a domestic economic recession combined with an overheated VC industry abroad can give you that momentum, take it and do something useful with it. Go fix what’s wrong, get yourself out of the way. But please, don’t just say empty words.

 

I recently heard someone ask, “Why aren’t there more African American (AA) founders?” I’m no expert in US entrepreneurship history so I listened to the different arguments brought to the table and the most compelling one hit close to home – the lack of role models.

The argument was that the lack of AA entrepreneurs is a vicious circle. If there aren’t many AA entrepreneurs it’s less likely to see a success story happen, and therefore less likely that a role model will emerge. As a result, when an AA kid is dreaming about his future it’s unlikely he’s thinking of becoming an entrepreneur.

A similar problem happens back home in Portugal. Much has been said and done to promote entrepreneurship in Portugal and so far everything has failed. True, the VC industry is practically inexistent and the market is small, but that’s not the entire story. You can still bootstrap, and companies don’t have to limit themselves to the domestic market.

The lack of role models, however, is a huge barrier. There are not enough entrepreneurs that I can look at and say, “I want to be like him”. Most of the (few) stories of “the person who started with an idea and became a millionaire” involve some sort of shady business and/or practice.

I believe we have a deal flow problem (i.e. not enough stories to tell about) but it’s possible that we’re just not publicizing properly the good stories that do exist. That would be a much easier problem to solve.

How to solve this problem? As usual, there’s no short-term solution. If we do have success stories and real role models, we should be publicizing those, inviting those people to schools to talk about why/how they became entrepreneurs. If we don’t have many of those stories, use the few we have and over-publicize them. I know we have some. Go beyond that, use stories and role models from elsewhere. It might be less effective but it’s better than nothing. Create an aura around the entrepreneur in a way that people will want to become one.

I’m not saying that entrepreneurs will take Portugal out of the hole it’s in now, but in a country so dependent on government spending, having a strong entrepreneurial community would help a lot.

 

Last night I had dinner with a friend from Portugal and eventually we talked about the economic situation in Portugal and why the country can’t be competitive in the global market. There are a ton of theories but at that point I looked at the bottle of wine we ordered and thought that was a great example of why Portugal is in deep shit. The bottle was a red Rioja from Spain that had ‘Tempranillo’ stamped on the label.

For those who have no idea what this means, most wines from Rioja are blends although Tempranillo is the most prominent variety. Outside Europe people don’t understand blends because it’s too hard to explain. It’s easier to say ‘I like Cab, Pinot and Merlot’, which can apply to several different countries, than ‘I like Rioja, Penedes, Umbria, Veneto and Alsace’ to speak of 5 wine regions in Europe (there are dozens). So if you’re not Bordeaux, the easier way to export is to promote a variety and then allow a bunch of wines from that country to jump in the varietal bandwagon.

Spanish producers have identified this trend and have been promoting Tempranillo as their variety of choice. Then regions like Rioja use that brand to produce varietals that are roughly the same as the blends but with a more consumer-friendly label.

What about Portugal? Not so much. Let’s jump into the facts. Portugal is the 7th-8th largest wine producer in the world. It should be a large exporter given the size of the domestic market (10 million people). In addition, it has the world’s top selling wine – Mateus – and an internationally recognized brand – Port. Despite this solid base, Portugal is usually no. 9-10 in the top wine exporters and mostly thanks to Port – you can hardly find regular Portuguese wine outside Portugal. Why? You can blame the lack of consumer focus. I keep hearing producers in Portugal complaining that the consumer needs to be educated, that you shouldn’t make wine easier to drink just because the consumer wants it, or name a wine after a variety just because it’s good for marketing. They sound like the guy who’s been running his business for 4 years with no success but keeps complaining that users don’t get it. If they don’t get it after 4 years, you should change your product.

As an entrepreneur, this is something that particularly pisses me off. When businesses don’t look at the consumer as the ultimate reason why they’re in business, they’re doomed to fail. As a company, I exist because of my consumers. Consumers could not care less if I exist or not.

P.S. If you want to know my opinion, I think Portugal should promote Touriga as the variety of choice – it’s Portuguese, it’s easy to identify, and most producers are using it anyway.

As I watch the economic and financial crisis unfold in Portugal, I’ve been thinking about the reasons why, as a nation, we became so risk-averse and so dependent on the government and big corporations. I extend this analysis to the vast majority of European countries, as they're not dramatically different in this particular aspect.

Culture vs. Education

Growing up, I heard again and again that entrepreneurship is something you cannot teach – it’s cultural they say. The US are naturally entrepreneurial because it’s a nation of immigrants that had little to lose and a lot to build. I say that’s bullshit. It’s obvious that today the US have a much stronger entrepreneurial culture, supported by a huge startup community and large amounts of VC money. Can you replicate something like this? Absolutely! It starts with education. How much does a 20-year-old kid fresh out of college have to lose? We need to instill entrepreneurial values while these kids are in school – show them some success cases, let them talk to inspiring entrepreneurs, let them know about the risks but also the rewards. Damn! You just have to put it side by side with the shitty entry-level corporate job they can aspire to and it’s obvious they have very little to lose.

The ecosystem

The second step (with many middle steps) is to build the ecosystem that can support entrepreneurship – VCs, incubators, supportive community, entrepreneur-friendly legislation. This is trickier. I'll ignore legislation as I don't think it's a significant roadblock at this point. For years now, the European Union has tried to build this ecosystem in a centralized and bureaucratic way – the only way the EU knows. Centralize the major funds to support innovation, distribute some more money to national governments, and expect people to be creative. This approach has given very little results – you cannot build many small communities spread around Europe from an office space in Brussels. The ecosystem cannot ignore the education system, which will feed the community with fresh wannabe entrepreneurs that, by nature, will run away from bureucracy and 100-page long application forms.

Leadership

Finally, in order to build an entrepreneurial ecosystem you need consistent leadership – not one that changes every 4-5 years and is more interested in political results than long-term effects. You need a bunch of very smart people committed to the cause and a long-term vision that they're willing to sustain. Portugal, as most European countries, has decided that the government is the most qualified agent to lead this process. The results are visibly painful.

Ontem ficámos a saber que o excesso de sal no pão passa a dar multa. 14 gramas por quilo é o limite. Conhecendo o zelo da ASAE quando se trata de fazer cumprir a lei, é bom que os padeiros do nosso país calibrem bem a balança ou da próxima vez que a ASAE encontrar uma amostra com 15 graminhas por quilo de sêmea vão ser prontamente notificados para o pagamento dos 5,000 euros de multa. Convenhamos que 5 mil euros por grama de sal, mil contos dos antigos, é muito dinheiro. Pergunto-me se não poderíamos criar uma lei que regulasse os atrasos na justiça da mesma forma. Definem-se prazos e por cada diz de atraso, cá vai uma notinha de 5,000 euros. E já agora ponha-se a ASAE a fiscalizar os atrasos, que eles são bons nisso e rápidos a sacar o bloco de multas. Quando estava no Brasil as pessoas riam-se de cada vez que saía uma lei de grande impacto. Gerava um grande ruído mediático nas primeiras semanas e depois lentamente morria no esquecimento e tudo voltava ao normal. Toda a gente sabia disso e ninguém se incomodava. No reverso da medalha, todos sabiam que uma nova lei era mais uma desculpa para a polícia passar uma multa, aumentando assim a arbitrariedade das forças da lei. Como me dizia um amigo, “quando a polícia me pára eu sei que vou levar uma multa porque há sempre alguma lei que eu estou a violar e que só ele conhece”. Entretanto em Nova York foi lançada uma nova campanha de higiene em restaurantes e cafés da cidade. Soa familiar? Não foi criada nenhuma ASAE e o processo arrancou com inúmeras sessões de sensibilização (educação) e esclarecimento sobre os objectivos da iniciativa. Em vez de multas foram criadas classificações que os estabelecimentos terão que afixar de forma visível. Temos assim os limpos, os menos limpos e os fujam daí, que desde que garantam mínimos de higiene podem manter-se abertos. E mais, quando alguém receber uma letra B ou C (A é o máximo) podem recorrer e recebem uma nova inspecção antes de serem obrigados a afixar a nota. Ou seja, o objectivo é que todos possam ter um A. Mas sem fechar portas a estabelecimentos que, por razões de custos ou clientela, preferem manter mínimos de higiene, incluindo por exemplo não ter uma casa de banho. Num país que tem tantas dificuldades em fazer cumprir a lei, continua a espantar-me este frenesim legislativo que cria um excesso de leis que ninguém cumpre. Não seria melhor primeiro fazer cumprir as leis que já temos antes de legislar sobre assuntos banais que podiam ser resolvidos com acções educativas?