December 12, 2019
Diversity, Innovation, Business Dev & Emerging Markets

Diversity, Innovation, Business Dev & Emerging Markets


>>Adrian: Hi everyone. My name’s Adrian Barajas
and I’m with the Hispanic Googler Network and we’re honored today to have Jorge Zavala
CEO of TechBA, business accelerator from green companies from Mexico to the U.S. He’s a serial
entrepreneur, engineer. And he’s gonna show us or tell us about his experiences in Mexico
and bringing companies here. So without further adieu, Jorge Zavala. [applause]>>Zavala: Yes we have a good quorum, that’s
good. Okay, well welcome to all of you and I am
very pleased to be in this event, be part of the Google, Googler’s team and helping
all the Hispanic community. I going to talk about three, the talk is going
to be divided in three parts. The first part is about my history; how I
do, I did some technology business and how life was in Mexico. Then I going to explain a little bit about
the program that we’re building here in the Silicon Valley and all around world with the
government of Mexico. And at the end invite you to be part of this
active process to be in that sense. Really my life has been a very interesting
life. I cannot complain. I born in Mexico City and got into the engineering school in
La Salle University where I really learn a lot of things in how to develop technology. At that time microprocessors was just coming
into the arena. For a lot of you maybe you never listen about the 4004, 4040, 8008 processors
that was the very earliest Intel processors. And we were playing at the time in the university.
We were the very first university in Mexico that started to do these kind of things. And it was a very interesting because at that
time we learned how to use technology for new things. I’m going to describe a little
bit which one were that, that was. Then I did my master’s degree in Canada. I
jump from Mexico City to Waterloo, Ontario where I was very pleased to learn a lot of
things and switch between mathematic, between an engineering environment to mathematics. For a lot of people here in Google maybe it
is not a big deal. When you’re an engineer and move into mathematics that is a very,
very hard part because usually the engineers were all the time thinking in how to build
things; the mathematicians are people that are trying to prove that the things work.
Once they prove it, nobody cares. [laughter] And that’s a big change and challenge. Doing it in another way maybe from a mathematician
to engineer could be easier because doing things is more easy than really having the
abstraction how to, how to build things. And that is a very, was very challenging for
me. From then I really I can define now as a problem
maker without any specialty has been doing a lot of things. I going to explain moving from engineering
to research to doing entrepreneur. I did seven companies in Mexico. And then I move into
the venture capital environment, something that for everybody here in the U.S. is quite,
here in the Silicon Valley is quite normal. In Mexico that was an unknown world. What
means venture capital is- is something that not too many people knew it. From that point I move it and I am doing really
now a business development that is my core and passion; a lot of things that I am doing
very much in how to manage the process of creating an idea and getting that into the
market. From that point, when I was in the university
that was quite interesting. My life in the university; I was not really an A student.
I was really a problem within the student, within the university because I got in the
second, in the second semester, in the second quarter, I got to work within the university
and I start to develop a research group as a student. That was a fantastic experience really it
was a unique, the university, La Salle University was a young university; electronics was brand
new. We were the first generation of people in the engineering stuff. And from that point it was very interesting
because we start to develop the research capability with the same students; not with professors. And that open a lot of doors and changed really
the mindset in how you develop technology. Because usually when you go to the school
you expect other people in the school show you how to do things. And usually, and that’s one of the big issues
that I see today in the education. The traditional of way of doing training or doing teaching
is getting behind at the speed that the technology’s moving. And that is something that at that time we
did it in about 30 years ago that was the students were taking it where they want to
go. And for that reason I say that we were a pain for the university. But what’s interesting because it was a pain
then top level of university like it. The dean of the university enjoyed that and they
were very pleased every time that we got into the dean’s office and ask for resources to
do new things. He was a very fierce guy and say, “Hey take it.” And from there we go to the dean of the engineering
school and say, “No way [laughs] are you going to the head of the departments.” They were
very much the enemy because we were taking their resources from them to create the fir,
the very first application. And the very first application that I built
was first using microprocessors to do data acquisition systems. How you are able to control
lab equipment to do research in the university. We were getting into the health and medicine
school, medical school and we started using the technology microprocessors to do the sampling
of things that were doing all day long where a student’s taking measurements every hour
and they were really complain because they were, they need to do a lot of sampling everyday,
24 hours a day, 7 days a week and we go up and put some device. That device is exactly
the same device. Later on I show that to the electrical utility
in Mexico. And they say, “Hey, we can use that same device to do the fully automatic
control system in how to generate energy in Mexico.” And that was a very interesting experience
because from the lab we became into the real world. We put that kind of systems, we built
a technology that at that time was unique in the world. We were the very first place
in the world that used microprocessor based it fully automated data acquisitionsystems
for electrical utility. That was in 1981; no- no 1976, sorry, 1976. That was really just beg, appearing the microprocessors.
AppleII was on the rise; was not yet IBM or things like that. Nobody knew about that.
[laughs] There was not yet in the mindset of a lot of people. And we use it, we compete worldwide in a–,
in a contest to get a bid of how to do the full automation with backing by research institute
in Mexico. They say, “Okay, we back it. We do it.” We created equipment and three years
later was in production in Mexico and we won the international bid how to do that kind
of things. At that time we learned a lot because it was
not just doing the idea and keep that into some place. We did idea; we created prototype. We tested
it in very, very hard conditions and there is a place, and there are two very bad places
in Mexico they are Mexicali. If you’ve ever been there right on the border is the worst
place for weather site and temperature, high salinity, big ranges of temperature in day
and night, and if you want to test on equipment for fulfill any kind of possibilities that’s
the best place. We were lucky. The electrical utilities say,
“Well that’s too bad. We have a second one.” And we said, they said no to second place
was a little bit more friendly for doing the test. We did that and the-the product two
years, three years later than the very first test was in production in Mexico. And was
used it for 30 years in doing the full automation of the generation of electrical power in the
country. Mexico has something that is very different
from the U.S. Is Mexico has just one generation company and all the national system is fully
integrated. You generate energy in Mex, in Tijuana, in the top of Mexico or in Cancun
that is in the other extreme, and the energy can be distributed all around the country;
so just one network of electricity. It’s not that the U.S. done. There is several networks
in that direction. In that sense we did a lot of things. And
that time really I faced my first existential crisis in life. We go to do something new
or we went to doing something in the same approach. At that time to compete as a competitive advantage
we decide to move from electronics circuits and the traditional hardwire systems and use
a microprocessor based system that nobody else was using before. And we survived and
it was good. Then something happens very interesting and
that was back at the Wheaton Research Center in Mexico, the research center by obvious
reasons was not focusing how to do manufacturing, how to do technology, applied technology. And we got all the rights of use all that
technology and move and create a company that was a private owned company. At that time
I was not yet aware about what means entrepreneurship and somebody else took the risk. I was just
an engineer in there. And we went there and we start using the same
kind of technology, the same approach as at the research center. We took 75 people. The
research center at that time was 1500 people. We took 75 people from the research center
and we hire another 75 people from the outside and create a new company born with three large
projects: that was how to do simulation, how to do sugar cane automation, and how to do
flight simulators. If I knew today at that time the things that
I learned here, we never dare to do these kinds of things because we were talking about
three different markets, three different approaches, and that’s the Mexican style. We do everything.
That is we are poly-makers. We have no specialties, that’s our brand name for Mexican people.
We are very good to do a lot of things, but we hardly focusing to one part and that time
we make that mistake. That company did a fantastic job because we
were able to create a chopper simulator that runs fine. We created a plant simulator that
was used it for the subway; how to train operators for the subway. Like the BTA, not the BTA
but the Bart. And that was a very good thing. And the third one was the project I was involved
with. I was the system architect there. Is we create a software application that was
able to create the sugar cane production fully automatic for the first time in the, in the
world. In the world you have sugar cane production
is usually a lot of process, very manual. And one of the very manual processes when
they take the people take with their hands the sugar production and say, “Well you need
to cook it a little bit, add pressure or reduce some kind of ingredients in there, increase
the temperature,” in order you create a way to produce the crystallization of the sugar. We did it fully automatic with a tremendous
advantage that would reduce the amount of energy what is the biggest cost for sugar
cane and we create a very high quality sugar. That was my second existential crisis because
that company was owned by an engineering company and the day that we finished the project I
talked to the president of the company and the CIO and say, “Hey, you know that we have
a tremendous set of products here that can be done worldwide production.” And the guy
say, “We’re an engineering company. We don’t care to do products.” At that time I resign of the company and decide
to be my entrepreneur life because I really was pissed off because the effort that was
done, was three breakthroughs, very well done, then never was use it again. We produce it. We start the systems, the systems
worked for several years until they died for obsolescence and that’s it. That since I decide to move from the engineering
side and move into my own companies. And the very first company we decide and we
cannot go to automate again the electrical utilities because it was already a market
already covered. And where we can use the same technology and that’s, at that time I
learn a lot, one thing that is quite important from the engineering. When you do something
good, how do you reduce that something into a new thing once again and again and again. And we used the same technology that we were
producing. It was never patented; it was never copyrighted. That means it was complete free
available. And we reuse it. And it was very interesting because at the
same time three people in the same original team of the electrical utilities development,
we have the same idea. And from friends we came, we became to be
competitors. Each one of us decide to open their own company and we start fighting for
how to do water systems automation. And water system automation I guess is one
of the businesses even today is quite interesting because the problem of water is getting more
and more complex instead of less and less solvent. At that time we start doing the competition.
In that sense we won the big contracts; my company at that time won was how to manage
the 1100 well systems to extract water of Mexico City. To complement the water needed
from the rivers and other places to fit the water systems in Mexico City. That was a fantastic job. The company still
is alive. I sold that company about five, no ten years ago in, at the end of 2000, before
the 2000 year when I found it was interesting to be going into another kind of companies. I decide I need money to start a new venture
because the Internet was not yet on the corner; multimedia appears to be there and we were
starting to using multimedia as a tool to do the development of medical people. How
to train people in the medical environment was very complex. We create that company;
that company really was not a very successful company. We did a very good projects, but
the company just was a surviving company. One of the days I decide that I didn’t like
that. Internet appears on the market and I decide to create my latest software company. The other seven companies were within this
company’s branches spin offs some thing like that. And Kiven became to be in the 2000, in 1998
becames to be one of the very first Internet companies in Latin America. We learn how to
build a website, develope equipment at that time was exist first of all and we won the
contracts for doing the website for them. Then that company becames Compaq. Then some
company that you may know and it’s called Microsoft was starting to reach Internet,
the market in Latin America, and we won the contract to be the out, the official outsourcer
for all applications, websites, and marketing productions for Latin America. That was a very, very high interest, interesting
company, Kiven. We start doing that. We found that doing the
same kind of things to other companies could be good and well what was at that time a similar
sized company that could be our customer, HP was, is one of the largest today is the
largest but at that time was not. The largest computers we won the same kind of contract
with Latin America and we start doing the outsourcing. And that became once again a very interesting
learning process. Having a service company is good to be survival, but is very hard to
really grow the company into a buy and generate wealth. At that time we decide, “Well why we don’t
move from outsourcing company to manufacturers to producers?” And we switch on the fly; something
that was a tremendous experience. We were the best supplier for HP and Microsoft.
At that time that opens the door to any company that was thinking to decide a system related
to Internet. Say, “You have the best credentials for doing systems for any of the large companies
in Mexico, Latin America, everywhere.” And we started to do a switch from instead
of selling outsourcing we selling the tools for doing the full automation of content management,
ecommerce, and knowledge management; everything integrated. That was a very interesting, the best example
that we had at that time. We were the very first people that create the Yellow Pages. About the same time [inaudible] was doing
here with Yahoo, the concept of the Yahoo starts. At that time I learn something that is very
interesting. When you are big company it’s a monopoly, a monopoly, you lose the sight
and the desire to grow and keep going. We build a technology that is still today
was used it for Yellow Pages, was a full system for how to automate companies, not was really
a Yellow Pages. They never use it; they never let, never learned how to really take advantage
of how to use it. And the best example is well Yahoo took part
of the business in Mexico of the Yellow Pages; now Google. What I can tell you? [laughs] You know the history. You have much better
information than any of the Yellow Pages in Latin America and that is a tremendous thing.
That is a very high opportunity. From that experience I decide suddenly one
day when the Argentine government, well we were trying to grow first in [Latin] before
Argentina, is we decide Kiven was say well the largest and the most more solid ecommerce
and content manager company in Latin America, why we don’t move from looking into the south
looking into the north? We decide to do that. We came here to San Francisco; we found the
resources to open a new company in the U.S. was not that real kind of quantity. That was
much before in 1999, before the dot com bubble. And we try to-to get into the U.S. doing an
alliance and get venture capital resources. We interviewed 37 venture capitalists. We
didn’t know how to do that kind of things; how to get money from a venture capitalist.
It was a learning experience really. And at the very last moment we decide okay
we make a joint venture with another company; get resources from one of these 37 companies,
37 venture capitals, and open an office here in the U.S. I came here in February of 2001. When was
the dot com? Was 2000, 2001, was 2000, 2000 I guess. It was one month before the dot com
bubble burst we came here. And when we came here, we start learning about that, we have
a disagreement my other partners and us. And say, “Hey why we don’t put that on hold for
a week and we decide that?” And we were the most lucky people in that time [laughs] because
at that time that week was when the burst bubble. We decide not to go. This company
lost a lot, a tremendous amount of money and we didn’t went into the environment. The company keep going, Kiven was going well.
At that time we were about 200 people. We were selling about seven million dollars.
It was, it was a profitable company. And something that we were very confident say, “Hey we can
switch the model.” We were moving into tools. We were getting resources in how to move into
tools. When something that we never believed that was going to happen: the government of
Argentina make a devaluation and say, “Hey what happened? You were in Mexico who cares?” That was the critical thing then. The government
did devaluation and it was about a third of the amount of money. The value of the capability
of Argentina took tremendous interest for a lot of the largest companies. We were working
only with very large companies and they decide to move all the outsourcing capabilities to
Argentina. They were able to buy. They think I know the sources for a third of the money
that we were paid. That day really was a, I recall that my first
meeting with HP was, well my only meeting with HP, was on Thursday and I came back to
my office, called to my lawyer and say, “Hey, what is the fastest way that you can close
a company?” He say, “No, well it could take for a month.” “Sorry you have one day.” I took a very, very drastic decision. On Friday
I got the board of directors saying, “The company’s closing on Monday.” Monday was Holy
Week in Mexico, Easter time and there was no way to conduct business than moving to
another way. It was a tremendous bad time to sell a company.
And we decide to do it. We close the company on Monday. Next Monday the 150 people that
was working with us was working with my competitors; all my competitors were very happy that we
close it [chuckles] because they got very good talent. [laughs] And I decide to move into venture capital
decision. And that was when we got into Visionaria. Visionaria was one of the very early venture
capital ideas in Mexico. It was created by a guy that used to be the VP of Latin America
for Microsoft. He was looking how to, he left Microsoft the same day that I closed the company.
And say, “Hey, I want to try it.” Venture capital was not ready in Mexico to begun there.
And the reason why was the complete different reason than we expect. Everybody say the problem
was no money available to do venture capital and the reason was and you know here is to
be part of a venture capital, venture backed company you need to have a very, very clear
idea where you go; have a very high value. The money, how to manage, and a team that
need to know a lot of things that we didn’t found very often in Mexican companies. At that time we were doing that kind of approach.
We decide to go instead of open really a venture capital we decide to go into a business development
process. We helped a lot of companies. At that time the government of Mexico, I present
the idea of how to do business development to the government of Mexico. And the government
of Mexico say, “Oh, that’s a neat idea, but you are talking to help five or ten companies
with 50 million dollars as initial venture capital” and they say, “Well, if you manage
five companies that’s going to be good enough.” And the government said, the Minister of Economy,
“How you can do that with a thousand or million or hundred thousand companies in a 10 year
period? There’s no way.” We have a very good discussions and that becames
to be TechBA. In that discussions the government say, “Hey, you need to help not a few companies
as you need to go for hundreds of companies.” We create a new business development process;
the process which has been going for five years. And it’s a dream, it’s still been a
dream and we need to go find how to get these companies into an IPO. So far Mexican people; no Mexican companies.
We have fund just one Mexican company; one Mexican person that has gone through the full
process of be a founder and get into NASDAQ. That’s something we’re looking how really
to fulfill. What I did, I learned in that stages. First
of all, I learned really to work all around the, 360 degrees of a company. From how you
create ideas, how you put that on the market, how you do marketing, how you get resources.
And you find something that is very interesting you are here as a part of a team; you may
be are a good executive. An executive is a person that is able to manage the resources
that somebody put you. The entrepreneur is a guy that is able to
create value without any resources. That’s the big challenge that entrepreneurs have.
And that’s very typical and I don’t know how many of you has been talking to people that
are into the entrepreneur environment and they put a little bit of their credit card
and they found somebody that helps a little bit to get into the next stage with a angel
investment. And from that angel investment how to move into create a big company. That
process is quite fantastic. And in that time I learn well 30 years or
more learning how to do that full process could be very interesting taking the challenge
that the government of Mexico asked me to be doing. And that really in some way is the
organization which sometimes joked is Don Quijote is very, is more into the side of
philanthropy than into the side of business, but we hope that it’s going to change and
things are going very well. TechBA was created with a very big support
of the Minister of Economy that has been grown a tremendous alliance. And it’s grown it by
a number of its organizations; that is the U.S.-Mexico Foundation for Science. And the idea here is how we focus in helping
any idea that are in Mexico becomes a good business. Provide them a physical system to
develop commercial capabilities in the U.S. At the beginning we started with the NAFTA
agreement and in that sense we started with an office here in Silicon Valley in 2005,
almost five years now. Then we decide to open the next office in Austin, Texas within the
university. And we learned something that was quite interesting
in that sense, because here you come and learn the environment of entrepreneurs and entrepreneurship
is really every place. It is not a single event that you don’t get there and you find
people that are seeking how to create the next Google. The dream is here, here in the example and
I am very proud. I don’t know if the people that works here in Google and one of the Mexican
people was very early in the stage of creating Google is when Page and Sergey were students
in Stanford. His professor was Hector Garcia-Molina and he’s a Mexican guy, a very well known
guy in the academics, and he was one of the guys that was starting to discuss about searching
and how to create all these things and organize information of the world. In that time when we create the office in
Austin, we went to a university learning how the entrepreneurship works into this environment
and compare how to, how it is develop in a university is a complete different thing. Then we decide to open in Montreal because
the NAFTA agreement was covering three countries. The Canadian people say, “Hey, why you don’t
consider to be here.” And really we didn’t think about that. [laughs] And they invite
us. We opened a third office over there. Then we decide that we should go into more
international, broad range. We open an office in Madrid. The decision for Madrid was, is
very easy, getting into far away is well what is the issue one. In that sense after we took
the decision of starting in the hardest one, that the Silicon Valley if you can succeed
here you can succeed everywhere in the world; that it. We took a chance there to go into a different
approach and open in Madrid and then it was the easier part in Europe to open an office. And the last two company, two offices was
opened in Michigan. Everybody say, “What are you doing in Michigan?” Well, that’s interesting.
The car industry’s in a very, very critical time; Mexico has a very high participation;
we produce a lot of cars in Mexico and that is going to be quite of a very interesting
challenge. How is going to be recover in the car industry, but Mexico is going to be part
of that; much more active in that sense. And the latest office that we opened is in
Phoenix; that was opened this year. The program announce every year we open two new offices.
This year still being two more to go. It is not yet definite. It’s going to be at the
very end of the year and that is going to be under the President Calderon policies to
keep going that for at least for the next three years more. I hope we, it is going to
be for a long, long time. How do we work in that direction? In that
direction we work in a way that is TechBA; when we have offices all around the world
with different people, learning how it is developed the entrepreneur environment we
called that ecosystem. That if we work in Mexico we are creating
something that we call Innovation Spaces. Is we have a network in Mexico last year we
did events in more than 30 cities, and this year we are reaching about the same amount
at the end of the year. And the idea is we get together people from
universities, students, professors,per academics; we get people from industry; we get people
from the enterprise; and we get the governments in each of the cities and work together in
how to develop companies. That’s the subject that we are facing. And we have a local operation. We create a
program that needs, an awareness program that is very interesting we call Pre-Acceleration. Is we bring companies into the U.S. for a
week. We teach them how to do business. We say how the different environment in each
place is different and then these companies has a transformation then create products
that are for the global market and the focus is how we adopt or create new products and
get into the global market. And here’s a tremendous opportunity and we’re
really looking how to spread that word into everybody. We want to do that not alone also
with companies here today are three companies: Margarita, Jose Antonio, and Jose, are three
companies that are from Mexico and they are seeking to learn by people, make alliance,
develop new possibilities. And that thing were doing everywhere that
we go. Is we want to, these companies learn how to do a global company; how the capabilities,
this company, well Margarita is about 23 hundred people working in a call center. Jose Antonio
has a software development environment to create, to support the products and it’s
a 50 people company. And Jose make, is really a start up that is starting with a new alternatives
of payments online. That is going to be sometime announced how it’s happened; he’s still been
a little bit in the development process. The range of the companies are from very small
companies to any kind of companies in any sector and could be not just technology; could
be companies in any other areas. Examples that has been in that sense for instance
JackBe and maybe you know that, JackBe’s a company. It is maybe the most known company
that has started for Luis Derechin. A guy that was in Mexico, got some little venture
capital, moved the company into Washington D.C., and he’s doing a lot of mashup software.
He has a development office in Fremont, but the base of the company’s Mexico City. They
already are in, already got the third round of investments. That sense we’re hope that
maybe is one of the very first IPO companies. Then Infolink is Jose Antonio is a product
support environment capability. When the typical thing that companies here in the Valley are
doing a product they start to put the product on the market, it happens to be that the engineering
people is doing the support of the company and you get into a, into a problem that you
don’t get more development because the people is taking care of the support that support
people is not very good because engineers have not good to doing the full support. They
want to do the new product development. And that sense is a very critical stage and
the other proposition then Infolink is bringing in the table is how to do that process easier,
faster, and in a very good way. Sinaloa Seafields is a very interesting company.
I really recommend that you visit the website. It’s a company that is producing algae into
a captive environment. In the U.S. there is not algae produced for
any way in fresh form. And they think bring it from India, China, China, or Japan. If
you are eating sushi, the sushi cover is algae, but now one of the interesting things is they
are introducing new kind of products not only for the use it for the sushi wrap, but they
use it for complement to additive for food and that is a very interesting area of opportunity.
Maybe you are going to start seeing sometimes; that’s a dream. On the lettuce, on spinach, an algae for doing
salads, why not? That’s some of the ideas. Next Contact is Margarita, is a company that
is focusing customer support, customer care and they are doing very well; 2300 people
are working with them. eBills is a company for Jose make and in that
sense it is a very interesting startup company. Another part that needs another company that
needs a complement to be used with things like style of Facebook or Twitter, social
networking and how to produce content for social networks, location based. And that’s a very interesting company that
is almost ready, almost close to sign the first angel investment. The company’s already
had some products and we hope to announce very soon. In that sense I want to invite you really
how you can go and find a way to work, I invite you to go to our website; I’m going to show
you that later. Talk to the companies; find how you can be a mentor for a company. It’s
a fantastic experience. I can tell you when you’re working in to an
organization you have a very high activity, but doing a product within a very large organization
is a complete different beast than doing that by your own with a new company that do not
have the resources and things like that. In that sense I invite in the etechba website.
You can see the portfolio of the core of 41 companies that are active with us. We are
really working very strongly with a lot of companies. The portfolio, the full portfolio
of the companies that has gone through the full TechBA process is more than 450 and 231
of them has gone through our office here in the Silicon Valley. We are located in San
Jose nearby the airport, one block from there. That is very convenient. But today the world is flat, the communication
is complete available. GoogleTalk can reach any place and that’s the way that we’re seeking
help to do things. I appreciate your time. I don’t know if you
have questions or you want to talk with the companies. Thank you very much. [applause]>>Gonzalo: Mr. Zavala, thank you very much
for coming. This was very interesting. I got one question and do you know of any
models like this in other countries or Asia, I mean other continents that are doing the
same thing that you guys are doing, and if you can elaborate a little bit of the success
of the program. Because I’m seeing that you’re opening new
offices and there’s clearly success, but if you can elaborate on what happened with the
companies that started with you the first year, where they are now. Those are my two
questions. Thank you.>>Zavala: Thank you Gonzalo. And that’s a
very interesting. First of all is the question is how is done
that all around the world? There are different organizations you can see here in the Valley;
there is the ANZA organization that is bringing companies from Australia. There is silicon
French that is bringing companies from France. There is JETRO has an office that is helping
companies from Japan, the Taiwanese, and the Korean people, has different ways. We found so far that we are the only ones
and we have a complete full scheme that goes from the original place in Mexico to how to
reach that company success globally. And that is a unique model. In some way I am glad that a lot of, these
governments comes to us or private organizations comes to us to ask how we do it. And we’re
very open. We share that, we disclose that about that; how the process is done. And they try, we found that most of the kind
of activities I know are very traditional. Incubation is we provide you space; we got,
we have a couple of events a year; and we provide some kind of introductions, but nothing
very well is structured. Now we are doing a lot of very different things
is we do awareness programs; we provide, we are creating in fact companies, part of the
companies in the portfolio now has been spin offs that provide services in how to manage
telecommunications for companies; how to do lead generations worldwide; how to do market
research for this kind of companies. That’s services that are happening all our own ecosystem. Right now when you have 500 companies in a
portfolio and grow in 200 every year, that gave you really a critical mass to be creating
an ecosystem. And I don’t see right now a similar model.
I imagine that soon we are going to start looking about that. Organizations like Plug
and Play currently for instance Whiteboard Strategies; it’s an organization that are
bringing people from Europe with models that are not exactly in the same way, they are
more focusing how to bring in the other companies into the venture capitalists, not provide
the other needs support. We provide the full level. And that is something that we’re very pleased
to learn and we learn it in different modes with different environments. The success: that’s a very good question and
I love to receive every time that we present the program. We have different ways to take measurements
of these things. At the beginning we would like to see that each company that comes with
us got into a venture investment and go into an IPO. That’s, it’s still been something that we’re
seeking very much currently for the 41 companies that we are working this year. Five of them
are seeking for venture investments. But not all of them are seeking for that.
And why that happens? Well we’re covering the full spectrum for companies. The worse
case scenario that happens is from the 231 companies that has gone with us so far I found
that just three of them has gone out business; that’s really, one in a hundred is not bad. The rest of these companies maybe about 30%
or something like that decide to retire and work in Mexico; make a more, much more robust
company and then come back later on. And that is maybe one of the very, very interesting
cases. Most of that companies at least doubled their sales in the first year; at least. There
are companies that has grown to five times; not all them, but. And that is a very, very
interesting things. They do a lot of much of our business using just the knowledge they
got from being, for a four months period of in the U.S. They go back to Mexico and they
double the sales. That’s not bad. Now the next step is for instance, companies
that are with us is we have companies that has gone into the venture investement. We
have about four or five companies that is a very interesting. It’s a mindset change
that has gone through the Mexican companies. Typical companies or Latin American people
don’t like to have co-owners of the company. And they want to have their own companies. When you bring an investor, the investor say,
“I want to have a very important part of your company,” and that is a mindset that has been
learned. Now every day we are receiving more companies that are seeking specifically that
approach and that is going to be a trend that I can see in the future. That is going to
be the majority of the companies. But that was a transformation stage of the program. From the next stage is from that companies
from the 231 companies that has gone here we keep about half of them doing business
in the U.S. And that, some of them do the business from Mexico; they open a branch in
the U.S.; they have a commercial office with one person that is really a representative
and usually the accounting people. And with this marvelous world that you can
move back and forth with Mexico is you can go to Mexico, from Mexico to here almost any
place in the U.S. in less than two days. In fact doing my benchmark is my shortest trip
has been 23 hours: to be in Mexico to give this conference; have meetings with people;
and coming back in 23 hours. That’s the shortest period time that I has been able do it. And that, when you want to go that to other
places, to India, to China, to the Philippines, you spend four days or five days at least
in travelling. And don’t say when you get there with the change of schedule you are
complete burn out. In Mexico you are about the same time schedule. Now last year we saw with this company’s new
sales outside of Mexico was 54 million dollars for the company that we have here, the 231
companies. And this year we’re expecting that we may reach into the expectation is we’re
in the neighborhood of 200 million dollars with the companies in the full ecosystem.
That is really very good. You are taking companies and for the first year doing business outside
of the government environment they were working generate 54 million; really is a very good
kind of things. The target or the dream of each company is
try to do sales capability of a million dollars for a person that they have in the new location.
And usually they have one or two persons in the new location. That means the target of expanding is to go
for two million at the end of the very first year. Some other questions? Yep.>>Zavala: Well it’s good for the recording
because it’s going to be on You, on YouTube or [laughs]>>male in audience: Oh, okay. So out of the 200 million that are projected
for this year I guess how’s the distribution in terms of the types of markets? Is it mostly
technology companies or is it a mix between agriculture and other type services?>>Zavala: Okay. Yep. Yeah, from the portfolio I can tell you today,
from the 41 companies that we have here in the Valley, it’s nine call centers and business
process outsourcing companies; 19 companies are not software related; two companies in
the food industry; one company in marketing; and about seven or eight, the rest of the
companies are doing into mechanical and optics devices, medical devices. And in that sense the amount of money really
that we are getting is services are very high; software devel, software products are getting
into some kind of about 10, 20 percent is round out and a lot of these companies really
the start up is going to be not a very high amount of money, but a lot of customer acquisition
because they’re moving a lot into the software service approach. And at the beginning the customer acquisition
is going to be the toughest part because it is, it is more important to get customers
and they pay for that amount. And that’s some kind, but for instance one of the companies
in the portfolio got a is now today recognized as the only supplier for RFID tools locator
for the Air Force in the U.S. That’s amazing. Tools within the Air Force camps is very critical
to know where they are. Can you imagine a screw driver that is missing and left into
one part of the motors when they do maintenance or things like that? And they create a system
that by RFID locate all the tools in order to avoid any kind of mistakes and things like
that. And that, and that is a very high potential
volume of sales that are going to be doing. We have another company that is a classified
project but they’re into the security environment and they have a very large project right now
in one of the states in the U.S. We have another company that are into education.
They are providing educational materials for K to 12 and that’s getting quite well. And in that sense most of the companies, I
can say 80% or 90% of the companies, production is highly, very high tech level.>>Adrian Barajas: Okay. Well thank you very
much. [applause]

2 thoughts on “Diversity, Innovation, Business Dev & Emerging Markets

  1. Success means: I want to know the work I do means something to somebody and helps make the world, if not a Better place, not a worse one. Click slapCompany to view my channel.

  2. Interesting lecture on the dynamics of Mexican business. Learning from the ground up and being in the trenches. This video is a great example of some of the things not to do when starting out and some of the things that led to successes.

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