Last month I had the chance spend several weeks in Peru (Lima and Arequipa) as speaker and guest at universities, incubators, community events and startup-related organizations. I witnessed first-hand how the tech startup ecosystem is evolving. I saw very good signs and enthusiasm focused in the right direction. These are my observations with a unique perspective … I was in born Lima, Peru.
Although I am a product of Peruvian private elementary and secondary education, I never attended a Peruvian university, nor held a job in Peru. I left Peru right after high school and became schooled in Computer Science and Math in the US. Afterwards, I worked in the US software industry (startups, small, medium, large corps) for more than 20 years. One could say that I had a Peruvian childhood and a gringo adulthood. And although I admit spending more time as a gringo, I can still detect the little nuances and idiosyncrasies in the Peruvian way of thinking. Here’s my personal assessment of the ecosystem with one American professional eye and one Peruvian “psycho-analytical” eye.
No Technical Cofounders
After one of the events I attended, I stopped by a fairly publicized and recently funded startup. I engaged in conversation with one of the team members of this startup. “So tell me about your tech stack”, I asked casually. “It’s PHP and MySQL, but it’s not the best”, he replied. “Why do you say that?”, I countered suspiciously, not expecting that answer. “It was chosen by a third party”, he answered. It turns out the startup began without a technical cofounder and the CEO outsourced the solution to a third party.
Apparently this is more the rule, than the exception. For some reason (which I’ll to elaborate later) technical people tend not to reach the leadership sphere in Peru’s tech ecosystem. Most startups get launched by their would-be CEOs. But, they are trying to build tech startups right? Would you ever open a restaurant without a chef?? Would ever outsource your chef?
The startup system itself promotes this because of the emphasis on pitching competitions. Who raises to the top in a pitching competition? The one with the most concise and eloquent pitch, and charismatic personality, definitely not traits of a tech person. This emphasis on pitching occurs in US ecosystems as well; however, in the US there are tech communities that are peer-driven that recognize your work for substance — your actual work (Github, tech conferences), not just presentation. This peer-driven community does not exist, or is very incipient at best, in Peru.
The Imbalance between Biz and Tech People
Growing up I remember that the most popular careers were “Administración de Empresas” (business) and “Ingeniería Industrial” (industrial engineering). In both you were groomed to be the next “empresario” (enterprise boss) and if you went to the colleges with the most reputation, like Pontificia Universidad Católica del Peru, Universidad de Lima or Universidad del Pacífico, you were for sure on track to be next the CEO of a Peruvian enterprise. I asked to myself then, if everybody aimed to be bosses, who is going to be left to be a boss of? Or if everybody focused on industrial engineering, what industry would they work on? Because there wasn’t a lot of industry back then. Perhaps a whole generation was trained to be bosses, not builders or makers.
At the same time that I was leaving for the US, a number of academies or institutes appeared in the Lima market. These offered two-year degrees in “computación” or “informática”, mostly akin to a technical degree in MIS (management information systems). This is one of the primary reasons I left Peru, because the lack programs in computer science (CS), the study theory, methods and techniques that make computers work. Fortunately I had traveled to the US before, and I knew of the existence of CS.
You can see how these two groups interact in the formation of startups. For sure, the union is not one of equals. Why is this? I asked myself. I have a theory. Back in the 80s, during my college years in the US, I was an intern at GTE (now Verizon), a major US phone company. I remember that all my bosses seemed to have backgrounds in business. By the 90s, more and more bosses tended to be have technical background. What happened? The shift from project-management driven, Gantt charts and waterfall methodology to a more peer-driven, agile methodology was transforming how tech projects got planned and delivered. It also affected how organizations were structured around tech teams, giving more responsibility and leadership to tech people. This peer-to-peer methodology or approach has even expanded beyond single corporations or institutions, to collaborations across teams and across countries. Moreover, the open source movement and the commercial success of open-source-driven software has accelerated this way of collaboration.
In Peru, the shift to agile and open source has not happened. In the US, during this transformation, the leadership (power and responsibility) shifted towards tech people. This has not occurred in the Peruvian industry, that is why tech people are still second class citizens, still taking orders from business people and therefore, not getting the chance to rise to leadership spheres.
The Elephant in the Room
One of the things that was appalling to see is how big software package vendors are “embedded” in the industry, government and even higher education. The strategy of these software vendors is to create a dependency early on, at your university for example, on these software packages. The purpose is to perpetuate the use of these packages later on in your career, thus preventing you from creating anything on your own. On the government side, it is easy for government officials to shift the responsibility to third parties and have the option to “blame” this third party when projects don’t work out. In education, the big software vendors “donate” a computer center and free licenses to university and schools. In my opinion, an institution of higher education should be a place of universal thinking, where a particular commercial solution has no place as a requirement, perhaps as subject or method of study, among others. This is especially important in computer science or computer related fields where creating something from scratch is so easy. You are just killing innovative instincts.
What does this dependance on big software packages create? It creates a “software” community composed of mainly implementation, maintenance and support engineers. A community that will not create anything from scratch, because it doesn’t know how to. This flaw in the community is insidious and permeates itself into the startup industry and into higher education. Would you want somebody that does not know how to create things from scratch in a startup? This is a problem that is a back-breaker in a startup ecosystem. If you are a startup and you are in need of experienced technical talent (post Series A for example), the Peruvian (corporate) industry will only offer you less than ideal candidates, well versed in software packages.
This dependance on big software packages rears its head in higher education as well. In this industry, since you only need implementors, maintainers and support people to fill the corporate ranks, you favor programs that fulfill that need: Management information systems (MIS) or “ingeniería de sistemas” as known locally. Most computer-related university programs are oriented to churn engineers that “use” software, not to build software. Only in the last ten years, have computer science programs been created, and of all places, the first one happened to be in Arequipa, the second largest city of Peru, as opposed to the capital, Lima, where “everything” important usually happens. This is an example of successful out-of-the-box thinking, not centralized group-think.
There are plenty of Problems, where are the Solutions?
When you see a the list of startups at various incubators you mostly see “tropicalization” (local version) of foreign ideas (ecommerce, social networks) and lots on “me-too” or lifestyle-oriented startups. There is a glimmer of hope as you are starting to see some startups oriented toward problems that are focused on primarily Peruvian or Latam problems, like non-traditional banking, and gastronomy. However, a lot of roadblocks in the Peruvian way of thinking conspire against better ideas.
Growing up in Peru, I saw a culture of conformity and “obedience” to “authority” and the status quo. Also, the believe that anything “good” comes from a foreign country. This must be a reflection of a history influenced by the fact of being conquered by Spaniards for more than 200 years, a regimental Catholic church that influenced our customs, and more recently, decades of military governments, and restriction of imported ideas and goods. Lest we forget, that the liberation from the Spaniards came from movements in Argentina and Venezuela, not from within. Non-conformity or creativity (of ideas) is not only not encouraged in Peruvian culture, but curtailed from childhood. You see that in the education system, with the emphasis on recitation, memorization and strict imitation. You almost see an insecurity in the Peruvian psyche, the thinking that “it can’t be done and the solution must come from overseas.” This is completely opposite from the US philosophy of questioning the status quo, or thinking “is there a better way?” This is something embedded in the DNA of the US, the existence of the United States was based on that thinking, that men and women are created equal, that there is no king, that church must be separated from state and overall, that their own citizens are responsible for forging their own future.
Another aspect of Peruvian way of thinking is the emphasis on image, rather than substance. People like to be associated with “famous” people in photos. Or, they go to universities or workshops to earn a diploma (“el carton”) and think that the piece of paper is their most important achievement. Or, get into debt to buy car and clothes, to appear “more” before your colleagues and friends. Or, think that somebody dressed in a suit and tie is more credible. This way of thinking conspires against the way new companies should be created. You can see this manifest in startups: the pitch, website and message will be extremely polished, ie. image, but not the tech stack or business model behind it. This is a reflection of image-first thinking.
Entrepreneurship and ingenuity are not foreign ideas in Peru. You just need to look at the thousands of street vendors around Lima, or anywhere in Peru. The street vendors have figured out a way to make money, sell something at higher price than cost, and know how to acquire customers by pounding the streets. Ingenuity, you could see in many places, even during my childhood times. The “Avenida Azángaro” was a well-known street in downtown Lima, for forging any sort of documents to an uncanny reproduction. They even did almost authentic university diplomas. Ingenuity and entrepreneurship in Peru have been miss-directed for decades, if not centuries, and have not had the chance to be combined with the right know-how.
Moving forward, some ideas to make the Ecosystem better
If I had a magic wand, here are some ideas on how to improve the startup ecosystem in Peru:
- Community — Encourage and build grass root efforts, peer-driven communities, not mandate top-down. Peer communities by nature are self-correcting, because there isn’t a hierarchy that becomes ossified, and new members are added at an equal level.
- Meritocracy — Reward merit, substance over form. Don’t just do pitching competitions, but also hackathons and Kaggle-style problem solving competitions. Don’t just look at diplomas, resumes, LinkedIn, CV, but also at Github and projects.
- Open source and Agile — Government institutions should adopt (only) open source technologies and demand agile delivery of projects. Big software vendors cannot cry fowl, because they’ve adopted open source already in the US. Just don’t keep buying 20-yr old solutions.
- Education — Emphasize computer science education from early age, not just MIS, that is, teach everybody how to program and think analytically, not only use software packages. Focus on creating more computer science departments in universities, not just MIS, focus on creating not just using.
- Build Exchanges of Ideas—Look for ideas from outside first, emulate them and nurture them so that eventually you can create your own. Invite people with those ideas. Repatriate those who once fled the country.
- Imagination and Creativity — Go (or follow) to Disney, volunteer as an Imagineer and see how they do things. Mix art and science, like how gastronomy mixes chemistry and presentation, or how tourism can mix archaeology with data science.
- Learn from the street vendor or the informal economy — Make startup entrepreneurs work as a street vendor as a way to learn entrepreneurship. This is akin to “selling lemonade”, the usual example to illustrate childhood entrepreneurship.
- Learn from the Gastronomy industry — You see a myriad of new dishes and restaurants in Lima and all over Peru. But they are not just following recipes, correct? They are creating new recipes. So what do they teach in culinary school? They teach principles of how different ingredients are prepared and combined to maximize flavors and textures. Do we have an inferiority complex? No. We proudly claim it’s one of the best cuisines in the world and we’ve shown it. Now …
Similarly, a computer science department in Peru should teach you the principles and concepts behind how computers and programs work. So that, the new generation of Peruvians are able to create the new “dishes” that solve world problems that we could export to the rest of the world.
