Category Archives: Startup Chile

The Chilean Mindset Needs to Change from Extraction to Value Creation

People always ask me questions along the lines of “what’s the one thing holding Chile back from being an innovative country?” It’s a question I’m really interested in, not just for Chile, but for the US as well.

My latest column in the Santiago Times titled The Extraction vs. Value Added Mindset talks about Chile’s current preference for business models that extract value, either from the ground, the sea, or even other people, rather than business models that create new value.

From the article:

I was invited to speak at a roundtable at the Universidad de Desarrollo about the challenges of teaching entrepreneurship in Chile. We had a lively and wide ranging discussion about how best to continue to foment entrepreneurship at all levels of Chilean society. One of the best debates was about trying to answer the question: What is the biggest factor holding Chilean culture back from being more entrepreneurial?

The general consensus was that it’s the Chilean family’s fault. Kids live with their parents until their mid- to late-twenties and generally only move out when they get married. Moms and Dads tell their kids they can do no wrong. Many lead pampered lifestyles with doting parents (and sometimes nanas), who solve even the most trivial of problems.

Since entrepreneurship is opportunity recognition and problem solving, the thinking goes that if you never have to solve problems on your own and always turn to Mommy and Daddy when things get tough, you won’t be a good entrepreneur. And if we just got kids to move out at a younger age like they do in the United States, we’d have more successful Chilean entrepreneurs.

I agree that this is part of the problem, but I actually think the real root of the problem goes much deeper and that the solution is much harder to achieve. The real problem is that Chilean culture values extraction over value creation. Look at the biggest Chilean industries: mining, fishing, fruit, wine, logging, banking and retail (trading). Of the principal exports (mining’s currently 56 percent of total exports), only salmon exports are showing growth in the past 12 months, (+53%) while forestry (0%), wine (-8%), fruit(-16%) are in decline. Some are literally extraction, like mining and fishing, while others are extracting wealth from their fellow citizens via banking or arbitrage opportunities in trading.

Read the full article at The Santiago Times.

If you want to help change the culture to make it more entrepreneurial, we have to start valuing value creation above all else. We need to stop making entrepreneurs (especially those who are using extraction business models) into rockstars and heroes. The real stars of an entrepreneurial ecosystem that’s starting to take root are those who are creating new opportunities and creating value for their customers.

The most important piece of the puzzle is the entrepreneurial mindset. My partners and I have been working on trying to help shape this mindset via teaching classes at universities, but would love to see this effort expanded. I believe changing the mindset is the key to creating a thriving entrepreneurial ecosystem.

The Chilean Entrepreneurial Ecosystem: 2010 to 2014

I’m writing a bimonthly column for The Santiago Times, one of Chile’s English language newspapers, about doing business in Chile and the entrepreneurial ecosystem. My first article was published today and it overviews some of the changes I’ve seen in the Chilean entrepreneurial ecosystem since I first came to Chile in 2010. From the article:

But entrepreneurs in 2010 also had to face powerful cultural obstacles. Chile was risk averse and punished failure. A typical conversation went something like this:

Chilean: “What do you do?”
Me: “I have my own business.”
Chilean: Blank look … “But what do you do?”
Me: “I have my own business!”
Chilean: “So you don’t have a job?”

When new businesses failed, as many do, the typical Chilean response was that the entrepreneur was either: a) stupid, b) lazy, c) stole the money or d) all of the above. Almost none of my new Chilean friends even could imagine themselves starting a business and looked at me like an odd duck who was on a weird path — not the traditional one of getting a job at a big, prestigious company with a comfortable salary and three weeks of vacation, plus fifteen days of “feriados.”

You can read the entire article, Creating an Entrepreneurial Ecosystem in Chile, on The Santiago Times.

Financial Times and La Segunda Articles

I was featured in two articles over the last few days. The first, Chile Property: Pro Business Policies Lures Foreign Entrepreneurs, written by Nick Foster in the Financial Times, covers the Santiago’s property market from a foreign perspective. My part:

Nathan Lustig, 28, is an entrepreneur from Milwaukee, US, who came to Santiago in 2010 under the government’s Start-Up Chile programme, which offers grants to promising new businesses, both foreign and Chilean, who set up in the country. Many are in the ecommerce, biotechnology and finance sectors. “Santiago is the most livable city in Latin America and there is wonderful hiking on your doorstep,” says Lustig. “Business-wise, there may be some extra bureaucracy here [compared with the US], but the rules are understandable and you feel confident that they are not going to change suddenly.”

“There is now a real cluster of young foreign entrepreneurs in Bellas Artes,” says Lustig, who has opened Andes Property, a company offering furnished units to the steady stream of expat arrivals in Santiago.

Lustig’s main gripes are air pollution and petty crime, while the distance from home is also a drawback: “It takes 14 or 15 hours to get to Wisconsin. On the other hand, if you are doing business with New York, or just watching sports or talking with friends there, there is no time difference in the southern winter, and only two hours difference in the summer.”

Read the full article over on the Financial Times website.

I was also featured along with my business partner Enrique Fernandez and many other entrepreneurs and stakeholders in the Chilean entrepreneurial community in a special entrepreneurship section of the Chilean national daily La Segunda in an article titled Nathan Lustig: Si Y No Con Santiago. The article talks about the pros and cons about doing business in Chile and how Chile can improve its ecosystem.

nathan lustig la segunda

 

How to Make Chile a Better Place to Do Business

A Chilean newspaper asked me an interesting question this week:

What should Chile do in 2014 to make it a better place to be an entrepreneur?

I don’t think my entire answer will get published in the newspaper, so I’ll republish it here. What do you think? And what would you do to make Chile a better place to do business?

1. Continue to push ASECH inspired entrepreneurial reforms

ASECH, the Chilean entrepreneurs association, has pushed laws like making it possible to incorporate a business in one day, for free, without going to a notary, pushed banks to allow entrepreneurs to open bank accounts much more easily, a entrepreneurship bankruptcy law, and has pushed for laws that force large companies to pay in 30-45 days, instead of 90-120 that’s fairly common in Chile. It’s been an incredible success and should be continued.

2. Force large Chilean companies to follow Chile’s competition laws

If you want to foment entrepreneurship, you need a level playing field. Chile currently doesn’t have a level playing field, as large companies routinely price fix and squeeze out new entrants to the market. And many large companies receive little to no punishment when they break the law. No laws need to be changed. Just enforce the ones on the books.

3. Push for a law that requires payment in 30-45 days for most sales

The majority of large companies in Chile pay suppliers, especially new ones, in 90-120 days. In the US its 30. Sometimes 45. If you start a new company in the US, you only need two months or so of operating capital before your sales start to pay your bills. In Chile six or seven months. This kills most people’s ability to start a business before they’ve even started.

4. Pass a personal bankruptcy law

I think it’s very unjust that a bank can loan you money without taking risk. Chilean banks know that they’ll get 100% of their money back at some point because there’s no personal bankruptcy law to discharge a debt. Chilean loans are very one sided contracts, which makes it more difficult to take risks and be an entrepreneur.

5. Tell the truth about entrepreneurship

Entrepreneurs are NOT rockstars or superheroes. Having your own business is a lifestyle and it’s not for everyone. It’s really difficult, but there are many benefits. I’d like to see the government and entrepreneurship groups talk about the reality of being an entrepreneur, rather than blinding building up entrepreneurship as rockstars and superheroes. I fear that when the first crop of entrepreneurs who’ve been told they’re superheroes just for starting a business fails, as most entrepreneurs do, they’ll be so burned that they won’t start another business.

Three Years in Chile

Three years ago last week, I was in New York getting the last few things together before my trip to Chile. I’d never been to South America, barely spoke Spanish and really had no idea what to expect when I got off the plane. As I waited in the airport lounge at JFK, it still didn’t feel real. It was just like any other of the numerous flights that Jesse and I had taken during our year and a half running Entrustet.

It didn’t feel like we were going to a foreign country that had promised us $40,000 (that we couldn’t verify we’d actually receive), to a place where we didn’t speak the language, 16 hours from home.

Three years later, I’m still here. I’ve spent 27 of the past 36 months in Chile, learned Spanish, immersed myself into another culture, pushed myself out of my comfort zone, made incredible friends, started multiple businesses, taught at three universities, wrote two books and received my permanent residence. It’s been a long road, but after three years, I think I finally pretty much get Chile.

What have I learned over the past thee years? What’s changed in my life and in Chile? And why am I still here? Why did I stay? And what’s next?

It was a big change coming from the US and resettling in Chile. I’m very privileged in that in the US things usually came easily for me. I almost always knew what to say, how to talk my way into and out of situations, all the cool local tricks, the best places to eat, the best parks, the hidden treasures. I knew what body language meant and what each local reference or slang word really and truly meant. It wasn’t very difficult to be successful.

When I first got to Chile, I was completely lost. I could get around the city, order food, get a drink at a bar, but could barely keep a real conversation. I had to concentrate all the time. I wasn’t myself: I couldn’t be the leader that I was used to.

I didn’t know the culture, I didn’t know what slang meant. Even though most people were very friendly, I really learned what it is like to be an outsider. I wasn’t in on the inside jokes, the turns of phrase, longstanding friendships and so much more. It really made me appreciate how hard it must be to be an immigrant in the US. When people say “immigrants should just learn English” I used to think, yea, they should. But it takes a big effort and it’s not as easy I used to think.

Even after three years, I’m still not truly able to express myself perfectly in Spanish. I’m still not fast enough to make the same jokes I do in English. I probably tell half the stories that I would in English. And the ones that I do tell are half as good as the ones I tell in English! It’s really made me realize what it’s like to be an outsider, or at least someone without all of the built in advantages that I’ve been lucky enough to have.

I certainly miss things. First, my family and friends. In the US I lived my entire life in Milwaukee and Madison and was always within 90 minutes of my family and friends. I miss good customer service. I miss good cheese. I miss being able to listen to every conversation that’s going on around me without actually trying. I miss 250 different beer choices. I miss having a yard. I miss telling an awesome joke with perfect timing. I miss top quality, spicy and flavorful food that doesn’t cost an arm and a leg. I miss my bike. I miss going to northern Wisconsin. Kopps ice cream. Watching all of my favorite sports on a big HDTV instead of illegally streamed on my little computer.

chilean beach

But I can get used to many of the small things because Chile really is an amazing country. I love being close to the pacific and the beach. Amazing seafood. Some great new friends. Playing more soccer. Sun 80% of the year. Being close to Argentina for long weekends. Traveling and exploring in South America. Peruvian food. Pisco sours. Going out dancing. Friends that have taken me into their homes, their families. Asados. The metro. Incredible business opportunities. An amazing $7 bottle of wine. Hearing the entire country scream goaaaaaal, when Chile scores. I certainly miss these things when I go back to the US.

As with all things, there are things that I’ll never get used to. Santiago’s pollution, especially in winter, makes the city just a few notches above unlivable. I’ll never get used to the massive amounts of dust. The classism. The Chilean “two dogs meeting” interview ritual. The rigid conservatism and class structure. Price fixing in big businesses. Going to three separate cash registers to buy an empanada. Waiting in long lines. Customer service reps who flat out lie to you. Living in small apartments. My new expat friends leaving every 6-12 months. So many smokers! Massive inequality and the inability for many people to see outside their own bubble of their own experience.

santiago smog

 

Chile’s changed, mostly for the better, since I arrived in 2010. My two favorite changes are the smoking ban in public places, plus the crackdown on drunk driving. Both of these laws have made Chile much more livable. I might not even still be in Chile if they hadn’t passed the smoking ban. It used to be terrible!

There are way more foreigners in Chile now compared to 2010. When I first got to Chile people asked us incredulously “why are you here???” Now it’s fairly typical to see foreigners in parts of the city. Rents have gone up 30-100%, depending on neighborhoods. I wouldn’t be here if it weren’t for the ban. There’s been a micro brewery renaissance, with a huge increase in of good beer. People seem to be more accepting of foreigners. Chile has become much more livable over the past three years.

Business-wise, from 2010-2013, the startup scene is completely different. While there were a few successful Chilean startups and entrepreneurs prior to Startup Chile, the program really has changed the mentality in the country. In 2010, people would ask me what I did and when I answered that I had my own business, they’d ask “where do you work” again, then look at me as if I were homeless. Now its cool. Probably too cool. I worry that the country has been sold a narrative of startup rockstars, heroes, gurus and celebrities that when the first round fails might ruin entrepreneurship in the country.

Asech, the Chilean entrepreneurs association, should be the model for the rest of the world. They are a lobby group that pushed through a law that allowed companies to register online in one day, for free. Before it cost $2000+ and took 2-3 months. They’ve convinced banks to let entrepreneurs open bank accounts, which was nearly impossible before. There are way more coworking spaces. More chilean startups and some incredible opportunities.

But there’s still not much funding. Not many Chilean success stories. Big companies and established players still crowd out entrepreneurs. The people with money still generally have an aristocratic yet provincial, anticompetitive attitude that seeks to divide up the riches and keep their place in the economy, not create new innovation and grow the economy. And the new rich still isn’t thinking bigger. The government isn’t helping much by allowing anticompetitive banks and large companies to gouge consumers and price fix.

I used to socially liberal and be very free market: I believed that if you just got government out of the way, economies will work. After being in Chile for three years, I’m even more socially liberal and still generally believe in getting the government out of the way, but my zeal has been tempered.

In Chile, I’ve seen what happens when there’s little to no competition and the government doesn’t really enforce price fixing or monopoly laws or just doesn’t have big enough penalties to stop basically institutionalized price fixing and corruption by large companies. Along with tax structures that benefit those in power to keep their wealth, and be extractors, sucking out wealth from society, rather than creating new, innovation and expanding the economy for everyone.

I have a better realization of what its like to try to move up in the world and how hard many people work for little money. I see what a problem inequality is and can be. People are physically, mentally, emotionally divided. The rich live physically separated from the rest, consuming different entertainment, different food, different clothes, everything. They never meet and talk, which causes misunderstanding, jealousy and a lack of empathy. This phenomenon is happening more and more in the US and I don’t want it to happen after I’ve seen what its like in Chile.

Overall, coming to Chile has been an incredible experience. I’ve learned so much about myself and about the world, made great friends, learned spanish and gotten to explore an incredible country and part of the world. I’m currently teaching entrepreneurship at three universities and working on a two projects that I think have the potentially to be very interesting over the next few months. I don’t know what my future really holds, but I’ll always be thankful that Jesse and I took the risk to come to Chile back in 2010.

Thanks to everyone who’s helped me in Chile, helped me learn about myself and this great country. I couldn’t have done it without you all. A final thanks to my parents, who haven’t demanded that I come back yet.

Startup Chile Application Round 9 Help

20120904-start-up-chile-logoStartup Chile just opened the 9th round of applications this week and will stay open from now until October 1st with the winners being announced December 9th. In the round eight application process 1500+  startups from more than 60 countries applied for the right to come to Chile for $20m Chilean pesos (US$40,000). Chile invited 100 of the 1500+ companies who applied and they will begin to arrive in the next months.

Startup Chile has become more competitive as the number of applications has grown. Round eight saw applications grow and more than 1700 companies will likely apply to Round 9. More than 1000 companies have already gone through the program since the pilot round in 2010.

It’s a great program, especially for entrepreneurs who are bootstrapping or already have developed a product but need more time to figure out the correct business model for their business. It’s a perfect fit if you’re looking to target the South American market.

My company, Entrustet, was part of the pilot phase of Start-Up Chile and I’ve been in Chile since November 2010. I blogged extensively about my experiences in the program and in Chile, along with advice on how to get selected for Start-Up Chile. I tracked down the stats from the pilot round companies a year later, which was published on The Next Web. I also wrote Startup Chile 101, the book that will tell you everything you need to know about living, working and doing business in Chile and Chile: The Expat’s Guide

Since the third round, I’ve helped startups review their applications and prepare them to get accepted into Startup Chile. Overall I’ve now reviewed, 35 applications for prospective Startup Chile teams and 20 have been accepted.

Round 3 – 6/9 66%
Round 4 – 3/4 75%
Round 5 – 3/6 50%
Round 6 – 3/6 50%
Round 7 – 5/10 50%
Round 8 – 3/5 60%

Overall: 23/40 58%

In rounds five through eight, 6.2% of applicants were accepted into the program and 52% of the applications I’ve reviewed have made it. Many companies that have applied as many as three times previously were accepted after we worked together.

I can help you craft an application that emphasizes the criteria that the judges are looking for, correct your grammar into perfect English and give you the tips you need to have the best chance at getting selected.

If you need help with your application, please contact me. Editing, writing, review, advice. I charge a small flat fee to review and edit your application, plus a larger success fee if you are selected for the program after I’ve helped you.

Want help? Got questions? Want a quote? Email me: nate at nathanlustig dot com or fill out my contact form.

Note: I WILL NOT write paid letters of recommendation.

Chile: The Expat’s Guide Released!

I’m excited to announce that my newest book, Chile: The Expat’s Guide is now out and available for purchase on Amazon! The book gives you the inside scoop about living, working and traveling in Chile from my perspective as a foreigner who has been living in Chile for the better part of the last three years. Whether you’re traveling to Chile for pleasure, coming for business, studying abroad or relocating, reading the book will arm with the knowledge you need to make the best of your stay.

chile expat guide

I cover everything from Chilean culture, history and food to practical tips on where to live, where to go out, dating, travel and much more. Rate five stars on Amazon, the book is 216 pages chock full of the useful information you’ll need to enjoy your time in Chile.

The book comes with a companion website that includes my most updated restaurant guide, service providers that will be useful while you’re in Chile and tips and tricks to survive in the Chilean jungle. For more information, check out the Chile Expat’s Guide website for a full table of contents, the introduction and much more.

Special Offer! If you purchased my first book about Startup Chile, I’m offering 50% off the electronic version. Shoot me an email with a picture of you reading the book and I’ll send you a discount code!

buy startup chile 101 amazon

Startup Chile Generation 8 Application Help

Startup Chile is opening the eighth round of applications today, June 10th. This application period will run from June 10th until June 27th with the winners being announced August 29th. In the round seven application process 1577  startups from more than 57 countries applied for the right to come to Chile for $20m Chilean pesos (US$42,000). Chile invited 100 of the 1577 companies who applied and they will begin to arrive July 3rd.

Startup Chile has become more competitive as the number of applications has grown. Round seven had applications grow from 1421 in round six to 1577. More than 1700 companies will likely apply to Round 8. More than 600 companies have already gone through the program since the pilot round in 2010.

It’s a great program, especially for entrepreneurs who are bootstrapping or already have developed a product but need more time to figure out the correct business model for their business. It’s a perfect fit if you’re looking to target the South American market.

My company, Entrustet, was part of the pilot phase of Start-Up Chile and I’ve been in Chile since November 2010. I blogged extensively about my experiences in the program and in Chile, along with advice on how to get selected for Start-Up Chile. I tracked down the stats from the pilot round companies a year later, which was published on The Next Web. I also wrote Startup Chile 101, the book that will tell you everything you need to know about living, working and doing business in Chile.

Since the third round, I’ve helped startups review their applications and prepare them to get accepted into Startup Chile. Overall I’ve now reviewed, 35 applications for prospective Startup Chile teams and 20 have been accepted.

Round 3 – 6/9 66%
Round 4 – 3/4 75%
Round 5 – 3/6 50%
Round 6 – 3/6 50%
Round 7 – 5/10 50%

Overall: 20/35 57%

In rounds five through seven, 6.4% of applicants were accepted into the program and 50% of the applications I’ve reviewed have made it. Three companies had applied two times previously and were accepted after we worked together. Another team needed to completely redo their video and we worked together to make it happen. I thought two more of the teams that I worked with completely deserved to make it in this round.

I can help you craft an application that emphasizes the criteria that the judges are looking for, correct your grammar into perfect English and give you the tips you need to have the best chance at getting selected.

If you need help with your application, please contact me. Editing, writing, review, advice. I charge a small flat fee to review and edit your application, plus a larger success fee if you are selected for the program after I’ve helped you.

Want help? Got questions? Want a quote? Email me: nate at nathanlustig dot com or fill out my contact form.

Note: I WILL NOT write paid letters of recommendation.

Starting a Business and Opening a Bank Account in The US and Chile

I finally finished the process of legally creating a Chilean business and getting my business bank account. I also just created another US business and opened a bank account. Here’s the process and time required for each.

USA – Wisconsin LLC, Federal Tax ID Number and Business Checking Account

LLC and Tax ID Number

  1. Go to Department of Financial Institutions website
  2. Fill out application form
  3. Pay $130 online with credit card
  4. Go to IRS website
  5. Fill out forms
  6. Click Submit

Total time: 10 minutes

Documents received: LLC registration paperwork from State of Wisconsin. Tax ID number (FEIN) from the IRS.

Bank Account

  1. Walk into bank with LLC paperwork and Tax ID Number
  2. Fill out four page form
  3. Sign your name
  4. Deposit a check for $55.00
  5. Print your debit card in the bank

Total Time: 20 minutes, plus travel time.

  • Total time – 30 minutes
  • Total money spent – $130
  • Deposit held by bank $55
  • Bank Account Cost: Free

Chile – SpA, RUT and Business Bank Account

An SpA is basically a Chilean LLC, the RUT is the tax ID number.

SpA

  1. Find an attorney, pay a retainer
  2. Fill out paperwork with attorney
  3. Wait for attorney to finish paperwork
  4. Go to notary and sign paperwork. Fingerprint three places. Pay $200
  5. Wait for notary to send paperwork to attorney’s office
  6. Send attorney copy of Carnet (national ID card) and other identification documents
  7. Attorney takes paperwork to SII (Chilean IRS) to apply for RUT (tax id number)
  8. Get listed in legal Chilean business registry. Pay $50.
  9. Wait for SII to process your paperwork
  10. Receive confirmation, pay attorney

Total Time: Five weeks. Mine was a special case because of visa issues, but three weeks is totally normal.

Total Costs and fees: $2500. Maybe as low as $1500 without visa issues.

Bank Account

I needed a bank account to accept money from the US and use it to purchase goods in Chile. I didn’t need credit cards, lines of credit, loans or anything else. Just a place to deposit money and spend money. I went to five banks and this was the only bank that actually gave me an account. See end of post for each bank’s requirements.

  1. Go to bank
  2. Ask for account
  3. You must have a personal account at the bank to get a business account
  4. Fill out ten page personal bank account application form
  5. Sign 8 times, 8 fingerprints
  6. Show proof of income in Chile of at least $900 per month
  7. Show an employment contract
  8. Get a credit report
  9. Show a business plan
  10. Send in your resume
  11. Send bank statements at other banks or foreign banks
  12. Recommendation letter from bank with at least 5 years and $10,000 deposits
  13. Wait
  14. Wait some more
  15. Send in more paperwork
  16. Sign paperwork again
  17. Put at $3000 untouchable deposit to securitize account
  18. Wait two weeks to get checks, credit cards or be able to access online banking.

Total Time: 4 weeks.

Summary

  • Total time – 9 weeks
  • Total money spent – $2500
  • Deposit held by bank – $3000
  • Bank Account Cost – 10/month
  • Documents Signed – 12
  • Fingerprints – 12
  • Trips to bank – 5

 

opeing a business usa chile large

Conclusion

Chile’s banking and business creation system are both extremely bureaucratic, cost a lot and hold bank entrepreneurship. Asech, Chile’s entrepreneurship association, is doing great work to force the government to make it easier. They’ve taken on the notary lobby and passed a law that allows you to create a business in one day. In reality it takes at least a week the first time through, but it’s great progress. Right now only one type of business is available online, but more will be available shortly.

Asech is also working with a bank to allow an immediate deposit account for new businesses. This is still awhile off it seems, but when it’s approved, it will make Chile much more competitive. All of these barriers to business creation shield the elites and entrenched interests in power and prevent competition and entrepreneurship. Asech and the government are doing a good job to try to make things better, but its extremely slow. If you’re interested in seeing my attempts to open an account at multiple banks, read on:

Bank Requirements

Bank 1

I went for my first meeting after an introduction from a friend. The banker met me, was really nice, seemed very interested in my business. We met for 60 minutes. He told me that I had to open a personal account and then get a business account. I had to send a business plan, a resume, any press i’d gotten in Chile, my bank statements from US banks, my bank statements from my Chilean banks, a letter of recommendation from a bank where I had $10,000 and at least 5 years as a client, a contract or independent contractor payments of at least $2000 per month for the last three months in Chile, a deposit of $2000,

He told me it’d be ready in three days if I sent the information. I immediately emailed in all of the documents. No response. I emailed back the next day. No response. Next day, no response. Finally he responded and said he never got my documents. I sent them again. He confirmed receipt.

A week later, I still hadn’t heard back and emailed again. No response. Another week later I tried again. No response. Three weeks later, I’ve never heard back.

  • Trips to bank – 1
  • Documents sent – 34
  • Minimum salary required – $2000/month in Chile
  • Total time – five weeks
  • Account cost: $20/month
  • Result: Stopped responding to my emails

Bank 2

I went to this bank on a friend’s introduction. They told me I needed a personal account and asked me to fill out the forms. It was six pages of normal questions and two pages of very personal questions. They asked for every document imaginable, same as bank 2. I filled out the forms, send in the documents, but could not prove that I made sufficient money in Chile each month and they told me I was not approved for a personal or business account.

  • Time spent: two weeks
  • Forms Filled: 2
  • Fingerprints: 16
  • Minimum Salary – $2800
  • Account cost: $15/month
  • Result: Denied

Bank 3

I met with a private bank from one of the major Chilean banks. They told me they would open my account if I could prove I had $1m in net worth in Chile. I don’t. They kindly showed me the door.

  • Time spent: 45 minutes
  • Net worth required: $1,000,000
  • Result: Denied

Bank 4

I met with this bank on an introduction. The executive was really nice and helped me fill out all the forms. I send in the same documents as bank 1. I didn’t hear back for two weeks, but finally was approved, if I could show $1500 per month in Chilean earnings and deposit $1000.

  • Trips to bank – 1
  • Documents sent – 34
  • Minimum salary required – $1000/month in Chile
  • Total time – three weeks
  • Account cost: $10/month
  • Result: No response for two weeks, then halfway approved

Bank 5 – Where I have my account

I was already a client at this bank, so I didn’t have to get a personal account. I walked in, talked to my personal executive, she took me to the banking executive. We filled out paperwork and they told me I was approved. I had to show business documents, a resume, my identification. And I had to deposit $3000 in a 1 month CD that is renewed each month in order to open the account. This bank was the nicest to me of any of the banks I met with.

  • Trips to bank – 5
  • Documents sent – 12
  • Fingerprints – 12
  • Forms filled – 9
  • Minimum salary – $900/month
  • Time spent – 10 hours
  • Deposit held – $3000
  • Total time – four weeks
  • Account cost – $20/month
  • Result – Approved!

 

Weonomics

Weonomics. Noun. The study of peculiar Chilean economic behavior in business dealings.

There are some clear cultural difference between doing business in the US and in Chile. I’ve taken to calling it Weonomics. (Gringo readers, weon is the ubiquitous Chilean word meaning anything from dude to asshole.) Clearly not all Chileans subscribe to the principles of Weonomics, but I run into enough Weonomics experts each week that I felt I had to write about it. I have a feeling that most foreigners in Chile will identify with this post, but I’m also interested to see the response from Chilean friends. Please enjoy.

Negotiation

A typical US negotiation.

  • Seller asking price $45,000
  • My offer price: $37,000
  • Seller counteroffer: $43,000
  • My counteroffer: $39,000
  • Final price: $41,000

Pretty simple, right? A sales price, a counter offer and meet somewhere in the middle. You’d think negotiation would work similarly in any part of the world, but not with many Chileans.

Weonomics:

  • Seller asking price $45,000
  • My offer price: $37,000
  • Seller counteroffer: $48,000
  • My counteroffer: See ya!

Seriously? Who in their right mind thinks they’ll close a deal counteroffering by RAISING their initial price?  But this is a principal tenant of Weonomics. The worst case I’ve seen was when a friend was trying to purchase a house. The opening price was $140,000. My friend bid $120,000. The counter offer? $210,000. Weonomics at its finest.

Lowball/HighBall

Someone’s first offer is rarely close to a real offer. It’s almost always a borderline insultingly lowball offer, or a pie in the sky number that only an idiot would pay. A friend closed a deal with a major Chilean company that pays him $20,000 per month. Their first offer? $500 per month. Many Chilean real estate prices are listed above market value in hopes that someone will come along and just buy it. You’ll rarely find a business deal that’s priced to get a deal done quickly.

Meeting Cancellations and No Shows

I’ve been stood up more in the past six months that I ever have been in my entire life combined. I had a string of five meetings on monday and tuesday that all cancelled less than 30 minutes before the meeting was supposed to start. Two didn’t even show up at all. One of the no shows told me it was my fault because “maybe I didn’t understand spanish fully.” The only problem? She’d emailed me the day before explicitly setting the meeting. It was impossible to mistake. That’s Weonomics.

No/Yes

You rarely ever hear a true yes or no in Chilean business. Each answer can mean multiple things. See chart:weonomics

One time I ordered sushi for delivery on a national holiday. The person who answered the phone told me I shouldn’t order because it would be an hour and a half wait for my food. I thought about it, but put the order in anyway and made myself a small snack to tide myself over. 20 minutes later, my sushi arrived, just as I was finishing my snack. Her no, it’ll take too long, was simply trying to get out of more work. Weonomics at work.

So what do you think? Am I right? Do you notice any of these too? Or any other ones? Do you do them yourself? Or am I just un gringo que no cacha nada?

Hat Tip: Skinner Layne for originally coining the phrase.