Are you interested in applying for Startup Chile?  Have you been selected into the program but haven’t arrived yet?  Are you already here but want to know more about Santiago and the rest of Chile?  Startup Chile 101: Everything you want to know about being selected, working, living & traveling in Chile is the book for you.  Download it now for $10.

I’ve been living in Chile off and on since November 2010 when I arrived as part of the pilot round of Startup Chile.

When I got here as part of the pilot round in 2010, I didn’t know anything about Chile.  I had the time of my life and ended up selling my business a few months after returning to the US.  This is the book that I wished I had when I arrived.

I’ve now lived in Chile for over a year and will share everything I’ve learned.  You’ll get the inside scoop about how to best take advantage of the program, and your time  in Chile.  The book is divided into four sections: Startup Chile 101, Living in Chile, Doing Business in Chile and Traveling in South America.

Startup Chile 101 talks about the program’s history, the reimbursement process and how to get the most out of the program.  The second part covers Chilean culture, where to live, safety and a city guide detailing where to go out, have a beer or have a nice meal.  Part three talks about the Chilean entrepreneurial culture, doing business in Chile and hiring talent.  Finally, the last section has travelouges of places I’ve gone in South America where you might enjoy taking a trip for a long weekend.

The book costs $10 and I can guarantee it’s worth it.  If you have any questions, comments or feedback, please shoot me an email, otherwise enjoy the book!

Note: This book is not authorized by Startup Chile or anyone in the program.  All opinions, recommendations and advice are my own.  Please don’t confuse this books with anything official.

                          

Facebook left nothing for the common investor. The insider pig pile of PE firms and celebrity Silicon Valley angels took it all. This is a rather new, post-Sarbanes-Oxley fact and it should make Americans very, very angry. When Microsoft when public in 1986, its market value was $780 million. Microsoft’s market value would rise more than 700 times in the next 13 years.Bill Gates made millionaires of thousands of ordinary public investors. When Google went public in 2004 at a $23 billion valuation, it left less on the table for you and me. Still, if you had invested in Google then and held your stock, you would be sitting atop a 9x return. Zuckerberg and his Facebook friends took it all.

That Facebook and its investors acted in its self interest shouldn’t be surprising and it shouldn’t make people mad.  They have no responsibility to the average Joe clamoring for a quick buck by purchasing Facebook stock.  Zuckerberg and his team are thinking “The average investor hasn’t done anything, they didn’t take any risks like our previous investors, they just want to piggyback onto our gains.  They’re greedy.”

Facebook sold its private stock at the highest valuation they could, which brought Facebook and its previous investors the most cash possible.  It was as if they were selling their company to the public, not opening it as a great investment opportunity.  They viewed the new shareholders as suckers, not partners.

With the advent of private equity in the 80s and its explosive growth into the 2000s, the pension funds and institutional investors have gotten more creative and powerful.  They invest earlier and in huge amounts, into the multi-billions.  The only people who can’t get early exposure are the regular joes who “play the market.”  Its now a casino and the game is rigged.  Facebook, the banks and the press sold the story using the old narrative, instead of the new role of public capital markets.

Facebook’s IPO shows this new role.  In a private equity driven, post Sarbannes Oxley world, the returns are getting shifted to those who took the initial risk, not retail investors.  These initial investors are playing a game of musical chairs and retail investors are the last stop, the last idiots to buy into the game.  It’s rigged so that the retail investors don’t have a seat if (when) the music stops.  And it’s purposely designed that way.

What Facebook, its investors and the banks did isn’t new.  It’s just the latest example.  Groupon did the same thing, but worse.  Months before they went public they took a series G round valued just shy of $1b.  The founders and investors took $810m off the table and put it in their pockets. The new investors not only allowed this, they did so enthusiastically because they knew that Groupon would go public at a higher price and the “stupid” general public would be left holding the bag when the price inevitably fell.  Groupon is now down 54% from it’s IPO price.

Retail investors should not be mad at Facebook for acting in its self interest and raising as much money as possible.  Retail investors should be pissed at the banks who hyped Facebook as the next great investment opportunity and the press who bought into the hype and the outdated narrative.  They should be pissed at additional government regulation that makes it hard for companies to go public earlier and leaves more gains for private equity.  Anyone who bothered to look at Facebook and Groupon’s previous private rounds and private sales on Secondmarket would have been able to see this coming.

It’s the new normal. Tech companies don’t use the stock market as an efficient way to raise capital like it was intended. It’s a way to cash out previous rounds and leave potential losses with the general public. It’s one giant casino with the public as suckers.  This farce will only stop when retail investors realize that tech IPOs are a loser for most of the general public or refuse to play in the casino…er stock market.

                          

Chilean entrepreneurs said that the vast majority of Chilean venture capital funds are not entrepreneur friendly.  They don’t use standardized term sheets, they try to take as much equity as possible (60%+), turning entrepreneurs into slaves, instead of partnering with entrepreneurs.  They are mostly former bankers or private equity without technology experience.  The vast majority just give money and don’t provide much else.  The only way to fix the problem is for time to pass and the industry to mature.

The funds responded that there’s plenty of money around and that entrepreneurs are getting funded at a high rate.

I agree with the vast majority of what the entrepreneurs say in the article.  I had contact with many of Chile’s investors either directly when we were looking to raise money with Entrustet and indirectly via speaking with Chilean and foreign entrepreneurs.  Some people believe that the solution is more money in the Chilean investor community.  If only there were more investors, they say, entrepreneurship would flourish.

I don’t agree.  More money can’t hurt, but there is plenty of investor money in Chile.  Startups with world class founders who execute and deliver what they promise get money, whether its from Chile, the US, Brazil or other countries.

The problem is that more Chilean startups fail than they should.  Chile has a very educated, passionate and hard working base of potential entrepreneurs who lack experience, connections and the know how to run startups.  A small percentage of Chile’s potential entrepreneurs are actually reaching the goals that they are capable of.

They don’t fail because of a lack of money.  They fail because many inexperienced entrepreneurs without networks make correctable mistakes that sink their companies.  Chile doesn’t need more VC.  It needs smart money.  It needs mentorship that comes with a check.

Chile needs mentor/investors who have successfully run startups.  People who knows what lean startups are.  How startups work in the US, but also understand Chilean culture.  Best practices for funding.  Someone to be a sounding board and tell startups when they are doing things wrong and give advice on how to make it better.  Someone credible to call bullshit on poor planning and excuses.  Someone to demand more and help create the roadmap to success.

Chile needs entrepreneurs turned investors who can mentor startups and give them the money they need to get a viable product that can bridge the gap to a Series A and steer them to good VC funds.  This will force Chilean VCs to improve, like their Brazilian counterparts Monahees Capital, who use Silicon Valley standards in Brazil.

Two great examples are Oskar Hjertonsson and Daniel Undurraga, the founders of Needish and Clandescuento, which were later acquired by Groupon.  After the acquisition, Oskar and Daniel were in charge of Groupon LatAm’s successful expansion across South America and are now investing in startups.  But they’re not just throwing cash at startups.  They’re using their expertise to mentor startups and push potential entrepreneurs to start their companies.

For example, after Nicolas Orellana organized the first Webprededor, Latin America’s most important tech and entrepreneurship conference, Oskar and Daniel told Nicolas that they would fund him if he developed his event management tool and started selling it to other companies.  Nicolas founded Welcu shortly thereafter. Although Nico’s the type of entrepreneur who would find a way to succeed no matter what, they’ve been indispensable advisers and additional investors.

Welcu’s now been funded by 500 Startups and Tomorrow Ventures in California and additional Groupon LatAm executives.  It’s grown from two guys in Chile to 35 employees and offices in Chile, Argentina, Brazil and Colombia and is still expanding quickly.  Welcu is a perfect example of how successful entrepreneurs funded a new startup and continue to share their know how.  There are other similar success stories in Chile, but Chile needs more of them and it should be an organized effort.

Chile needs a Dave McClure or Paul Graham who will formalize a seed mentorship program that can help startups navigate the beginning parts of the startup process and mold entrepreneurs who think like their entrepreneurial compatriots in California, NYC and other entrepreneurial hotbeds. That’s the gap in Chile’s market.  So who’s it gonna be?  Who will step up and fill the void as Chile’s Paul Graham or Dave McClure?  Will it be you?

                          

I knew I wanted to move out of Wisconsin, at least for awhile. I’d lived there my entire life.  I went out to San Francisco and met with some friends and talked to my network in NYC.  Nothing really piqued my interest.  I decided to return to Santiago, where I’d spent six months as part of Startup Chile, to see what I could find.  I was looking for a specific opportunity that met four specific criteria and if I couldn’t, I’d return to the US.  I wanted to join a startup that:

• Had traction and was generating significant revenue
• Was expanding across Latin America so I could learn about the markets and expand my network
• Forced me to work in Spanish all day so that I could finally get fully fluent
• With a team of founders I could learn from

I talked to all of my contacts in Chile and looked at a bunch of different companies, but one kept hitting all of the metrics: Welcu.

I’d met Nico Orellana and Seba Gamboa in my first few weeks in Chile in 2010 at an asado (bbq).  The two Chilean entrepreneurs were on their way to Palo Alto to try to raise money for their event management company.  We ran into each other in person and on Twitter over the next year and a half and I always admired their progress.  They arrived in Silicon Valley with a simple product and returned to Chile as 500 Startups alums, bosting funding from Eric Schmidt’s (ex-CEO Google) Tomorrow Ventures, the founders of Groupon LatAM and other Groupon execs in South America.

When I got back to Chile, I met with Nico over a michelada and he told me about Welcu’s agressive expansion plans to Colombia, Argentina and Brazil.  In addition to Welcu, Nico and team organize Webprendedor, Latin America’s most important technology and entrepreneurship conference.  Nico told me they needed help with marketing, pr, blogging social media and expansion strategy and offered me a sort of Entrepreneur in Residence position and head of marketing for Latin America.

It met all of my goals:  Welcu is generating significant revenue and expanding quickly.  I’d work in spanish all day, be learning about the Chilean, Argentine, Colombian and Brazilian markets and be learning from two great cofounders, along with an awesome team.

I joined Welcu two months ago as employee number 7.  Now we’re 35 and have offices in Chile, Argentina, Colombia and are opening Brazil as we speak.  We’re hiring as fast as we can.  I work in spanish all day and provide lots of entertainment for my coworkers.  My spanish is already so much better and I’m learning how business gets done in the rest of South America.  Our tech team is incredible and Nico is a great entrepreneur who has many of the traits of my business partners from previous successful startups.  We have a great team and it’s going to be fun as we continue to expand across South America.  For me, this is the perfect opportunity.  The only downside: my first winter in two years.

                          

Twitter was abuzz.  As the track was coming along, Deadmau5 said that his next step would be to create some vocals.  Chris James, an aspiring dj/producer in the UK was watching and decided to throw something together.  He pulled some audio together and created some vocals.  Next, he tweeted at Deadmau5 to share his creation.  Deadmau5 talked about the tweet briefly on the broadcast, but didn’t listen to the track.  Other viewers kept tweeting saying the he had to listen. It was that good.  He obliged and was blown away, tweeting “DUDE… YOU FUCKING KIDDING ME???? god DAMN!”

Deadmau5 knew he had something amazing.  Within minutes he got Chris on the phone, gave him writing credits and told him how to improve the vocals.  All within 20 minutes.  The next day, they integrated the vocals.  A month later, Deadmau5 released The Veldt ft. Chris James, which I think is one of his best tracks in a long time.  Two years ago, this sort of collaboration would never have happened and we wouldn’t have this awesome track.

I firmly believe that this Deadmau5 story is just the leading edge of the phenomenon, and that its not just limited to music.  The internet gives those with something to offer unprecedented access to do amazing things.  Whether its collaborating with Deadmau5, connecting with entrepreneurs, journalists or artists, anyone with a good enough idea has the power to get noticed.  It’s an incredible change that is revolutionizing how we connect, create and live.  We can reach out and collaborate to create amazing things, publicize injustices and change the world.

We no longer have the excuses “if only I had the right connections” or “it’s too hard, nobody will listen to me.”  Just start.  Do something awesome, be persistant and the rest will take care of itself.  The internet has leveled the world. We all have the power to reach out and make our mark.  There’s no better time than now to get started.

Watch the streamed creative process here:

Listen to the complete finished track here:

                          

I’m excited to announce that Entrustet has been acquired by SecureSafe, the market leader in secure storage of digital information and digital inheritance.  Since Jesse and I started Entrustet in a spare classroom at the University of Wisconsin, we’ve had one vision: to build a system to help you to create a plan for your digital assets that you can be assured will be carried out when you pass away.

We’ve done everything in our power to make our vision reality.  We’ve created a product that works and helped people in over 20 countries protect their digital assets.  We’ve helped families of the recently deceased find, access, transfer and delete online accounts and computer files. We’ve shed light on the entire topic of digital estate planning to the general population. We’ve worked with attorneys and legislators to help carve out some legal clarity in an evolving area of estate law.

Over the past three years, we’ve gotten to know the SecureSafe team very well.  They are based in Zurich, Switzerland and their service is used by various Swiss Banks.  We’ve gotten to know a great team with massive experience, and a very similar vision. As we worked together, we realized that SecureSafe had everything that we wanted in a partner.  Their service is top notch and has more features, all backed by the Swiss banking privacy and security they are known for.

It’s a clear win-win: they share our vision of helping you securely store your online accounts and computer files, making them securely accessible anywhere in the world and enabling you to transfer or delete them when you pass away.  Jesse and I will be continuing to work with the SecureSafe team to make sure everything goes smoothly.  We’re both excited to see what our next steps are in our professional lives.

Looking back, Entrustet has been an incredible experience.  I owe so much to Jesse for being an amazing partner.  We have very complimentary skill sets and see the world through a different lens, but at the end of the day we share the most important things in common.  His relentless optimism and ability to take a step back from situations and analyize them have taught me so much.

I still remember the day he pitched me Entrustet in the Wisconsin Business School library with a very rough powerpoint.  I jumped in and we spent the next three years becoming amazing friends.  I really couldn’t ask for anything more in a cofounder, and as Jesse put it, I’ll remember our times outside of the office even more than inside.  What an incredible three years.

Helping start an industry and becoming thought leaders in the space. Seeing users actually benefit from our service, including helping families access and transfer online accounts after someone passed away.  Getting more press than we could ever imagine and meeting tons of incredible people.

Entrustet changed my life.  I learned so much from every part of running the business, but especially from Jesse.  Entrustet took me to New York, San Francsico, Chicago, LA and Austin.  It led me to Chile as part of the beta round of Startup Chile where I met amazing people and discovered a beautiful country.  I got to speak at South By Southwest and even gave a speech in Spanish to Chile’s president at their equivilent of the White House.  Entrustet led me to start Capital Entrepreneurs, Forward Technology Conference and to making tons of new friends.

But we didn’t do it alone.  There are so many people and organizations who helped us get to this point.  We owe so much to our investors, our advisers, Joseph Boucher, Tom Juszczyk, Allan Stern & Adaptive Engineering, Merlin Mentors, our 2010 intern class,  Nathan Dosch and so many more.  I couldn’t do this without the support of my parents who’ve always told me “do what you think is interesting and makes you happy, just as long as you don’t ask us to pay your bills!”  Thanks to my friends who have put up with digital death talk for the past three years and those who were there with me through the ups and downs of startup life.  It’s easy to take risks with family and friends who supports you.  It’s been a great ride and I can’t wait to see what happens next!

                          

Second, the enormous credit expansion that has fueled the world economy since World War II is beginning to topple over.  It’s taking ever more debt to marginally increase our GDP.  These two macro trends are causing our economic chaos.

The US economy has cancer.  Government and personal debt are massive.  They are unpayable without monetizing the debt or in plain English, printing money.  Unemployment is at record levels and the lowest amount of working age people are in the workforce in decades.  Our government isn’t functioning well.  The stock market is recovering as the Fed prints money, but main street is suffering.

The Democrats under the direction of Barack Obama believe that we can spend our way out of our problems. They believe that if we simply print more money and put it into the economy, we’ll revive the economy and everything will take care of itself.  That’s why they passed the stimulus and believe its best to keep interest rates at nearly zero.  If all else fails, start the printing presses!  The vast majority of the trillions of dollars that have been printed have going into consumption, which doesn’t help the economy long term.

That’s the road to inflation, or hyperinflation.  To me, that’s like a doctor saying, “yeah, you’ve got cancer, just take these pain pills, drink some alcohol and live the good life and things will get better.”  In reality, you might not feel the pain by continuing your behavior, but in the long run, you’re gonna die.  But hey, we postponed the pain as long as possible.

The Republicans believe that the debt is the problem.  They believe that if we cut spending, balance the budget and get out of debt, everything will be ok.  That’s suicidal.  If we just cut, cut, cut, we’ll go into depression.  Their cancer cure is to hack off the offending body part, without anesthesia, in the middle of the forest with a dull instrument.

The Democrat’s plan will burn us to death in the long run via inflation, while the Republican’s plan will freeze us to death with huge recessions, if not depression.  There is a third way, but I believe both sides are too partisan to take it.

Instead of treating our economic cancer with alcohol and painkillers (printing money), or chopping off our leg in the middle of the forrest (austerity), we need chemotherapy (targeted reforms).  We need specific medicine that will actually have a chance of working.  The US’s economic cancer is fairly advanced, so even targeted remedies may not work, but it’s at least worth a try.

Instead of actually looking for targeted solutions, or taking a bit from both sides, both parties continue to toe the “either/or party lines” of “we can spend our way out of it” or “we can cut our way out of it.”  But it’s not bipartisanship.  It’s a third way.

So what is the third way?  It’s realizing that while we do need to shrink government, its not about just cutting monetary outflows.  It’s about cutting the money that’s printed and then put into consumption.  We need to be investing in projects that will actually net a positive return.  We don’t need more consumption.  We need infrastructure, investment in new technologies and education.  We don’t need spending, pork projects and transfer payments.  We need high speed Internet everywhere.  We need better transportation. Better schools.

The cuts come in spending cuts, while we increase investment. We need a new roof on our house, not a trip to the Carribbean.  Spending on consumption won’t work.  Draconian cuts won’t work.  It has to be investment. The only way it happens is if we demand it. We have to start now. We have a 7-10 year window to really get started and give it our best shot.

                          

Even though I don’t agree with much of what Obama has done and believe he’s been a bad president, I’m going to vote for him because he has the biggest chance to actually push for the big changes that we need and the current Republicans are a disaster. If he wins, he won’t do much more damage and might actually make change.  If not, we give the Republicans a second chance to come up with a potential game changing candidate.

Lots of people felt the same, but others disagreed vehemently, either supporting Obama’s agenda or saying that the Republicans had it right.  Many wished for more bipartisanship.  I don’t want bipartisanship as we’ve come to know it today.  The current definition is one side comes up with a proposal, the other side says they don’t like it, puts in a few recommendations and we pass a watered down bill that doesn’t actually change anything.

That’s not what we need. Bipartisainship used to work because each party had big ideas that they believed in, but individual politicians were allowed to have their own opinions on the rest of the issues.  Both parties were “big tents” where everyone generally agreed on the big issues, but smaller issues were left up to the politician’s good judgement.

Republicans used to believe in small government, a strict interpretation of the Constitution and generally conservative attitudes, but the individual members could stake out other “liberal” positions on tax policy, social issues, environmental protection and many others.  Democrats used to believe in larger government and a more fluid interpretation of the Constitution, but could take all sorts of other more conservative positions on individual issues.

Now, to be a successful politician, you have to be monolithic in support of your party.  You have to be lock step with them you’ll draw the ire of the party activists.  You must agree on everything or you’re voted out.  Because of jerrymandering in the House, we get more and more “true believers.” Joe Lieberman was basically kicked out of the Democratic party because he sided with the Republicans on Israel and defense.  The independent minded Republicans have all been voted out. Both parties have become irrationally tied to their positions, co-opted by hyper partisan politics instead of making things better.

I do not want bipartisanship.  I don’t want a president who leads from the right or from the left. I want someone with an independent mind.  Someone who can for example support a simplified tax code, a new look at the drug war, cutting the defense budget, a look at the prison industrial complex, civil rights and investment, not spending.  Someone to take the best from the Republicans and the best from the Democrats ad go for it.

That’s how we get out of this mess.  We don’t need compromise, we need someone who is willing to break away from working in lockstep with a party.  Someone who recognizes a good idea when they see it and throws their support behind it.  We need a rejection of both party’s lock step agenda.  We need to reject the idea of bipartisanship in its current definition and break the lockstep grasp that both extreme wings of each political party has on our country.

                          

I believe that Barack Obama has been a bad President.  He has shown little to no leadership, lack of backbone, a poor grasp of economics and has been in constant reelection mode since his inauguration.  He’s made a bit of progress, but hasn’t proposed real solutions to any of the big issues.  He’s spent huge amounts of money and continued to run up debt.  And before you say it’s the evil Republicans’ fault, Obama had a filibuster proof majority in both houses for a year and a half and still couldn’t get things done.

During Obama’s term, he passed health care reform, but only went half way.  Instead of leading, he outsourced all of the hard work to the very unpopular Harry Reid and Nancy Pelosi.  Whether you agree with Medicare for all or not, Obama could have passed it if he wanted to.  He also could have tried to push for fixing the root of the problem: that healthcare is based on use, rather than outcomes.  Instead we got Obamacare.

Guantanamo Bay is still open.  Even worse, Obama has presided over some of the largest erosions in our civil liberties in recent history, many of which are unconstitutional.  He signed a law that allows US citizens to be detained indefinitely in Guantanamo without a warrant, a trial or due process.  He’s authorized the assassination of US citizens who “support terrorism.”  He intervened in Libya and is thinking about it in Syria.

His TSA has introduced naked body scanners, pat downs of little kids and the elderly and is thinking about adding random TSA checkpoints complete with scans for cars on the highway!  The Orwellian “if you see something say something” is coming out of Obama’s government.  To not appear weak on terrorism, Obama has allowed all of this to happen under his watch.  If a Republican had been in office, the left would be HOWLING, but since Obama is a compatriot, the criticism in muted.

Obama’s justice department and SEC have let Wall Street do as they please, presiding over huge bailouts while leaving mainstreet to pick up the pieces on its own.  His administration has kicked the can down the road in just about every aspect of government, preferring to do the safe, hopefully crowd pleasing move rather than actually lead.  Afghanistan is still raging and seems to be getting worse by the day.  Our spending is out of control and our debt situation will be like Greece or Spain if interest rates ever rise.  To me, his biggest success is that he’s gotten us out of Iraq.

                          

We are going through the biggest changes since the industrial revolution.  Technology is changing fast, replacing jobs with computer programs and robots that always show up for work and never get sick.  In the late 1990s and early 2000s, we lost our manufacturing jobs.  In 2008-2010, we lost many middle management white collar jobs.  These jobs aren’t coming back.  Our new industries only employ a fraction of the people our old giant companies did.  Instead of looking for solutions, our institutions are failing us.

It begs the question: how safe is your job?  Do you have a skill?  Are you willing to work harder than other people?  Do you take criticism and work under pressure?  Are you better at something that just about everyone else?  To succeed in our new economy you either have to create something on your own, have skills that help those who are creating succeed or be willing to work incredibly hard.  You need to be willing to learn every day.  You have to compete with the rest of the world!

From government to Wall Street, our instutions are failing us. They’re busy talking about how bad it is or recycling old ideas that aren’t going to work anymore.   The loudest voices are not proposing real solutions.  They are stuck in the past.  So how do we help fix the problem?

Enter #FixYoungAmerica and The Young Entrepreneur Council.  ”From the Arab Spring to the Tea Party, from Occupy Wall Street to the SOPA and PIPA protests, we’ve seen the power of what like-minded individuals can achieve.  #FixYoungAmerica is about starting a much-needed conversation in America and implementing a REAL plan of action,” writes Gerber.  A combination of entrepreneurship, education, government policy and hard work will make things better.  #FixYoungAmerica is designed to start the conversation and force it into the halls of government by getting our ideas into the hands of every member of Congress.  It’s a movement that needs to happen.

I’ve been a big supporter and member of Scott Gerber and Ryan Paugh’s YEC movement from the beginning.  I’ve seen the good work that YEC has accomplished so far and know this campaign can really make a difference.  But #FixYoungAmerica needs your help.  Check out the #FixYoungAmerica website and add your voice to the conversation.  We need it.