Vivek Wadhwa

The Magic Happens
When You Focus on People

Innovations Case Commentary:
Start-Up Chile

Governments the world over have tried to re-create the magic of Silicon Valley by
focusing on infrastructure and industry. They follow the prescriptions of manage-
ment consultants who tout Michael Porter’s cluster theory. They act on the belief
that if you build a magnificent technology park next to a research university, 亲-
vide incentives for chosen businesses to locate there, and bring in some venture
首都, then innovation will happen.

These efforts inevitably fail, because entrepreneurial ecosystems simply can’t
be built from the top down. They must be built from the ground up, with entrepre-
neurs helping entrepreneurs. What is needed—and what governments can’t cre-
ate—is a culture of information-sharing and mentorship, which is what has made
Silicon Valley a success.

Chile is among the countries that drank the “cluster Kool-Aid.” It spent hun-
dreds of millions of dollars building a series of clusters, including one focused on
IT outsourcing, but none of them was able to create an indigenous innovation
capability because they were focused on the wrong things and weren’t tailored to
Chile’s needs.

Chile’s Economic Development Agency (CORFO) invited me to Santiago in
九月 2009 to meet executives of its IT outsourcing industry. They wined and
dined me, and tried to impress me with the progress they had made in creating an
$840 million services industry, which they predicted would grow to $5 billion by
2015. I was impressed with their progress—and I loved the Chilean wine—but I
told them that their projections were baloney. I told them that, before long, the IT
services would choke off other industries and then implode, as labor shortages got

Vivek Wadhwa is Vice President of Academics and Innovation at Singularity
大学; Fellow, Arthur & Toni Rembe Rock Center for Corporate Governance,
Stanford University; Director of Research at the Center for Entrepreneurship and
Research Commercialization at the Pratt School of Engineering, Duke University;
and distinguished visiting scholar, Halle Institute of Global Learning, Emory
大学.

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Vivek Wadhwa

more severe and salaries began to rise. 毕竟, Chile only had a population of 16
million people and was graduating a mere 1,400 engineers per year. Their voca-
tional schools were producing another 4,500, but most didn’t speak English. 在哪里
would the necessary IT workers come from?

I was very blunt in my meetings with CORFO executives. After returning to
the U.S., I felt bad that I had upset my Chilean hosts, so I wrote a BusinessWeek col-
umn praising their efforts and detailing my views on how they should move for-
病房. A few weeks later, 在
meetings with Chile’s inno-
vation chief Nico Shea and
economics minister Juan
Andres Fountaine, I sug-
gested a strategy to help
Chile by taking advantage
of weaknesses in U.S. immi-
gration policy. I recom-
mended that Chile build an
innovation economy by
importing the skilled immi-
grants the U.S. was chasing
away. I suggested that they
could attract these innova-
tors and job creators to
Chile by offering visas and
financial incentives, 并由
providing them with men-
toring and entrepreneurial
networks like what they
在
是
Silicon Valley.

The fears the locals had had
about the program taking their
jobs away proved to be
unfounded. 实际上, 相反
发生. Foreign start-ups
scoured local colleges for talent
and started hiring and partnering
with locals. 同时, Chilean
entrepreneurs saw tremendous
value in having access to global
networks and in the knowledge
they could gain.

leaving behind

As Horacio Melo’s arti-
cle highlighted, Chile tried the experiment, and so far it has been a runaway suc-
过程. There are valuable lessons to be learned from this, but first, let’s understand
the challenges Chile faces.

Chile not only has a small population, its entrepreneurial ecosystem has the
same disadvantages as most regions of the world: failure is vilified, secrecy is high-
ly valued, and mentoring and social networks are lacking. Then there is Chile’s
remote location—its southern end borders the South Pole, and entrepreneurs there
are not only disconnected from one another but from the rest of the world.

Cultures often take generations to change, and connecting entrepreneurs even
within the same city is often a challenge, let alone across the world. That’s why the
Start-Up Chile experiment made so much sense for the country.

Skeptics had argued that the small amount of money Start-Up Chile was offer-
ing would not attract entrepreneurs from anywhere but the poorest Latin

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The Magic Happens When You Focus on People

American countries. They said it would be almost impossible to attract 1,000 glob-
al start-ups. Others argued that a tech center could not be built without a large ven-
ture-capital fund as its foundation. There were also concerns that the program
would be politically untenable, because some Chileans would regard educated
immigrants as a competitive threat and voice the same fear that nativists in the U.S.
做:1 that foreigners take jobs away.

The skeptics were wrong. As Melo noted, the program has received more than
1,600 applications from 70 countries—most of them from the U.S. Venture capital
has started flowing in from a number of countries, including Argentina, 巴西,
法国, the U.S., and Uruguay.

Most important, Silicon Valley-style entrepreneurship has been spreading
全国各地. The events I attended during my last two trips to Chile were at
least as dynamic as those that take place in Silicon Valley every night. The entre-
preneurs had organized themselves into tribes and were sharing their knowledge
with locals on diverse topics, from biotech to social media. Participants were shar-
ing their own product ideas and business plans, and at the same time building net-
作品. Many told me they had never imagined they could get this type of assis-
tance and were now considering starting companies of their own.

The fears the locals had had about the program taking their jobs away proved
to be unfounded. 实际上, the opposite occurred. Foreign start-ups scoured local
colleges for talent and started hiring and partnering with locals. 同时,
Chilean entrepreneurs saw tremendous value in having access to global networks
and in the knowledge they could gain. They started asking to be part of the action.
所以, in July 2011, the government opened the program to local would-be entrepre-
neurs and was flooded with applicants.

Although it is too early to declare the overall program a success, a key lesson
has been learned: the magic happens when you focus on people, rather than on
行业.

Lesa Mitchell, the Kauffman Foundation’s vice president of innovation, 谁是
researching the program, says it is a model other regions of the world should emu-
晚的. The Foundation is already advising leaders from more than two dozen coun-
尝试, from Australia to Venezuela, on how to replicate the model. The program
may not work everywhere because the local conditions and challenges aren’t the
相同的, but the lesson remains the same: the regions will only gain by investing in
entrepreneurs rather than in industry.

1. Nativism is a sociopolitical policy that favors the interests of established inhabitants over those of

移民.

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