The Lure of Chilecon Valley
economist.com
economist.com
I can answer questions, but the one thing that I don't think any other incubator program has is the diversity and community. Some of us had dinner last night, and at the table were at least 9 nationalities represented, which is totally normal in startup chile. And they all have a common passion of technology, business, and innovation. The program self organizes into topical groups, and all in the name of information sharing. I truly believe the success of the program hinges on this network.
Santiago is safe, just like the rest of the country, and the economic development arm of the govt is very aggressive. I believe they are matching 50% of private funding for economic development, and it is common for startup chile graduates to get some of this funding if they decide to stay in Chile. (We were just awarded a grant to help internationalize and promote our business outside of Chiles borders, for instance)
We met with a large well respected law firm yesterday to look into incorporating here, and they are also modelling the SV/NYC pro bono/deeply discounted rates for startups, which is great sign and definitely needed.
Lots of opportunity down here for someone that wants to be part of an amazing community.
It's certainly possible, a bit of an adventure for sure, and I feel like a lot of people with families live outside of Santiago (even though there are family friendly suburbs in city limits). You are free to live anywhere in Chile, including Easter Island. Though living in Santiago makes the monthly paperwork meetings easier.
[ * ] http://earthquake.usgs.gov/earthquakes/eventpage/usb000d4jf#...
[incidentally, i agree absolutely that this should not influence the choice of anyone to come here - at most, you will have an interesting story to tell someone when you go back home...]
Employers are mandated to give 30 days notice when laying off employees. They also have to pay 1 month per each year of employee service. (employee been there 9 years, you have to pay him monthly salary * 10 to let him go)
This law is good for employee stability and help keeps salaries low (employees with several years of service are unlikely to quit and lose the accrued severance). However you cannot show up one morning, close the curtain and tell everybody "sorry, company ran out of money".
however, the above shows the kind of clout the richer classes have here. despite this being a question about conservative bureaucracies and super-rich family businesses, the unions somehow get blamed. i can remember my bosses complaining about "worker mobility" in the one chilean company i worked for - it suddenly wasn't an issue the day i resigned.
[edit: one thing i think that startup chile companies should use to their advantage is the idea of an "american working culture". the chilean culture is to do very little for very long hours. in contrast, you should be able to sell something more like "we want you to work your fucking ass off, but only for 8 solid hours a day". at least for me, that would be a huge incentive. however i don't know if it works so well for young (just out of uni) chileans, who may not yet have the experience to see what a good deal it really is. chilean working hours are the second longest in the oecd, behind only s korea - http://stats.oecd.org/Index.aspx?DatasetCode=LEVEL#. edit2: whoa that's changed! they are now in third place. curious. they were second earlier this year - http://www.acooke.org/cute/LongWorkin0.html
exactly who to blame for this is unclear, at least to me. while i am not sympathetic to people who simply blame the unions in a country where the gini coefficient is so high (see above) there is clearly a problem. politics are very polarized - people may not understand that doesn't mean just communists, it also means raving fascists at the other end of the spectrum (if you speak spanish, peruse http://www.google.cl/search?q=chacarillas+1977 - if you dig around you'll find a list showing how many are now in positions of power). i hate to say it, but what the country really needs is some kind of tony blair who can find a populist middle ground that creates space for dialogue.]
Does the government throw you in jail? Does it come out of your own pocket? (And what if you personally can't afford it?) Does the company just end up owing everyone a bunch of money it can't pay anyway?
One think I see happen a lot is companies rather stay on business barely surviving than close their doors, because is so expensive to layoff employees.
I haven't been back to Chile in 10 years so things might have changed for the better.
As a debt it can be negotiated (with unions) or if the company is liquidated it'll be pay (in full or part) out of any money that can be extracted from the company assets.
The obligation to have Chilean citizens (or permanent residents?) involved in most kinds of incorporated LLCs (I think particularly for single-founder companies) is much more of a big deal, but even it is not really that big a deal if you hire a lawyer and have them do it. It just means it costs more than starting a company in the US.
1) A pool of risk tolerant capital.
You need the capital to start the businesses, people pitch the money men for seed, series A - D, rounds.
2) A lack of regulation on competition.
You need to understand that existing, powerfully connected, companies are going to get disrupted and you need to prevent them from killing off the startups.
3) A failure tolerant culture.
You need to understand that Silicon Valley is awash in failures, they are everywhere, but they don't have the same sort of stigma they might elsewhere. This disassociation between personal failure and startup failure is key.
Typically, the first challenge is that culturally the company sees failure as a problem for the individual "He failed at his business" which needs to morph into "One of the businesses he started (positive affirmation) didn't take off. (business failed, he didn't)" That is hard for a lot of people who have historically thought of businesses as things you put your whole life into.
The next thing is pointing out to powerful people that their 'friends' will ask them to kill the very thing they are trying to start when it starts costing them money. To understand a successful startup you have to understand that if they are successful they start out by re-directing capital flow to (or through) them which funds their growth. I've used AirBnB a couple of times as a great example of this (although Uber works as well). Here is a startup which is growing by taking money that would have gone to Hotel chains, and instead putting it into the hands of these non-hoteliers. So the Hotels are going to be irritated and try to stop it, be prepared for that.
The challenge is that the impression people start with is that 'Silicon Valley' is composed of startups which are always new "green field" businesses that bring great returns to modest investment. Not realistic at all.
About the empires and monopolies, totally true. Also bureaucracy... although it's improving now (also slowly :P)
Some have moved overseas or back home with their new companies, which is sort of the opposite of what this program is all about: creating a startup ecosystem in Chile
Companies leaving the country after seed stage kinda defeats the purpose of it.
The goal is to bring entrepreneurs to chile, and have them interact with chileans. And the program is very successful at that-- many of the companies hire chileans and everyone spends some time directly helping bootstrap entreprenurism in chile.
For example, one of the things we did was help chileans work on their business ideas.
A lot of the companies end up with deeper ties to chile. Some take on Chileans as co-founders, others as employees, and a minority, but a significant one, stay in chile after the program ends, even though you don't have to.
Is that really the economist I'm reading? If even they're getting sick of the rentier class the revolution can't be far behind!
Pretty much every B2B software can be described in the same sentence - what else would landlords do with their properties?
This is a huge point. Chile has relatively straightforward residency permit, and after getting your a 1 year permit extended once (eg: being there 2 years) they have a straightforward permanent residency process.
For us, this is pretty appealing for after we leave the Startup Chile program.
After all, we can't go back to either of our home countries because if we do the other half of the founding team will be considered "aliens" and have a very difficult process of getting residency and work permits, that would be ongoing-- and that's even assuming we can get permission.
Chile is not perfect- there's a lot of bureaucracy, the business culture is often lackadaisical, and it is a first world country, so it is not like we're living in paradise on a discount (well, only a slight discount.)
But they are happy to have us live and work here, and have a variety of programs to support starting businesses.
In fact, I've heard that private investment is inhibited to some extent because here, when someone talks about getting financial support for a startup, everyone just assumes the government will pay for it.