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>>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
>>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]