INICIA: “For Entrepreneurs by Entrepreneurs”

Once a year, Inicia, an Argentine entrepreneurial community, awards a prize to the entrepreneur with the business that has the greatest potential impact on society. The prize? An all expense paid trip to Europe, The States or any country of the winner’s choosing, to meet potential clients/alliances, build ideas and speak with advisors on the business. Last year’s winner was Totebag - a manufacturer of totebags with an environmental sustainability vision. Totebag entrepreneurs and sisters, Lorena and Natalia Nunez traveled to Paris where they had the opportunity to meet with and learn from top executives in the Paris fashion industry.

Inicia started twelve years ago during an Argentine Economic Crisis. “When the economy crashed,” says Patricio Sworn a board member of Inicia, “Argentines were laid off and turned to entrepreneurship as a way to create livelihoods. Inicia became a gathering of executives to help these forced entrepreneurs navigate the business environment.”

One of the things that separates Inicia from other organizations is that they push entrepreneurs to think in terms of social and environmental responsibility. “We love sustainable enterprises that contribute to economic, social, civic and environmental value for the community.” To further promote that value, they offer their entrepreneurs courses on sustainability and other important values and entrepreneurial skillsets. “Each course, little by little modifies the mentality of the entrepreneurs in Argentina,” says Patrico.

Inicia’s plan for the future? To be 100% run by entrepreneurs. “For entrepreneurs, by entrepreneurs,” exclaimed Patricio. It will be exciting to see the impact inicia has on Argentina’s entrepreneurial community.

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The graph below was created by Patricio's consulting company. The graph depicts the frequency which the term "business plan" was searched on Google in five South American countries. 

Summoning the demon! Artificial intelligence arrives to Argentina

When it comes to three-time entrepreneur Pablo Orlando, one thing is for certain: he dreams big. Primarily known for GoodPeople.com (the biggest active lifestyle marketplace in Argentina, with a hefty following in The States), he’s since moved onto his latest venture: introducing artificial intelligence to vehicles. Only a few weeks ago, Pablo launched the first autonomous driving car in Argentina to the public.

The little yellow cars, designed for the Buenos Aires government to poll the public’s opinion on autonomous driving, are electric, feature touch screen and move up to 35 miles per hour. At one point during the launch, Pablo walked in front of the vehicle as it drove along its pre-programmed route. The car looked as if it would crash, but instead it swiftly analyzed Pablo’s presence and slowed to a halt (Watch the video above to see Pablo’s car in action).

Pablo isn’t looking to directly compete with Google in the autonomous car manufacturing business. Although he sees the manufacture of cars as a potentially viable avenue to take the fledgling start up, he has his focus set on developing and licensing software that can be programmed into existing vehicles, so that they too can have artificial intelligence features.

“We’re bringing artificial intelligence to existing vehicles,” explains Pablo. “Once our software is programed, trains will be speaking with each other. We are also prototyping the software with buses, ultimately preventing collisions due to blind spots.”

Will these vehicles become completely autonomous using Pablo’s software? Not yet, but they will contain features that incorporate artificial intelligence.

“One of our biggest problems,” says Pablo, “is the need for numerous types of high quality engineers. We may be focused on building software, but if we want to create autonomous cars we need to understand how to build the hardware too. It’s a learning process.” But Pablo’s team is learning! While it took the engineers two years to develop their first autonomous car, it only took three months to develop the second, and one month to develop the third.

“At the end of the day, the future is in the internet of things,” states Pablo. “Soon, everything we own will have some kind of artificial intelligence embedded within.”    

Sounds scary? Not all entrepreneurs look at the power of artificial intelligence as a benefit to mankind. In fact, Elon Musk, CEO and Founder of Tesla, is well known for his cautious if not pessimistic view on AI, stating at one point that, “With artificial intelligence we are summoning the demon…. I think we should be very careful about artificial intelligence.”

“Regardless of how you feel about artificial intelligence, it’s coming,” predicts Pablo. “Soon your Roomba will talk with your Apple TV, your TV will speak with your Nest and your Nest with your car. For better or worse, technology will become smarter. Why fight it?”

ASEA: "We are an ecosystem of entrepreneurs!"

“We believe that the next economic revolution will come from innovation promoted by the entrepreneurs,” says Ezequiel Calcarami, a mobility/transportation entrepreneur and the Vice President of non-profit, ASEA (The Association of Entrepreneurs of Argentina). “But in Argentina’s government instability, lack of funding, societal attitudes and mountains of red tape are getting in the way.” ASEA saw this as an opportunity to gather all entrepreneurial communities and entrepreneurs – no matter the industry or stage, to act as one-voice and address government issues. “The only way we can change circumstances in Argentina is if we join together,” affirms Ezequiel.

ASEA is a quasi-entrepreneurial lobby started in September of 2014. Already, they’ve gathered 1,200 entrepreneurs and by year-end they expect to reach 10,000. By joining together, ASEA hopes to show the value of entrepreneurs to the Argentine community and economy. In Chile, ASEA’s sister organization ASECH, has already cut down red tape and increased funding for entrepreneurs. For example, in Chile you can now open a business within 24 hours (as opposed to several months). Here in Argentina, ASEA is still young but is looking to make a huge impact fast.

For example, they’ve created the ASEA Bill that addresses barriers to entrepreneurs in Argentina including a simplified model for limited companies, the entrepreneurial corporation that can be created with one partner and the endorsement of limited taxation for the first five years of the company’s existence. “We’ve had meetings in government to get it passed and have been discussing our cause with all presidential candidates (general elections occur in October 2015),” notes Francisco Torres Vidal, COO of ASEA. “We are trying to generate value for entrepreneurs and Argentina as a whole.”

While Ezequiel notes that Argentina is an important country in terms of generating new and creative entrepreneurs, “it’s not pro entrepreneurship.” Bureaucracy is a huge problem. For example, to form a company, the government makes entrepreneurs jump through hoops to receive clearances and some activities are double or triple taxed. “It could take months to form a company,” says Ezequiel. “It’s tough and it’s distracting for an entrepreneur who needs to focus on his business.” Furthermore, lack of available funding from both private investors and the government makes it difficult to accelerate or even start a company. “Just getting a credit card or checking account at a bank as an entrepreneur can be tough. The banks don’t want to take the risk,” states Ezequiel.

And it’s not just the red tape and lack of funds that inhibit entrepreneurial growth; it’s also the society’s attitude towards failure. “In the US, failing in business is part of the entrepreneurial process,” says Ezequiel. “You still cheer for failures because you know that the entrepreneur will be better prepared for success next time. But in Argentina, that’s far from the case. Argentines love to flock to the winners but run away at the sign of failure. To fail is to also fail socially.”

Over the next five years, ASEA hopes to be at 100,000 members. “At 10,000 members the government and the people might listen to us. But at 100,000 members the government and people MUST pay attention,” says Ezequiel. “We are an ecosystem of entrepreneurs. We are trying to change Argentina for the better. It is not going to be easy, but together we can change things.”

S4: Alleviating the Burden on Today's Farmers

“With the global population expected to increase from 7.2B to 9.6B over the next 35 years, food supplies will have to increase by 70%,” states Santiago Gonzalez Venzano, Founder and CDD of S4 – an agriculture tech start up based in Buenos Aires, Argentina (and recently in Saint Louis, MO). Yet, in order to increase food supplies with available farmland, farmers need to more efficiently utilize their resources. One way S4 is helping to alleviate the burden on farmers is through “decision” agriculture, helping risk managers use high level precision agriculture information, based on satellite imagery, to reduce financial agriculture related risk. By analyzing a farm’s relative risk, S4 ultimately reduces the administrative costs for insurance companies, and as a result increases the available premium given to farmers.

Having a traditional Argentine Asado or BBQ with the S4 Argentina-based team. Santiago Gonzalez Venzano, Founder and CDD of S4 is at the head of the table.

“Traditionally, insurance companies have two main costs when insuring crops,” says Santiago. “The pure risk or the amount that the insurance company is willing to provide to farmers if crops are damaged, and the administrative costs (like the cost to hire an inspector to estimate the risk).” For example, when a farmer purchases insurance for $100, about 50% to 60% of the insurance purchased will go to the pure risk; the rest is funneled to administrative costs. “Because we can notify the insurance company of the relative risk a farm has, we are able to boost the ratio of pure risk to administrative costs from about 60% pure risk to 70%. That means more money can be given to the farmer if their crops are damaged,” explains Santiago.

How does S4 measure relative risk? S4 measures 15 years worth of information on any given 12 acre satellite image, and benchmarks the management of that farm with its history the history of its neighbors.

Santiago is a trained agronomist and worked as an advisor to farmers on nutrient management for many years. “Growing up with hippies for parents, I’ve always had a very close relationship with nature.” Ten years ago, Santiago began to play with the idea of using data from satellite imagery to help farmers. After several years of working to prove the concept, Santiago formed S4 in 2011. Since then, S4 has expanded rapidly and now provides services to Argentina, Colombia, Uruguay and the USA. “Over the next five years I hope we will be in all continents, helping to improve the agricultural world.” And, with the onset of a growing population and the ever-increasing demand placed on farmers, we hope S4 is able to do just that.

Cavok Kites: Made in Hell!

Imagine flying over the ocean, feet strapped to a kiteboard and hands clutching a wind kite. This is an everyday experience for Marcial Valiente, Co-Founder of Cavok Kits. Cavok Kites manufacturers kiteboards, wakeboards, and skateboards in Buenos Aires, Argentina with a focus on capturing Argentina’s preference for bold style. In addition to manufacturing their own brand name, Cavok manufacturers boards for well-known Asian and European brands.

Left to right: Andrew (Entrepreneurial Trek), Marcial (Cavok Kites), Charlie (Cavok Kites) and Kaity (Entrepreneurial Trek).

When we first met Marcial at his warehouse and manufacturing center, we were swept away with the numerous intricacies involved in creating boards. What had originally started as a part-time gig while working as an engineer for Peugeot, Marcial and co-founder, Charlie turned their labor of love in 2007 into a full blow operation in 2012. “I wanted to do something I loved. And I love action sports like kiteboarding, snowboarding and skateboarding. We started creating and selling boards to friends but soon realized we could turn it into a real business.”

In 2014, the company manufactured over 400 boards alone for the Cavok brand and over 500 boards for other brand names. Instead of setting up storefronts, Cavok sells to retailers and local kitesurfing schools to access a network of buyers already in place by their vendors. “Kitesurfing schools are popular,” says Marcial. “In part because kitesurfing can be expensive and renting equipment from kitesurfing schools is sometimes preferred.”

Cavok Kites competes with large brand names by pricing their boards 20-30% cheaper than imported brands (due to a combination of cheaper manufacturing and Argentina’s tariff on imported goods), and by appealing to Argentina’s bold design preferences. “We want big, bold graphics on our boards because that’s what our audience in Argentina and Latin America are looking for.”

And with the slogan “Made in Hell!” and a kiteboard series with titles like “Wake the F*ck up” and “F*ck the rest”, we can’t see how Cavok could possibly get any bolder. “We want to have a huge visual impact. It is impossible ignore these boards,” explains Marcial.

In the future, Cavok plans on expanding their brand to include clothing, skis and snowboards. Due to the seasonality of kite and wakeboards, expanding their line will allow Cavok to stay busy and pull in revenue year round. They hope to expand internationally with the Cavok brand, but are reluctant. “First we need to develop our brand and creating clothing will help with that. Once our name is out there – beyond Argentina, we will be able to compete with the international players,” says Marcial. “At Cavok we want to capture the Argentine spirit. We want to be bold and fun. We want to stay true to ourselves and Argentina.”

Condor Technologies: Every drop in the ocean counts

What’s the best part of being an entrepreneur? “I love creating something new; something I’m proud of. I love knowing that I have the ability to impact the world,” explains Alberto Patron, CEO and Co-Founder of Condor Technologies – a global technology and services company focused on telecommunications in Latin America.

Left: Alberto Patron CEO of Condor Technologies, Right: Kaitlyn Ersek and Andrew Bagwell of Entrepreneurial Trek

Alberto teamed up with some friends to form Condor Tech in 2004 after being laid off from Ericsson during the 2001 crisis. Alberto realized that there was a huge opportunity in the Latin American telecommunications industry because established players (from USA and Europe) weren’t always able to meet the needs of their Latin American customers. “They had great products,” Explains Alberto of the traditional vendors, “but they were trying to fit USA and EEU products and commercial schemes to Latin American problems. It wasn’t working.” The problem was that in some cases their entry-level products were still too big for most of the operators in the region. In addition, the sizes of deals made in Latin America usually didn´t allow them to commit to the necessary product customization required to adjust to local regulations or requirements. That’s where Condor Technologies steps in. “We provide the flexibility and service of a small company, but have the ability and expertise of a large multinational.”

While the business has been a success, running Condor Technologies has been a bumpy road for Alberto. In 2006 Alberto lost a friend and partner to the business. “Not only was he a dear friend, but he was a vital member of the Condor team. It wasn’t easy for the company to overcome his loss.”

Then, in 2012, while undergoing a particular critical period in the company, Alberto nearly lost another friend and partner, this time to a rare genetic disease. His friend needed $1 million USD to undergo a bone marrow transplant treatment in Boston, Massachusetts. “The entire company plus a group of friends started a solidarity campaign to help him” says Alberto. “2012 was the darkest and yet the most transcendent year of my life.” The entire country rallied to the cause and in the end they were able to raise the money. “It regained my faith in mankind. People from all over the country gave something even when they themselves had so little. Each contribution, no matter how small, made the world of a difference.” Alberto reflects on a quote from Mother Theresa, which the company uses as a guide,  to describe this:

“We know only too well that what we are doing is nothing more than a drop in the ocean. But if the drop were not there, the ocean would be missing something.”

Yet, Alberto is eternally grateful for the lesson 2012 provided.  “It really taught me about the power of contributing with whatever you can and how everything makes a difference. When I find myself in a dark place, I always think back on that time as a source of hope.”

Saporiti Inc: A family legacy

Saporiti Inc, a family run business since 1927, supplies flavors and ingredients to the food and beverage industry. “Half of our sales come from flavors for producing drinks, chocolate or, ice cream” says CEO, Adrian Saporiti. “We also produce colors and texture agents.” The company is divided into three market segments in the food industry, allowing Saporiti to diversify the business.

“In business, by focusing on a specific segment you can grow fast but the more specialized you become the more fragile your business will be. It’s sometimes dangerous to specialize in one thing in Latin America. You never know what will happen in the economy or in government policy. The government could forbid one of your main ingredients or an import rate could go up tremendously.” Adrian believes that it is important to the long-term health of the business to diversify even at the cost of growing slower.

Adrian Saporiti, CEO of Saporiti INC (Left) with Kaity Ersek, Entrepreneurial Trek Writer (Right)

Learning to run his family business did not always come easily to Adrian. The first 20 years of his professional life was spent working as a pediatric intensive care doctor. It wasn’t until an older brother passed away from cancer that Adrian decided to make the switch and enter the family business. “I had to learn quickly but I was ready to tackle the challenge.” Adrian is the third generation to take over the business. “My father started this business, then my brother took it over (25 years his senior) and now it’s been passed on to me.”

One of the harder parts of running a family business is keeping the business in the family from generation to generation. In Latin America, the majority of family run business are managed by the first generation (about 47%), 29% are run by the second generation and only 10% by the third generation. The trend continues to decline generation after generation. Unfortunately, about 13% of family run businesses fail by the third generation.

One reason for the lack of continually run family business may be that children are taking over the business for the wrong reasons. “I believe that kids should not take over the business just because it is the easy path. They should have a strong passion for the industry and the business,” says Adrian. He feels that fathers or mothers passing down a family business should make it hard for their children to take over the business. “While kids should inherit stock, they need to earn the right to work in the business.” When we asked Adrian if he planned to pass the company to his kids, Adrian replied, “definitely, but I think it’s important that they have outside experience first. After they’ve worked for another company, if they want to be part of Saporiti, I’d gladly welcome them.”

To Adrian, Saporiti is a family asset. “It’s important to think long term to keep the company prosperous for the family.”

Resources: 

http://www.businessweek.com/smallbiz/content/apr2010/sb2010049_806426.htm

http://www.economist.com/news/business/21629385-companies-controlled-founding-families-remain-surprisingly-important-and-look-set-stay

https://familybusiness.ey-vx.com/pdfs/page-55-56.pdf

Enablis & Pigmalion Studios: Creating an entrepreneurial movement

With 2,400 entrepreneurs in their worldwide network (70 in Argentina), Enablis is a nonprofit organization geared towards serving entrepreneurs in developing countries to create wealth through job creation. “We focus on innovative entrepreneurs with existing or early stage businesses that have the potential to expand internationally,” says Rose Vervenne, Director of Enablis Latin America.

Rose Vervenne, Director of Enablis Latin America

Originally focusing on South African entrepreneurs, Enablis has quickly expanded to six different countries (five in Africa and one in Latin America). They offer several programs to support their members including peer support groups (known as Enablis Circles or E-Circles), mentoring by successful entrepreneurs from around the world, coaches that meet with entrepreneurs to discuss their top two priorities for the quarter, and several other business improvement programs.

Marcelo Klein, CEO & Co-Founder of Pigmalion Studios 

For Marcelo Klein, Enablis member and CEO of Pigmalion Studios, it was the Enablis Circles that first caught his attention. “The E-Circles are a place of trust where you can tell fellow entrepreneurs what you are thinking, feeling and going through, both as a company and personally,” says Marcelo. “We call our E-Circle: Vegas. That’s because what happens in Vegas stays in Vegas and it’s the same for what is said during E-Circle peer support meetings.” Marcelo also credits his Enablis mentor as one of the biggest influencers on his business life. “He has experience taking a company from 2 people to 250 in under two years. We meet every two weeks to discuss what’s going on in Pigmalion Studios. It has made a huge impact for me and Pigmalion.”

With a focus on mobile applications and services, Pigmalion Studios develops technology solutions for clients like Visa, Forbes Argentina and others. They’ve been in business for four years. “When we first started out in mobile, our clients just didn’t understand the power of mobile technology for business. Now mobile technology is huge and we’re growing fast and steady!” In addition to their early start in mobile technology, “another big differentiator is our people,” says Marcelo. “I have two clients: our consumers and our employees. Our people are our key to success. We focus on hiring not only key techs, but good people.” Because of connections formed through Enablis, Marcelo expects to expand operations to the rest of Latin America, Europe and the U.S. over the next five years.

But, Pigmalion Studios isn’t the only organization looking to expand operations. “Five years from now, I’d love for Enablis to be in Chile, Colombia, Peru, Brazil and maybe even start our first chapter in Asia,” says Rose. What’s holding Enablis back from growth? “Because we are a non profit we have to figure out how to make a big impact with small resources,” cautions Rose. “We have to stay lean and we have to be super focused on creating an entrepreneurial movement from the base. We have to become an exponential organization.” Rose believes that if Enablis can stay lean and think exponentially, the organization will expand rapidly and continue to influence entrepreneurial growth in the developing world.

Edelfex: Core values aren't exactly a "new" fad in business

Core values aren’t exactly a “new” fad in business. But do those business’ actually live them?

At Edelfex, a Buenos Aires based Heat Exchangers and Fluid Handling Equipment Manufacturer, CEO and founder Miguel Harutinunian would say yes. “Culture is important to us. It’s about communicating with customers and stake holders in a way that is consistent across the board.” In fact, to Miguel, core values were so important that it took Edelfex eight grueling months where each employee collaborated to create their core values (by the way, there are 55 employees in total. That’s a lot of collaboration!). “We created our core values as a team,” affirms Miguel.

To Miguel, maintaining core values starts with the hiring process. If you can hire people based on core values, it takes care of 80% of deviations,” says Miguel. “I’m always the last person to interview a new hire. It doesn’t matter if he’s an engineer or a secretary, it’s extremely important for the health of our organization that we hire an individual that fits our culture,” says Miguel. “For us you either pass or you don’t pass our core values. There’s no gray area.” Edelfex takes pride in recognizing employees (both by managers and their peers) that practice the core values through prizes or by receiving a shout out on their monthly News Exchangers (haha think heat exchange industry) – Edelfex’s internal magazine. Finally, if an employee isn’t fitting the Edelfex core values and culture, they’re let go.

Edelfex started 11 years ago when Miguel quit his job at German multinational GEA, and with their blessing, started the company. Miguel came over to Argentina from Armenia with 900USD in his pocket, and a newly minted degree in Dairy Engineering to escape the economic turbidity of post USSR Armenia. In Armenia, “Despite our independence, we were more dependent on the goodwill of fellow countries than ever before.” After working for two years at a few odd end jobs and failing to start a fruit and vegetable tienda (small shop), Miguel finally received his working papers and managed to snag a job at the multinational German firm, GEA.

Edelfex specializes in heat exchange equipment, the reselling of parts and the creation of completely tailor made systems and plants. Specifically they serve, the food, pharmaceuticals and cosmetic industries. “In Argentina, diversifying our work is key. We serve numerous different industries so that if one falters, the others can sustain the business,” says Miguel.

Despite the need to diversify, Miguel believes that entrepreneurship is growing in Argentina. “Argentina is a special country and in the long term, it will grow, but this year, it isn’t. I believe 2015 is a transformational year and that new government (elections are up in October of 2015) – regardless of the party, will help put in place policies that encourage business growth in Argentina.” And yet, Miguel affirms that regardless of the current economic stagnation, “this is the time when we as entrepreneurs and business leaders are tested. We need to think long term and set ourselves up for growth. We can’t conserve all resources.” Despite a lagging first quarter for Edelfex, Miguel plans on hiring an additional six staff geared towards sales and customer service as well as opening a subsidiary in Mexico to serve the Mexican and Central American market. “We need to become a more sales oriented firm to capitalize on future growth.” 

Bondarea: Need a loan? Don't go to the bank!

“As an entrepreneur in Argentina, you’re lucky if you can get an institution to write you a loan. But when they do, interest rates often fall between 45 – 55%,” says Antonio Zavalia, Director and Co-Founder of Bondarea. “Who can afford to take out a loan at those rates?” Bondarea is remedying the lack of available or affordable loans to small businesses and individuals in Argentina through their peer-to-peer lending website and software.

What’s the difference between peer-to-peer lending and crowdfunding? While both are trying to solve capital related problems, small businesses that use crowdfunding techniques are selling a product. In return for contributing, funders receive a perk or product from the entrepreneur. When it comes to peer-to-peer financing, “entrepreneurs or individuals can ask for microloans. Loanees then bid to lend some or all of the requested loan at an interest rate dictated by the loanee.” This way, if an entrepreneur needed a loan of 16,000 Argentine Pesos, he could auction off his loan and several loanees could offer to lend different amounts at different rates. The entrepreneur could also decide to turn down an offered loan if the interest rate was not agreeable.

Overall, the average interest rate on Bondarea is 32.5%. “Competition among bids drives interest rates down,” says Antonio. While that might sound scary to an entrepreneur in the States, that’s a lot cheaper than going to a bank (interest rates fall between 45-55%). After two years in business, Bondarea says that the total percentage of late payments (those more than 30 days) is about 0.6% (only a fraction of its comparable number at local financial institutions) and to date, and no one has failed to pay back the loans.

Co-Founders Antonio (Left) and Frederico (Right) with Kaity Ersek. 

Antonio believes that these low numbers are due in part to the credit screening done by Bondarea. “It’s a mix of the backward looking factors found in the U.S. FICO score and forward looking factors, which judges how attractive a loan can be to potential loanees.” Bondarea screens each entrepreneur or individual before allowing him/her to auction off the requested loan.

However, it’s the software-as-a-service side of their business that is the most scalable and has the highest potential to affect entrepreneurs and individuals in need of a loan. “We sell the software used on our peer-to-peer lending platform to NGOs in Argentina, so they can more effectively and efficiently run their own community peer-to-peer lending programs.”

Overall, through both their peer-to-peer lending platform and software, Antonio says they’ve funded roughly 400 to 500 businesses, adding up to 6 million pesos (about 600,000 USD at the Argentine official rate) worth of loans. That’s a huge impact!

The biggest growth challenge for Bondarea is that, “people are scared to borrow or lend money in the current economic and political context… especially to a company that isn’t a household brand. It’s tough. However, as we build up a reputation for finding good credits and ensuring low borrowing costs, new users come to our platform in greater numbers.”  And yet, at the same time the lack of available loans means that there is a real potential for growth for Bondarea as both a lending platform and software.