Being here is being where things happen," says Uruguayan Agustina Sartori, co-founder of the startup GlamST, on the other end of the phone. The "here" is more than 10,000 kilometres away from Montevideo; it is the cosmopolitan San Francisco (California), one of the most famous metropolises in the USA and one of those that make up the global mecca of entrepreneurship and technology: Silicon Valley. There, giants such as Apple, Google and Facebook coexist with entrepreneurs from all over the world who come in search of contacts and capital.
"I have been in San Francisco for three years. The reality is that when I came here, I came with the expectation of looking for clients, raising capital, but then I realised that it wasn't that easy," Sartori admitted. He realised that he had to settle in California instead of "coming and going" every few months.
GlamST, a virtual make-up testing platform, has its technical team in Montevideo while its CEO works in the Galvanize coworking space in San Francisco's Financial District.
Another Uruguayan entrepreneur works in these facilities. Sofía Palamarchuk is CEO for the US of Abstracta, a local software consulting firm, and since February she has been based in San Francisco to first explore (at the end of 2014) and then realise new business opportunities for the company.
After the first exploratory trips, the company based Palamarchuk in San Francisco to have a direct dialogue with customers.
"The fact that you live there and that the client can pick up the phone and you go there changes a lot; having face-to-face meetings and that it's not all remote speeds up the processes a lot and trust is gained faster," Palamarchuk said.
It took artificial intelligence-focused startup Tryolabs 10 minutes to deduce that the best customers for its products and services would be in Silicon Valley, but it acknowledges that bringing that idea to fruition has been "another story".
The company's CEO, Martín Alcalá Rubí, lived for five months in 2015 in Silicon Valley, encouraged by being in what he defined as "the Holy Grail of opportunity" - "everyone is for the same thing" - and where there is a high "concentration" of investors and high-impact companies. "You take all the little fish out of the same lake," he said.
The experience allowed him to learn about and work with marketing tools that the company now uses to develop - remotely - most of its commercial activity with companies in San Francisco. But, as being present in Silicon Valley to do business is an insurmountable step, Tryolabs has a sales representative installed in that area. Alcalá Rubí explained that this approach makes it possible to close sales without increasing costs. However, the option of opening an office is not out of the question. "The answer to that is very simple: it's whatever the business merits. Today we run a company of 40 people and we have more work than we can handle with this model, so why incur that expense? What is always on the cards is to move there, to stay a little longer".
Contact Agenda
Magdalena Rodríguez, co-founder of the social platform GPSGay, learned that in Silicon Valley you have to be encouraged to break the ice.
"You don't have to be afraid to go and talk to people you don't know and introduce yourself, ask the other person what they do, then that person will reciprocate by asking you too," suggested the entrepreneur who has been in San Francisco for a year. Face-to-face is fundamental; on the contrary, looking for contacts through Linkedin was a "waste of time". The many events for entrepreneurs that are organised on a daily basis (many of them free) are another great showcase, she added.
"Something that is very good here is that it is a small ecosystem like Uruguay's, although it doesn't look like it," Rodríguez compared.
The Silicon Valley region is home to some 3.5 million people. The technological and business climate that pervades its flagship cities is accompanied by a strong multicultural tone. The residents of Silicon Valley were hardly born there. This melting pot nurtures an open and collaborative mindset among the ecosystem's participants.
"I always say that it is easier to get a meeting with a Silicon Valley manager than with a Uruguayan one, because they are open to opportunity, and if you have something interesting to tell, they listen to you," said Alcalá Rubí, and recalled that during his stay in San Francisco he had meetings with firms such as Amazon, Airbnb, Google, Dropbox and Twitter.
If the collaborative climate is palpable, it is also true that gaining access to major investors or business leaders takes time and work. At the very least, it requires gaining the trust of other interlocutors.
"Nobody introduces you to their investor as a matter of course. They do it if they think you have a good product, if they value you as an entrepreneur and if they think their investor can invest (in you); nobody burns their contacts here," Sartori said.
In the pitch, venture capitalists are not usually guided by "what worked in Uruguay" or even in Latin America, because that does not mean that success will be repeated globally or in the US, he remarked. In addition, the foreign entrepreneur must be "open-minded" and self-critical enough to adapt his or her project to the US way of doing business.
Palamarchuk says that to get investment, "you have to be very persistent, because it takes a lot of time to practise the pitch (verbal presentation)". In addition, investors also look to see if the startup's team has someone "local", which helps build their confidence.
Astronomical Prices
Money flows in Silicon Valley, not only because it is the "engine" of California - the sixth largest economy in the world - but also because, on a different scale, those who open their offices there face exorbitant costs.
Volatile cost dynamics stem from the high salaries paid by Silicon Valley tech companies. As a result, low-income firms try to recruit in nearby cities but outside the Valley.
"Staff is very expensive, you have to evaluate in each case whether it is justified or not," said Sergio Fogel, president of dLocal (a platform for online payments in emerging markets). The company, which has been based in San Francisco for two years, wants to scale from two to eight people, but Fogel admits that retaining and attracting talent is "very challenging" when "the hottest companies of the moment" are on the other side.
According to the Glassdoor platform, the average salary of a systems engineer in Silicon Valley was around US$ 129,000 per year in 2016.
The effort of opening an office is worth it, says Fogel; it allows dLocal to learn about the latest trends and to be close to its customers.
Office and housing rents are so high (Alcalá Rubí rented a studio apartment for US$3,500) that the most common option for startups is to work in a cowork. For a monthly fee, users connect with other entrepreneurs, receive mentoring and participate in events.
For many young people, this is a shortcut into the world of Silicon Valley.
As Sartori says, arriving in the mecca does not ensure investment or business. "It's like when someone wants to be a singer and goes to Los Angeles. You don't become a singer by going. I want to have my start-up and I'm going to Silicon Valley'. But who do you knock on the door? How you become part of the ecosystem is the challenge".
Sense of community
Which lawyer to contact for a visa or where to get an affordable rent are "piques" that connect Uruguayan entrepreneurs in Silicon Valley, said Magdalena Rodríguez of GPSGay. They also receive government missions, such as the one led in October by Industry Minister Carolina Cosse, entrepreneurs and other startups. "We are a small country, there are many companies wanting to grow. I think that if we help each other it will be much easier to be successful," said Sofía Palamarchuk, from Abstracta.
Source: El País
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