Betting on the Brits – …my FOREX-related story

A couple of years ago I was asked to cover a trading desk at a prestigious firm in London. What transpired in the first week was quite humorous, since neither party really knew the other all that well.

During one of our daily banters at lunch break, I asked one of their top traders if it was possible for a random freelance writer, like me, to become an expert Forex trader like him and his colleagues, …in say, less than two years time? They chuckled, but soon the question turned into a friendly wager between us. They were willing to teach me the art of their trade, if I agreed to stay in London for a few months longer. Without any hesitation, I agreed. What I failed to tell them, however, (since they never asked) was that aside from freelance writing, I was also a seasoned programmer with over 25 years experience.

For the next three months, I watched two top traders work the Forex markets masterfully. In the evenings I diligently programed what I had learned into a versatile algorithm. To keep up with the trading lingo, I poured over technical trading manuals, took copious notes on their many trading styles and strategies, and carefully observed their trading behavior under many different circumstances. After a few days in the trading room, I quickly learned how these circumstances could vary widely.

Each morning we met briefly to review global events and discuss trading opportunities. Every meeting derived a different outcome. For example, one morning interest rates moved up in Australia causing investors to dump Euros and buy Australian dollars. The ripple effect triggered a similar outflow in Emerging Markets whose respective currencies sometimes reacted with greater amplitude. Within seconds, my two mentors were skillfully working the South African Rand and the Turkish Lira using Gold as a potential hedge. The Euros that were sold earlier in the day were bought back, all at a precisely calculated, risk managed profit. Later that week, changing oil prices, commodity prices, invasions, trade disputes, earnings, GDP, non-farm payrolls, hedge funding currencies, political elections, and so many other factors including the prospects for a Grexit and Brexit, weighed in. In an unpredictable manner, each event contributed to an uncanny sense of ‘controlled mayhem’ in the trading room.

Despite the daily ensued chaos from the markets, these two cool cats maneuvered skillfully through the maze pinpointing with incredible accuracy, areas with high-probability arbitrages. Like the rails on a train track, their unflinching trading discipline was solid and consistent, day in and day out. They reminded me of two sturdy pillars standing firm against a fierce tornado. It was truly amazing to watch and absorb, not just for what it did for their trading results, but more for the many ways it could be applied to daily life decisions.

Perhaps, my greatest takeaway from the entire experience could be summed up as follows:

“Add clear thinking, risk management, and a disciplined approach to any
problem and the odds for a successful outcome can be greatly improved.”

Simple? Yes, but very difficult to achieve on a sustainable basis, at least for humans, but not so for a pair of fast computers and a cleverly written algorithm. What happened next surprised us both. See for yourself at http://www.ragingfx.com.

So, you might ask, who won the wager?

As it turned out, we both did. …because we had unwittingly hedged our respective bets! They taught me everything they knew, while in two years time, I created an amazing algo that digitized everything they had taught me!

© 2016 Tom Kadala

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Greece: Land of Economic Tragedy or Entrepreneurial Opportunity?

Would an ancient Greek playwright like Euripides have ever considered Greece’s current economic malaise a source of inspiration for a modern day Greek tragedy? Probably not. …and yet, an audience for this unwritten, modern-day Greek tragedy has surged as members of the Troika continue to relentlessly pressure Greek politicians to address their overdue financial public obligations now teetering above 170% of GDP.

One can just imagine the utter frustration that Greece’s Government VP and Foreign Minister, Evangelos Venizelos, must feel every time he updates ECB officials of Greece’s economic progress or lack thereof. At a recent ECB review meeting, Venizelos, a burly looking character, bellowed a strong opinion in the nearly empty chambers of onlookers. He told anyone who would listen that to view Greece as the “central problem” of the European and global economy was “false, dangerous, and unfair”. When I read his quote in a local paper, it sounded like the perfect opening line for a riveting and engaging modern-day Greek tragedy, whose first scene might begin as follows:

A Modern-Day Greek Tragedy
As the sun sets over the Athenian skyline, scene one begins. A spotlight, as though originating from the night sky, shines brightly upon the Acropolis. The stage is the city of Athens, while the audience is a virtual network of headline news readers who watch with great anticipation for clues on how this extraordinary Greek tragedy will unravel. 

The first scene begins with a narrator’s soliloquy on Greece’s current financial woes. In a monotone voice, he tells the audience that Greece is in debt up to its eyeballs. The country of 10 million inhabitants owes over 317.31 billion euros plus interest to European bankers and other investors, …which translates to a shared debt of over 31,731 euros per Greek citizen. With unemployment at 27.8% and almost twice as high among its youth (58%), the Greek population has a slim chance of ever paying back its creditors. Increased austerity measures have helped reduce the need for more debt but have done little to address the amount the country owes overall. The severe cut backs have made Greek everyday life exceedingly difficult by spreading public misery, triggering social unrest, encouraging talent drain, and fostering capital flight. 

In a baffled voice, the narrator turns to the audience and asks the following questions:

If austerity has truly brought the Greek people to a dead end, what can Greece’s leadership do today to help secure a better future? How can their government policymakers attract foreign direct investments, create local employment opportunities for its citizens, and eventually reignite a new and sustainable Greek economy? Are we doomed or is there hope among us?

Suddenly, the silence is broken. From the audience, a group representing the future of Greece, speaks out loud. Their message is direct. Their recommendations spot on and their intentions, genuine. They are none other than representatives of Greece’s young professionals.

A Dynamic Facilitated Discussion
Unwittingly scripted into this next scene, I arrived in Athens for a last-minute business trip earlier this year. Prior to my departure, I had asked various groups of Greek young professionals through LinkedIn and other sources to meet with me for an informal discussion. For nearly two hours, we chatted candidly about the future of their Greece.

They were an eclectic bunch, fifteen in all. They covered a wide range of backgrounds including post graduates, young entrepreneurs, teachers, and professionals working in the private sector. Many had spent time outside of Greece either studying or working internationally. For them, Athens was their home, and they had a vested interest in her future. I agreed to write an op-ed expressing their views so their collective recommendations could be read globally.

I began our facilitated discussion with a hypothetical question that went as follows:

If this Group was offered access to a 100 million euro fund to spend in any way they chose for the betterment of Greece, what would they do first and why?

The Group offered three suggestions, which together revealed some fundamental issues that go far deeper than the well-documented mistrust between Greeks and their government. First, funds should go toward changing Greece’s educational system and specifically toward the placement of more non-Greek teachers. Group members felt that the practice of recruiting teachers from the same student body had potentially fostered a myopic view among Greek academics. Bad teachers who have little fear of losing their jobs are rarely challenged by outside peers nor formally evaluated by their students for their comments and suggestions. With a strong bias towards ‘teaching to the test’, teachers have become unchallenged, while students have lost their genuine desire to learn for the sake of gaining new knowledge. To make matters worse, students are never certain if and when they will graduate as teacher and student strikes are common.

Exposed early on to disinterested teachers and unpredictable graduation dates, Greek students have developed an inherent dislike to academia. Their disdain for their educational system has resulted in a long-standing rift between industry and academia, one which has severely lessened the government’s support and industry interest in the development of Greek-based R&D initiatives.

From an early age, children are taught to aspire to public sector jobs. These jobs form part of a government promise that offers lifetime, financial security for its citizens. Aiming for a different career path is considered out of the main stream. Under these preconceived notions, entrepreneurship ranks low as a worthy career among Greek family members. They view young would-be entrepreneurs as fools rather than business pioneers. In fact the literal translation in Greek for entrepreneurship is ‘business man trying to do something’. …they just don’t know what that might be!

Not surprising, the second suggestion for the allocation of the hypothetical 100 million euros was to boost the poor image of entrepreneurs within Greek society. At first I thought the Group’s suggestion would also include financing for an entrepreneurial eco-system which might include a startup incubator and an innovation center. Instead it focused entirely on addressing the severely marred image of entrepreneurs within Greek society. Intrigued, I verified this stigma with other young Greeks I met during my trip and found that indeed it was true. They also felt like ‘social outcasts’ who preferred not to share their dreams with their respective friends and families.

Where American entrepreneurs relish the rebellious freedom associated with entrepreneurship, Greeks do not. Greeks rank social acceptance of their entrepreneurial dreams as a top priority. Not addressing this social concern first could significantly lessen the long-term effects of any experimental entrepreneurial program. Certainly much more can be read into this social angst, and I encourage readers to delve further into this discussion among their friends and colleagues to explore innovative approaches that will turn the tide of traditional thinking.

The third suggestion for the fund was expressed as an off-handed comment but nevertheless unveiled some valuable truths. To the Group funds should be spent to create a new and independent political party, one that would be open to delivering new government promises for financial security that were not associated with a position in the public sector.

A New Normal
Undoubtedly the Troika’s demands have forced layoffs and salary cutbacks within the Greek government that have jolted the fundamental foundations upon which Greek life has been based for decades. Today, a new normal is evolving between traditional Greek  family expectations for job security and government promises. Neither has experience navigating through these troubled waters and as a result blame the other for Greece’s severely weakened economy. Workers strike frequently, making matters worse, while lawmakers struggle to acquiesce to the demands of their key industry groups. Last year alone, the government published over 240 legislative reforms, which created havoc among business owners and investors who remain on the sidelines awaiting greater economic and political visibility from their government.

The Group’s Recommendations
Hanging Merkel in effigy may help release some anger among the Greek population but as the Group pointed out, there are better ways to deal with the current crisis; however, first things first. Steps to favorably reassess the role of the entrepreneur in Greek society will very likely spark a cottage service industry of business coaches, entrepreneurial therapists, web designers, mentors, and more. Their growing presence will encourage other young adults to consider entrepreneurial pursuits, while simultaneously, reverse the current ‘social outcast’ stigma associated with entrepreneurship. If supported by favorable policies and legislation, Greeks living abroad may see this initiative as their calling card to return to Greece. Their expertise, networks, and enthusiasm should further unleash the many innovative capabilities currently bottled up within the Greek population.

The Group felt Greece could one day become a low-cost solution for big data and data analytics services globally. Just as India captured the call center and IT sectors, Greece’s mathematical prowess, recognized throughout history and the world, could drive both the low end side of the business where big databases require meticulous ‘cleaning’ as well as the high-end side of the business where sophisticated algorithms for machine- to-machine communications among devices or robots are required.

Institutes for Excellence
The Group suggested the development of an independently operated Institution for Excellence or IE whose purpose would be to teach and mentor students on the educational tools and skills needed to launch a big data and data analytics eco-system, specifically a human capital engagement research center. The Institute would reside within an existing university but operate independently. Their campus presence should reignite a new sense of purpose at academic institutions, one that industry could value and be willing to support financially. The Institute would have to be fully insulated from political influence and be governed through an independent board whose members represent its constituents equitably. The IE’s footprint should be designated a tax-free zone to help students finance their startups. Startups that reach a specific threshold in sales would be spun off into the Greek economy under a gradual legislative assimilation process.

Funding for an Institute for Excellence could come from three sources. First, from Greek diaspora who may be willing to return to Greece and actively participate in a teaching/mentorship program. Second, from a modified tax amnesty program similar to one implemented in the UK where tax avoiders can come clean with their overdue tax bill by investing in qualified startups. To help Greeks make the transition to entrepreneurship, however, this tax amnesty program could be further simplified by issuing shares from a fund whose charter includes the establishment of multiple Institutes of Excellence throughout Greece and, potentially, other countries.

A third funding source would come from international private equity funds whose involvement could lead to future investments in the IEs startup companies and relevant initial public offerings or IPOs at both local and global stock exchanges.

Existing organizations such as MIT’s Venture Mentor Service ( http://vms.mit.edu/) can be tapped for guidance, know-how, and strategy. As is often the case with entrepreneurship, the initial phases for proof of concept are the most difficult, however, there is little doubt in my mind that the 15 Greek young professionals who worked through these ideas with me in less than two hours can lead this charge. If given the chance, they and their peers could offer Venizelos with another set of talking points that will change the Troika’s next discussion from one of exasperation to one of opportunity fueled by sustainable economic growth.

© 2014 Tom Kadala

Improving the Odds of Entrepreneurial Success by taking a closer look at MIT’s Eco-System

If you were sitting at a Las Vegas gambling table with a 3% chance of winning big, would you continue to play or fold? Guessing your likely response, then let’s compare this example with launching a startup company. Statistics show that 97% of startups fail after their fifth year of operations with nearly two-thirds in their first year. If your response was to fold at the Las Vegas gambling table, then why are so many institutions encouraging students to launch a new company when the data shows that the odds are severely stacked up against them?

As though these numbers were not discouraging enough, then there are the private equity firms who search through the rubble of startups with the hopes of selecting a winner. Their expectations are even more somber. Of the thousands of business plans reviewed per year, startup investment firms will fund on average 4 deals per year, knowing all along that 3 out of the 4 companies will either fail or break-even after their first year of operations.

So, one might ask, can anything be done to improve the odds of success for a typical startup?

Lab to Market
At universities the term ‘lab to market’ is used to describe the worn path that many young companies must endure to become successful. Their humble beginnings tell a familiar story where an unexpected mishap in a lab inadvertently inspired their startup. For some, the inspiration came from a personal experience, such as in the case of DropBox’s founder, Drew Houston, who got tired of using USB drives to move files from one computer to another. Had Drew not been inconvenienced enough times, DropBox may have evolved differently or not at all. The key to his success was not just his personal revelation and commitment, but also MIT’s established eco-system that was there when needed to grow his nascent idea into a global company. MIT’s contribution was so crucial that one might ask, if every entrepreneur had access to a similar eco-system as MIT offers, would the odds of success improve? Surprisingly, the answer is ‘not necessarily’.

Ideation
Just as moving ideas from lab to market are challenging, coming up with the ideas in the first place or ‘ideation’ requires an entirely new approach and discipline, one that MIT addresses today with the first-of-its-kind ‘proof-of-concept’ center known as the Deshpande Center for Technological Innovation – http://deshpande.mit.edu/.

Recently, I attended an awards reception to honor the 2013 winning teams who were approved for nearly $1m in grants. That evening the lobby of the Media Lab (where the event was held at MIT) was buzzing with sponsors, investors, students, faculty and other interested parties. Hoping to be discovered, the teams were on hand to display their progress and answer questions. Unlike a traditional startup competition that select the best business plans, this event focused on the teams with the best business ideas. Appreciating the difference between both ideas and plans is key. Ideation occurs primarily at the very beginning of the entrepreneurial process, while business plans that build upon proven ideas come later.

When Drew Houston stumbled upon his vision, DropBox was just an idea, an idea that could have easily slipped out of his mind had it not been for a timely injection of funds to nudge him along to help him prove his concept further. That nudge, that tap, that light push made all the difference. The timely urgency to nurture ideation at this very initial point in the entrepreneurial process was what inspired Gururaj “Desh” Deshpande and his wife, Jaishree, to donate $17.5 million to launch the Deshpande Center at MIT.

An Innovative Approach
At the reception I caught up with the founder, Desh, and asked him if he was pleased with the Center’s 10-year record of 110 funded projects with 28 successfully spun out companies. A successful entrepreneur himself, Desh seemed less interested in speaking about his Center’s extraordinary achievements than he was of the impact his Center had among the faculty and graduate students at MIT. To him the true value proposition of the Deshpande Center was less about granting awards to a select few and more on the number of applicants who applied. He felt that the Center’s application process forced researchers to view their work from an ‘idea to impact’ perspective, an approach, he felt, was uncommon among researchers. With his contagious smile, Desh boasted that it was not unusual for non-winning applicants to apply a second or third time.  Last year two such teams that despite not winning a grant from the Center, succeeded in launching their startups anyway. With a deep sense of pride, Desh relished the fact that his Center’s influence had achieved an equally positive impact with every applicant, regardless of who won a grant or not. Through his Center, Desh had created an ‘ideation culture’, one that is often ignored and yet intimately critical to the success of any startup/eco-system.

Surely the odds of entrepreneurial success should improve if more startups had access to established eco-systems, especially those that support ideation early on. But perhaps the lesson to be learned from MIT’s Deshpande Center’s story is less about funding ideation grants and more about giving entrepreneurs a second or even a third chance to prove their concept. Just think how many fantastic ideas are tossed aside and lost forever simply because a business or grant contest is designed to select only three winners?  …or the thousands of business plans tossed in the garbage of an overwhelmed angel investor? …or the business plans that are rejected because of an entrepreneur’s poor presentation skills? Imagine what would happen if one-quarter of the startups presented to a private equity investor were randomly awarded a Deshpande Center-like financial nudge for further proof of concept. Maybe then the odds of succeeding as an entrepreneur would truly improve.

© 2013 Tom Kadala

Winning by Failing, the new Entrepreneurial Paradigm Shift

Why is it that startup companies that fail never make headline news? A likely reason is that few readers are interested, and yet, over one-half of new startups fail during their first year of operations. To make matters worse, their unfortunate founders are often subjected to heavy losses, fines, foreclosures, and humiliation, just for trying to fulfill their dreams. Why then, do societies worldwide come down so hard on these well-intended individuals, especially when they represent a potential source for job creation? Are entrepreneurs who fail, outcasts or overlooked assets? 

Successful startups or inventions do not just surface out of thin air. Thomas Edison, one of the greatest inventors of modern times, once claimed that he never invented the light bulb but rather confirmed 2,000 ways of how not to make a light bulb. Edison knew that his inventions hinged on repeated experiments, the vast majority of which would fail. Why then did he consider his failed attempts more valuable than his inventions? Was it because he viewed his successes and breakthroughs as an afterthought? In a new world order where inventors have had to become entrepreneurs and entrepreneurs, inventors, could Edison’s approach to ‘inventing/winning by failing’ offer us some new insights?

Imagine if…
Imagine if, instead of shunning entrepreneurs who failed, societies embraced their expertise (such as the many ways not to make something work) by efficiently reintegrating their experiences/experiments into an ongoing process of discovery and invention? Take this idea one step further. Imagine if, these entrepreneurs were motivated to work together by co-owning shares of an organization that was partially funded by the profits of the companies whose ideas/inventions did succeed.

While most entrepreneurs would support this type of arrangement, the traditional establishment of venture capitalists, private equity investors, politicians, and large established companies may not. But, as technology advancements continue to enable entrepreneurs to accomplish more with lower funding requirements, investors and their cohorts may, at some point, be wise to reconsider their old business models.

Evidence of Edison: A Five Country Review
To see, if indeed, entrepreneurship is trending toward an inventor’s model, I met with key leaders from 5 different countries including an academic institution, (Ecuador, Chile, Kenya, Mexico, and MIT) and compared their respective entrepreneurial initiatives. My choice of countries coincided with a slew of conferences and meetings that I attended between the months of August and September of 2012.

With each person I met, I inquired what policies, if any, they or their respective governments/institutions were actively pursuing to promote local entrepreneurship. If they were entrepreneurs, I asked about their experiences and expectations. Over time their collective comments developed into an interesting mosaic, which reflected their wide range of experiences promoting entrepreneurship. Less experienced countries sought lofty goals and often highlighted successful models elsewhere. Assuming this trend, one might conclude that the country/institution with the most experience could thus be considered the industry trendsetter.

Least Experienced – Ecuador, Chile, Kenya
A countries with the least experience promoting entrepreneurship such as Ecuador are usually held back by their own overburdening bureaucracy and an economy largely operated by a handful of family-owned businesses. Chile partially addressed these issues by legislating laws that designated a protected area (legally and physically) for its new startups. Their plan also included shared support systems (i.e. office space, Internet connection, etc.), and funding for an aggressive international mentorship program. Kenya’s government built out an Internet infrastructure that today connects over 40 million Kenyan users. They also approved the use of a mobile phone digital currency called M-Pesa that together has mobilized local entrepreneurs and investors.

Mid-Way – Mexico
At mid-way, Mexican thought-leaders are grappling with more sophisticated issues such as integrating venture capital funding. Key to their strategy is a coordinated effort among Mexican government officials, local venture funds, and public universities (i.e. Tecnológico de Monterrey) to identify the next ‘Steve Jobs-like’ entrepreneurs (or, in their words, ‘super entrepreneurs’’) who are capable of building the next ‘Apple-like’ industry on Mexican soil. To attract greater investor interest, the Mexican government recently approved a USD$120 million ‘fund of funds’ to encourage more venture fund managers to work with their most promising startups.

Most Experienced – MIT Media Labs
The highest level of experience also tagged as the industry’s potential trendsetter in my sample was MIT’s Media Lab (Massachusetts Institute of Technology). Under the direction of Joicho Ito, an accomplished investor and colorful visionary, MIT’s Media Lab operates about 350 concurrent student-related startups.  Ito explains that his primary focus is to develop a team’s collective agility rather than the prowess of one exceptional individual. Startup founders find each other, are free to innovate together as they see fit, and, when ready, present their ideas for funding by conducting a proof-of-concept such as a small pilot or survey. Funding is limited to no more than $100,000 per team. Teams that succeed may pitch for more funding (with a formal business plan), while those that fail are encouraged to join another team.

Teams are expected to conduct many small pilots and leverage their data analytics to identify timely opportunities. Ito’s unwritten rule of denying a second round of financing has forced team members to become more agile with their decisions.  As expected, however, failures do happen and are not only common at the Media Lab, but most importantly, revered. According to Ito, students who learn to fail several times, actually win by learning the art of risk taking. Given several chances to take risks within a short period of time has proven to render more ‘breakthrough ideas’ as well as develop a more seasoned crop of team leaders/entrepreneurs.

Conclusion
This brief five country evaluation simplifies the entrepreneurial process into three distinct levels and suggests that sequential levels place the most experienced country/institution as the potential trendsetter, in this case MIT’s Media Labs.

Assuming my analysis is true and MIT’s Media Lab succeeds at creating companies responsible for new industries in the coming years, then one might guess what advice Thomas Edison would have given to governments and institutions if he were alive today.  According to Edison, future entrepreneurial programs would do better if they focused more on efficiently recycling lessons from failed attempts than on sifting through hay stacks of candidates in search of a few needles of success.

Hopefully Edison’s likely advice will turn on a few more light bulbs in the minds of our global leaders!

###

Appendix

I have included an Appendix for those of you interested in more details and interesting tidbits from my interviews with each country/institution for this article.

———————————————–
Ecuador, Chile, Kenya, Mexico, MIT
———————————————–

Guayaquil, Ecuador
Considered a hidden city by investors in-the-know, Guayaquil recently conducted a national roadshow, http://www.nationroadshow.com/guayaquil/en, that began in New York City. In my brief interview with their mayor, Jaime Nebot, he expressed his views on entrepreneurship for his city in two words. ‘Not now!” Ecuador, like other Latin American countries are controlled by a handful of influential family groups who operate the country’s key businesses. For young Ecuadorian entrepreneurs, the chance of succeeding is both intimidating and inhibiting, not to mention, the 8 month lead time needed just to register a company and fulfill all of the public sector requirements. Venture funding exists primarily for launching new businesses within already established ones. Most new businesses are proven concepts transferred from other countries rather than breakthrough technologies that could offer spectacular returns. For now, Mayor Nebot is focused on attracting established international firms to Guayaquil that have the wherewithall to weather his country’s stifling bureaucracy.

Santiago, Chile
At a recent conference on M&A activities in Latin America held at the offices of Baker & McKenzie – (www.bakermckenzie.com) in New York, a cadre of legal experts described Chile’s financial economy as brisk. Unlike Ecuador with its family-owned monopolies, Chile’s formerly family-owned firms have been institutionalized and therefore easier to merge and acquire. Despite these advances, entrepreneurialism in Chile has had its challenges. Young Chilean students who might have taken to entrepreneurialism sooner prefer careers in finance, medicine, or law.

About two years ago, the government of Chile approved funds for a revolutionary program called Startup Chile (www.startupchile.org). Hoping to change the mindset of its youth, Chile’s government is offering entrepreneurs from around the world a USD$40,000 grant to spend 6 months launching their startups in one of two buildings located in downtown Santiago. The program attracted seasoned global entrepreneurs who served as mentors to Chile’s young hopefuls.  Chilean entrepreneurs today account for over half of the startups in the program. One of the participants I interviewed at a local meeting in New York, described the environment at the incubator in Santiago as serious-yet-fun, inspiring, rewarding, and very international. Founders often work with one partner on premise and form virtual teams-on-demand using shared referred resources sometimes located in other countries.

Nairobi, Kenya
A banking phenomena called the M-Pesa has emerged in the unlikely city of Nairobi, Kenya. M-Pesa is a cell phone currency operated by Safaricom (www.safaricom.co.ke) that has transformed local economies in a manner that few could have imagined possible and that other countries have had difficulty emulating. Similar to PayPal’s online capabilities (www.paypal.com), M-Pesa funds appear as a balance on a cell phone account that can be drawn and transferred at the time of purchase from one cell phone to another. Its resounding success has created fertile ground for Kenyan entrepreneurs and has attracted investor groups including a local bank. As expected, Kenyan entrepreneurs have formed their own version of an incubator/consulting operation called iHub, (www.ihub.co.ke) where local techies and investors can congregate. Despite having many fundamental issues to resolve, Kenya’s success in lubricating its economy with a digitized currency is truly noteworthy. Credit is largely due to the Kenyan government who played a crucial role in building out the infrastructure needed to connect over 40 million cell/Internet users.

Mexico City, Mexico
At a recent conference held in New York by the Mexican-American Chamber of Commerce – Northeast Chapter, (www.usmcocne.org) on Mexican innovation, entrepreneurship, and venture capital financing, two panels of key influencers shared their views.

There I learned that 99.8% of the firms in Mexico produce just over half of the country’s annual GDP (52%).  Most revealing was that the remaining 0.2% of Mexican firms are in the hands of the ‘super-rich’ who collectively account for the other half of the country’s annual GDP. With half of the country’s GDP in so few hands, venture capitalists and similar funding sources have seized the opportunity to disrupt the status quo with a new crop of technology-based firms that could deliver ‘Apple-like’ growth and a similar eco-system of supporting companies.  Their ‘plan of attack’ as expressed at the conference, was principally focused on identifying ‘Steve Job-like’ candidates who would agree to work tirelessly, communicate effectively, innovate constantly, and function amenably with their venture capital support teams. They referred to these individuals as ‘super entrepreneurs’.

To fill the pipeline with potential candidates, one of Mexico’s largest academic institutions, Tecnológico de Monterrey, operates a Technology Center for Entrepreneurs (www.itesm.mx). The center currently manages a total of 1,500 startups per year. Startups that show exceptional promise graduate to the university’s accelerator program and may eventually compete for venture capital funding. This step also includes assistance from internationally recognized non-profit organizations such as Endeavor Global (www.endeavor.org), also present at the conference. Graduates from the exclusive Endeavor Global program work with leader/mentors along with their peers to gain additional market access and intel.

Mexico’s Venture Capital (VC) industry is small in comparison to the US but is making meaningful strides.  They have approved legislation granting VC’s with limited access to its hefty pensions. In addition, the government has recently approved a $120 million fund called the Entrepreneur’s Fund or ‘fund of funds’ to encourage more local money managers to address the needs of their up and coming squadron of ‘super entrepreneurs’. The government’s support is crucial and timely for Mexico, since its crop of qualified candidates are more global in scope than their predecessors and  could easily decide to move their businesses to another country for support and funding.

Cambridge, MA (MIT)
At MIT’s student incubator known as the Media Lab in Cambridge, MA (www.media.mit.edu), Joicho Ito, an accomplished investor and colorful visionary, oversees over 350 concurrent student-related startups.  On the surface, the incubator program appeared similar to the incubator/accelerator initiative at the Tecnológico de Monterrey in Mexico. However, a closer inspection showed that  their similarities ended at the front door.  At the Tecnológico de Monterrey, startup instruction is centered around the rigors of writing and rewriting a comprehensive business plan that might, one day, be used for funding consideration at a venture capital firm. In contrast, MIT’s Media Lab postpones the business plan writing exercises until funding has been approved.  Heretical in his approach, Ito explains that his primary focus is a team’s collective agility rather than the prowess of one exceptional individual or a business plan subjected to the rigidity of an outline and presentation. Startup founders find each other, are free to innovate together as they see fit, and, when ready, present their ideas for funding by conducting some form of proof-of-concept such as a small pilot or survey. Funding is limited to no more than $100,000 per team. Teams that succeed may pitch for more funding (with a formal business plan), while those that fail are encouraged to join another team.

Teams are expected to conduct many small pilots and leverage their data analytics to identify timely opportunities. Ito’s unwritten rule of denying a second round of financing has forced team members to become more agile with their decisions.  As expected, however, failures do happen and are not only common at the Media Lab, but most importantly, revered. According to Ito, students who learn to fail several times, actually win by learning the art of risk taking. Given several chances to take risks within a short period of time has proven to render more ‘breakthrough ideas’ as well as develop a more seasoned crop of team leaders/entrepreneurs.