Full Stack Startups in Latin America are a Massive Opportunity

Latin America is the perfect market for full stack startups. I’m convinced of it after living and working in Latin America for the past four and a half years and am even more convinced after having met, worked with and reviewed over 600 startups in the past year and a half as managing partner of Magma Partners in Santiago, Chile.

So what is a full stack startup and why am I convinced that Latin American entrepreneurs should be exploring full stack startup business models?

First, lets start with a definition. Chis Dixon coined the term Full Stack Startup in a blog post in March 2014. He says that a full stack startup is a  “…complete, end-to-end product or service that bypasses existing companies.” It bypasses the old, existing hierarchy to be able to control the entire experience. According to Dixon:

Prominent examples of this “full stack” approach include Tesla, Warby Parker, Uber, Harry’s, Nest, Buzzfeed, and Netflix. Most of these companies had “partial stack” antecedents that either failed or ended up being relatively small businesses.

So why are companies following the full stack method instead of the old school method of partnering with large companies? Dixon explains:

The problems with the partial stack approach include:

    • Bad product experience. Nest is great because of deep, Apple-like integration between software, hardware, design, services, etc, something they couldn’t have achieved licensing to Honeywell etc.
    • Cultural resistance to new technologies. The media industry is notoriously slow to adopt new technologies, so Buzzfeed and Netflix are (mostly) bypassing them.
    • Unfavorable economics. Your slice of the stack might be quite valuable but without control of the end customer it’s very hard to get paid accordingly.

The full stack approach lets you bypass industry incumbents, completely control the customer experience, and capture a greater portion of the economic benefits you provide.

The three difficulties that Dixon explains are even harder to overcome in Latin America. Let’s unpack them one by one.

1. Bad Product Experience

Large Latin American companies generally have poor customer service and product experience because consumers don’t have many other options. Large companies are not generally motivated to improve their product, as they’re very confident in their market position. And if you are able to do a deal, you’ll be confronted with seemingly endless bureaucracy and conservative thinking that will water down the product to make it 10% as good as it could have been. What could have been a highly successful startup gets turned into a corporate innovation program that gets watered down and doesn’t succeed. I’ve seen it firsthand with three of my portfolio companies and heard the same story from countless Latin American entrepreneurs.


Latin America is an oligarchy. In some countries the best way to describe the business climate is that it’s a country club, if you’re in, you’re in, if you’re not, you’re in trouble. The general attitude of most powerful businesses is not to create value, but to extract as much value from whatever they can, whether its raw material from the earth, fruit from the land or money from people’s pockets.

Large, established, generally family owned, companies control huge swathes of the economy. In most countries, there are small number of cell phone companies that have more or less the same plans and prices. Latin American banks are the most profitable in the world (27.4% return on capital, compared to 14% in North America) and don’t really compete with each other. Most brands are sold by an exclusive distributor that sets the price and is nearly immune from direct competition.

In Chile, there are three large department stores that each sell to different target clients and don’t really compete on price. There are three large Chilean pharmacies that get caught price fixing every few years, pay a small fine, and go right back to it.

Most large Latin American companies aren’t focused on growing and innovating. They’re hoping to maintain their historical dominance and squeeze more money out of their clients. I’m not saying there’s no competition and that large companies are evil, but there’s much less competition than in the US or Europe. So when a startup tries to partner with an existing company, it usually doesn’t work because the large companies cannot or will not execute on the new opportunity.

2. Cultural Resistance to New Technologies

Large Latin American companies are almost always conservative. They’re not interested in new technology because they’re already profitable and confident in their market position. Most executives in large Latin American companies are not interested in trying new technologies. For example, if you pitched your product to an executive at a large US company and he passed on it and it would have solved a big problem for the company, he might get a bad performance review or even fired. He missed an opportunity to grow the business or streamline a process.

In Latin America, its the exact oposite. If you pitched your product to an executive at a large Latin American company and she passed on it and it would have been a huge success for the company, nothing happens. But if she had tried to implement a new technology and it didn’t work, she might get a bad performance review or even lose her job. There is a massive resistance to new technologies because companies put the fear of God into employees not to screw up. So they reject most new ideas out of hand.

3. Unfavorable Economics

If you don’t have control of the end consumer, you’re likely leaving money on the table. This is even more true in Latin America. Large companies are used to taking most of the value in a deal. If you’re a startup that creates $100 of value for a large company, the large company will want $99 and might agree to let you have $5 and think that they’re doing you a favor. (Unless you happen to already be in the upper class of a country (club), then you might get closer to $50. But that’s for another blog post).

Large companies don’t feel like they need to give you a fair deal because they know they are one of the only games in town. If I try to sell my product to a large retailer in the US and they try to take nearly all the value for them, I’ll go to their competitors, there’s hundreds of them. But in Latin America, there might be two or three per country. If you want to capture value, you may do much better if you’re a full stack startup.


If you are thinking of starting a business in Latin America or investing in a business in Latin America, I believe full stack startups should be your first choice. They represent a massive opportunity to disrupt undisrupted markets where the incumbents actively laugh in your face if you ask them about competition from startups. The market has been changing rapidly over the past two years, but I expect it to change even more quickly over the next five and large companies still don’t recognize the threat. I bet full stack startups will be the most successful startups in Latin America over the next five years.

What do you think? Do you have any examples of full stack startups in Latin America? I’d love to continue the discussion in the comments.

Some Examples

1. Cumplo

Cumplo is a peer to peer lending company like Lending Club. They could have partnered with a financial institution, but went out on their own and are finding massive success.

2. Propiedad Facil (portfolio company)

After running as a non full stack startup a year and a half Propiedad Facil became a full stack startup, bypassed the traditional players and went out on their own. They’re now growing 100% month over month.

3. Khipu

Khipu is a payments processing company in Chile. Others have tried to break into the market, but, unlike most other competitors, Khipu designed an end to end process that bypassed the Transbank monopoly and allows people to pay using their bank account and merchants to pay lower fees and get their money faster.

4. Deenty (portfolio company)

Deenty started as Yelp for dentists. But they found that they could make more money by starting referring patients to their own dentists and have found product market fit.

5. Lema21

The Warby Parker of Brazil. They recently merged with another Brazilian company and are growing steadily.

Chile Restaurant Guide: Best Restaurants in Chile

I’ve lived in Chile for four and a half years now and have had an ample chance to sample Chile’s many restaurants. Although Chile’s restaurant scene has made incredible strides since 2010, unlike places like New York City, San Francisco, Buenos Aires or Madison, Wisconsin, Chile isn’t a place where you can walk into a random restaurant and find a great meal.

The average Chilean restaurant isn’t that great. You’ll likely end up with some meat and potatoes with little flavor, low quality food or overpriced fare with little connection to value for money. I’ve created a list of the restaurants that I actually like and go to regularly. Please enjoy my favorite restaurants in Santiago and Chile.

I’m always looking for new restaurants to add, so please post any ideas or feedback in the comments!


Ensaladeria Holm – Padre Mariano 125. Providencia. Huge Saturday and Sunday brunches. Fresh fruit and vegetable juices and smoothies. Salads and sandwiches during the week. $$$.

Casa Zucca – Presidente Riesco 3006. El Golf. Old house with a beautiful courtyard tucked away from busy El Golf. Small menu, but large portions and high quality food. Great for a relaxing Saturday brunch, closed on Sunday. $$.


Pad Thai – Manuel Montt 231. Providencia. Solid Thai Restaurant with a cool courtyard. The Pad Thai is great, other main dishes are decent. Appetizers and desserts are a bit lacking, but main dishes are really good. $$$.

Thai House – Manuel Montt 1020. Providencia. Authentic Thai food a bit farther down Manuel Montt than Pad Thai. The décor isn’t as cool as Pad Thai. Most dishes are better here except I prefer the Pad Thai and ambiance at Pad Thai. Try the green tea cake with melted white chocolate for dessert. $$$.


Rishtedar – Holanda 160. Providencia. Real authentic Indian food. Huge menu. Many vegetarian options. One of my favorite restaurants in Santiago. Try the mushroom appetizer, the authentic naan and spicy curry. If you want it spicy like Indian food should be, you have to ask for it, as Chileans don’t tolerate spice well. Delivery for $2.000. $$$.

New Horizon – Merced 565. Bellas Artes. Authentic Indian food. Small menu, small restaurant. I love the fish curry. Cheap lunch specials. Great value. $.


El Naturista – Huerfanos 1046 & Moneda 846. Centro. Rosario Norte 532 Las Condes. Vegetarian restaurant with two locations close to Universidad de Chile metro. Great pebre (tomatoes, cilantro, onions, goes on bread) which goes really well with all of their dishes. My favorite is huevos rancheros with tons of pebre. $$.

El Huerto – Orrego Luco 54. Providencia. My favorite salads in Santiago. Their homemade whole wheat bread and their very vegetabley pebre are great. Meat eaters, try Nuevo Mexico, you’ll almost forget you’re not eating meat. $$$.

Quinoa – Luis Pasteur 5393. Vitacura. A vegetarian’s dream, reasonably priced, especially for the area, top-notch food in a cool location. They also have great brunch. $$$.

Shakti – Av Italia 1568. Barrio Italia. Vegan. Interesting food, even for meat eaters. The interpretation of ceviche but made with mushrooms instead of fish is really good. $$.

Rishtedar. See the Indian food section. Many vegetarian options.


La Gloria – Huerfanos casi esquina Amunategui, Santiago Centro and Manuel Montt 1315, Providencia. Peruvian sandwich shop. Amazing service, top quality food. Might be my favorite sandwiches in Chile. Love the fish sandwich with the spicy sauce. $.

Fuente Alemana – Pedro de Valdivia 210 and Bernardo O’Higgins 58 (near Plaza Italia). The best lomitos in Santiago. Huge sandwiches. A completo comes with lettuce, tomato, sauerkraut, avocado, mayo. Add spicy mustard for extra kick. Kind of touristy, but worth it every once in awhile. $$.

Dominó – Multiple Locations. Not to be confused with the US pizza chain, Dominó is my go to fast food restaurant. It’s how fast food should be. Good ingredients, lots of choices, not expensive. They have surprisingly good salads as well. For a change of pace: get the vegetarian sandwich (avocado, tomato, cheese) with a “paila” of eggs. $.

Donde Guido – Bellas Artes. Peruvian sandwich shop with lots of interesting sauces. Fast, good, filling. Big sandwiches…you won’t go away hungry. $.

Hogs – Los Leones 40, Providencia. Merced, Lastarria. Handmade, quality sausages and hotdogs. A bit expensive compared to to a typical low quality Chilean hotdogs, but worth it. A real hotdog is worth the extra cost. $$

La Superior – Nueva de Lyon 105. Providencia. Upscale versions of Chilean classic sandwiches. One of the best beer lists in the city with 25+ Chilean brewed beers. Packed for lunch, but easy to get a table for dinner. $$$.

Metropol – Vitacura 8927. Vitacura. Filling sandwiches named after metro stops, good beer list. Quesadillas are worth trying too. $$.

Elkika – Multiple locations in Providencia. Big, tasty sandwiches, cheap beer. Always packed. A local favorite. $$.


Tiramisu – Isidora Goyenechea 3141. El Golf. Great thin crust pizza. Reasonably priced for location, cool atmosphere and top-notch food. It’s always packed, no matter when you go. Expect to wait if you go during peak hours. Have a pisco sour while you wait at the bar. $$$.

Fabrica de Pizza – Bellavista. Lower quality, but good thin crust pizzas for US$6-9 and cheap beer. A place to sit outside on a nice sunny day or a warm night with a bunch of guys. Cheap and “interesting” people watching. $.

Caperucita – El Bosque Norte 083. El Golf. Thin crust pizza with interesting combinations. Also has delivery.


Sukine – Antonia Lopez de Bello 244. Patronato. One of my favorite restaurants in the city. Authentic Korean food with owners who barely speak Spanish. Really cheap, a great place to go with groups. Best for lunch or early dinner, as neighborhood can be sketchy at night. $$.


Vietnam Discovery – Loreto 324. Patronato. One of the only Vietnamese restaurants in Santiago. Great food, sophisticated decoration. $$$.


Barandiaran – Manuel Montt 315. Providencia. Patio Bellavista and Nuñoa. Manuel Montt is my favorite location they converted a beautiful old house into the restaurant with a large courtyard. Great food, classic Peruvian. Really strong pisco sours. Great place for a special occasion. I love the corvina with mango sauce and shrimp and the filete a lo macho, along with the ceviche.  $$$$.

Las Hermanas de Trujillo – Av. Italia 1206. Barrio Italia. Small courtyard in Barrio Italia with great empanadas and Peruvian dishes. Great place for dessert and coffee. $$.

El Encuentro Peruano – Ismael Valdés de Vergara 790. Santiago Centro. A Peruvian restaurant that caters to Peruvians who are living in Chile. Affordable, big portions, strong pisco sours, good flavor, cool old building. My favorite affordable Peruvian restaurant. $$.

Astrid y Gastón – Antonio Bellet 201. Providencia. From world renown chef Gaston Acurio. Intricate, flavorful, Peruvian food. One of the most expensive restaurants in the city. Only for special occasions or if your parents are visiting (and paying!). $$$$$.

La Mar – Nueva Costanera 3922. Vitacura. Rivals Astrid y Gastón as the top Peruvian restaurant in the city. Better ambiance and outdoor seating, known for its seafood and ceviches. The only Peruvian with vegetarian menu, but you have to ask for it specially. For special occasions. $$$$$.


Shoo-gun – Enrique Foster Norte 172. El Golf. Authentic Japanese restaurant with interesting Japanese dishes, other than sushi. Good sushi, but expensive. I love the katsundun, a rice, pork, egg and onion bowl. Lunch menu is a great value. $$$$.


Kintaro – Monjitas 460. Bellas Artes. Fairly priced, great rolls, least use of cream cheese in their sushi in Santiago. Sashimi is good, but not spectacular. Try a sushi boat sample platter if you go with friends. $$$.

Senz – Cerro Plomo 5680 Las Condes and Costanera Center Tobalaba. Peruvian inspired sushi. Large sushi rolls with interesting Peruvian inspired sauces and fillings. I prefer the Las Condes location, as it’s quieter. Really busy for lunch. $$$.

Zabo – Dardignac 0191. Bellavista. A bit expensive for what you get, but really good, high quality sushi. Great sashimi. Good drink menu. $$$.

Bushido – Francisco Bilbao 399, Barrio Italia. Las Condes 9377. Las Condes. Great sushi with interesting combinations, but terrible Thai food. The contrast between the quality sushi and the garbage worthy Thai food is incredible. Go for the sushi. Don’t be tempted to try the Thai. Good delivery. $$$.


Peumayen – Constitución 136. Bellavista. Peumayen’s tagline is “ancestral food” and is the first restaurant in Chile that’s honoring Chile’s rich indigenous food tradition. I foreigners here whenever they come to visit Chile, as it’s an experience. Start with a North to South bread sampler, an appetizer platter to share and a unique main dish, all in a beautifully restored Chilean house. Expensive, but worth it for a special occasion. $$$$.

Divertimento – Pedro de Valdivia Norte at Cerro San Cristóbal. High quality Chilean food. Expensive, but a great location surrounded by trees in the park at the foot of Cerro San Cristóbal. You may need a reservation at night or during lunch. $$$$.

La Casa de Don Benito – Camino Lonquen Norte Parcela 16. Lonquen. Located about 30 minutes from downtown Santiago, Don Benito serves classic Chilean food and claims to have the best empanadas in all of Chile. The no frills food is excellent and all of his restaurants are packed on weekends. $$.

La Piojera – Aillavilú 1030. Metro Cal y Canto. Santiago Centro. La Piojera is a bit like going back in time, before tv, before radio and electricity. It’s what I image our great great grandfathers did in their spare time after a hard day’s work. It’s a divey traditional place famous for their terremotos, which are drinks made of white wine, pineapple sorbet and some light liquor. The meat on the bone and the hot sauce is great, but the place is dirty and if you think too hard, its gross. A place to go for drinks and brave the food. Although it’s getting touristy, it’s still worth going at least once for the experience. Really cheap. Half a dollar sign.

Salvador Cocina y Café – Bombero Ossa 1059. Santiago Centro. Hidden just off of Paseo Ahumada, this restaurant is about 3 blocks from the Universidad de Chile metro and has great homemade lunch. Much better quality for a similar price compared to many of the small restaurants in the center. Try the iced tea. $$.

Liguria – Three locations Pedro de Valdiva, Manuel Montt, Tobalaba. Providencia. Bar and sandwich shop that serves good Chilean food, sandwiches and decent drinks. Food is good, specials are great. Drinks can be expensive for what you get, but it’s one of the only bars that serves food after about 12am in Providencia. $$$.

Juan y Medio – Barrio Brasil, Rancagua and Vitacura. Originally a truck stop about an hour south of Santiago that served massive portions of hearty, classic Chilean food. Now Juan y Medio has up locations in Santiago. It’s hit and miss: sometimes its really tasty, other times not great. $$$.

Galindo – Dardignac 098, Bellavista. Cheap Chilean food. Good place for beers and chorrillana with friends or Sunday lunch with a group or traditional chilean food after work during the week. $$.

J Cruz – Condell 1466. Valpariaso. The original chorrillana: Artery cloggin’ french fries, grilled onions and meat. Accompanied by a beer. The location oozes history and is down a dark alley. But it’s worth it if you’ve made the trip to Valparaiso. $.

Las Cabras – Luis Thayer Ojeda 0116, Providencia. High quality Chilean classics at an updated version of a Chilean “fuente de soda” or soda fountain. Smallish portions but very high quality food. $$.

Bar Nacional. Centro, El Golf. Huge menu of Chilean classics. Good value for money. Packed at lunch, good place for after work drinks. $$.


Portofino – Bellamar 301, Cerro Esperanza, Valparaiso. Top-notch seafood on the coast. The incredible views alone are probably worth the price of the meal. Good wine list, great service. $$$$.

Punta Mai – Avenida del Mar 1366, Maitencillo. Located about two hours north of Santiago, Punta Mai has great seafood in an upscale atmosphere. A bit expensive, but if you’re already on the coast, its worth it. $$$$.

Mercado Central – Metro Cal y Canto. Mercado Central is a bit of a tourist trap, but it really does have great seafood. Don’t order the crabs, they’re insanely expensive. The best tip here might be to purchase fresh seafood and cook it at your house. It’s way cheaper and more fun to look at all the interesting fish and shellfish that you probably haven’t seen before.  $$-$$$$.

See: Peruvian restaurants – They usually have great seafood.


Las Vacas Gordas – Cienfuegos 280. Barrio Brasil. A traditional Chilean parrillada and meat restaurant. Huge, open grill that you can see right as you walk in. Great pisco sours and desserts. A great place for Saturday lunch, but expect to wait a bit. $$.

Ox – Nueva Costanera 3960.Vitacura. Some of the best meat in Santiago. Expensive, good wine list, great appetizers, but worth it for a special occasion. $$$$$.

Happening – Av. Apoquindo 3090. El Golf. Rivals Ox in quality, but a little less expensive. Good value for money on the meat, but sides and wine can be expensive. $$$$.


California Cantina – Las Urbinas 56. Providencia. Gringo bar with burgers, texmex food and moderately priced drinks. Decent, not great, but if you’re craving a US atmosphere, go here. Great place to watch US or European sports on tv. $$$.


Golfo di Napoli -Dublé Almeyda 2435. Ñuñoa.  The best value for money Italian restaurant in Santiago. It’s cheap, has huge portions and has the feel as if you’ve been transported right over to Europe. The gnocchi melts in your mouth. House wine in US$4 for a half liter. There will likely be a wait on weekends. $$.

Da Noi – Av. Italia 1791. Barrio Italia. Reasonably priced Italian food in Barrio Italia. Waiters bring warm bread with meatsauce when you arrive. Try the lasagna. $$$.


Varanasi – Manuel Montt 983. Providencia. An interesting mix of Indian “soul food.” A bit expensive for what you get, but interesting dishes and nice atmosphere. $$$.

Lusitano – Condell 1414. Barrio Italia. Good food, great tiramisu for dessert. One of the best outdoor terraces in Santiago. Great place for a relaxing lunch or a nice night out with friends or a date.

Étnico – Constitución 172, Bellavista. A loungy type bar/restaurant with great seafood and a top wine list. The food is a bit expensive, but the wine and drinks are fairly priced. Great place to relax with some friends or to take a date. $$$.

Ky – Peru 631. Recoleta. One of my favorite places in the city. Located in an old house filled with old furniture, this is another great place to take a date. Interesting Asian/Chilean dishes, great seafood and a drink menu that’s 3x longer than the actual menu. A rare place with character in Santiago. Make sure to make a reservation on weekends. $$$.

Casa Luz – Av. Italia 805. Barrio Italia. Beautifully restored old house with one of the best courtyards in Santiago. High quality food, but a bit expensive for what you get. $$$$.


La Burguesía – Santa Magdalena 99. Providencia. Burger restaurant with interesting mixes of meat and non-traditional toppings. Only outdoor seating. $$$.

Unlce Fletch – Dardignac 0192. Bellavista. The best burgers in Santiago. Brioche bun, high quality meat, crispy bacon, top notch beer list. $$$.

Ice Cream & Desserts

Emporio la Rosa – Parque Forestal and various locations. The best ice cream in the city. Thick, creamy, delicious. My favorite flavor is chocolate avellana (hazelnut). They also have cakes and coffee. The Parque Forestal is the classic location. Grab an ice cream and eat in the park.  $$.

Freddo – Costanera Center, 5th floor, Providencia. Parque Arauco, Las Condes. Argentina’s favorite ice cream chain comes to Chile. A little piece of Argentina in Chile. $$.

Pastelería Laura R – Manuel Montt 747 and other locations, Providencia, Vitacura. Traditional Chilean cakes, cookies and pastries. Incredible cheesecake. $.

El Bombón Oriental – Merced 353. Bellas Artes. Traditional Chilean cakes, Turkish coffee. Really nice waitstaff. Has a patio where you can sit outside and enjoy your snack. $.

Le Flaubert – Orrego Luco 125 Providencia. They have delicious small sandwiches, interesting cakes and cookies. Great place for tea and a snack. $$.

Dulceria Las Palmas – El Bosque Sur 42 and various locations. Try to the bite sized cake assortment. $$$.


La Parrilla Uruguaya – Condell 566. Providencia. Second location in Ñuñoa. Amazing meat, feels like you’re in Montevideo or Buenos Aires. Cheap beer, wine and drinks. Split a parrillada that comes with a chicken breast stuff with sausage and choose, multiple types of sausage and steak. As a bonus, it’s a good place to watch a soccer game. $$.

Sandwicheria La Rambla – Tabancura 1344. Vitacura. Uruguyan sandwiches, specializing in chivitos. $$.


De la Ostia – Orrego Luco 065. Providencia. Spanish tapas bar. Solid food. Tasty sangria. Always packed, which sometimes leads to slow service. Good place for a drink with friends. $$$.


Le Bistrot – Santa Magdalena 80. Providencia. Traditional French restaurant with French owners and waiters. Loved the beef bourguignon. Most of the time you’ll need a reservation. $$$.

Normandie – Providencia 1234. Providencia. Tasty, well prepared French food. Good wine list. Serves pâté and butter with warm bread when you arrive. Cool interior that look like a Paris cafe. $$$.

Boulevard Lavaud (Peluquería Francesa) – Compañía de Jesús 2789. Barrio Brasil. Solid french menu in an old house turned into a restaurant. Still has a functioning old style barber shop in the building in the front. Good food, great place for a date. Really cool décor.  $$$.

Impunity and Vautrin’s Law in Chile and the US

I’ve noticed an interesting phenomenon as I’ve worked in Chile more deeply over the past two years building companies. Many, if not most, Chileans believe they don’t have much influence on events in their lives and in their country.

I see it all the time in multiple contexts: business, politics, customer service and corporate bureaucracy. I’m very familiar with this feeling in politics, as I feel the same way about non-local US politics, but at first I didn’t understand it in the other contexts.

For example, in business, if Chileans get screwed over, they are less likely to take to social media or write a blog post detailing their experience than people in the US are. When there was an issue with a Chilean business incubator, it festered for months before a foreign entrepreneur shared his experience and only then did nearly a dozen Chileans corroborate their experiences. I asked some of the Chilean entrepreneurs why they hand’t said anything before, and they all said that they didn’t think they could do anything to fix the situation and that they didn’t want to rock the boat.

Large Chilean companies pay suppliers using 90 day payment terms and then only really pay a half year later, entrepreneurs can’t and don’t do anything about it. When large companies lie to your face and treat you poorly, the typical Chilean reaction is to say “yeah, they’re screwing me over, but there’s nothing I can do about it!”

When the vast majority of landlords take your security deposit when you move out, regardless of damage, Chileans hate it. But the vast majority don’t do anything about it and resort to extralegal methods, like not paying the last month’s rent, to avoid getting screwed.

In the legal realm, the son of a powerful politician got drunk, drove, hit a guy and left him for dead. The man later died and the politician’s son lied to police. The son of the politician didn’t get punished. More ridiculously, his passengers were the only ones punished, each getting $150 fines for lying to police. There was some twitter outrage, but no serious calls for change, no mass protests. People were resigned to the fact that the rich and powerful have different rules than the rest of us.

When the President’s daughter in law got a sweetheart loan deal for $10m to purchase a property and sell it quickly, netting $5m, it didn’t lead to criminal charges or real change in the system. When Chilean politicians give themselves raises to bring their yearly salaries to $260,000 in a country where the average salary is $9,000 per year, and members of the US House of Representatives only earn $175,000, people complain, but don’t do anything about it.

When bad things happen, most Chileans are momentarily outraged, then don’t try to do anything about it, because they believe nothing will change. And they’re probably right.

Couple this impunity with the fact that only 15% of Chilean households earn $1350 in monthly income and 50% earn less than $800, compared to $6250 average household income in the wealthy areas of Santiago, and lack real possibilities to get into the top 15%, you have a recipe for social tension and potentially worse.

When elites and large companies act with impunity and the rest of society has a lack of opportunity, it creates a toxic brew that corrodes civil society and democracy.

Two heuristics have been helping me think about opportunity and impunity in society.

1. Impunity Index – The index is high and society is in trouble when elites do whatever they want without any consequences and the weak either think they cannot or really cannot do anything about it.

2. Vautrin’s law – Society is in trouble when it’s better to marry someone rich or commit crime that to better yourself via hard work and education. This law comes from Vautrin from Balzac’s Le Pere Goriot as cited by Thomas Piketty in Capital in the 21st Century.

Chilean elites and large businesses have acted with high degrees of impunity ever since the Spanish first arrived. And Vautrin’s law is clearly in force. For at least 85% of the population, its an economically sound decision to try to marry someone wealthy or to look for extralegal ways to make money than it is to work hard, take out a loan to get an education and try to work your way up. Because even if you work hard, most people will top out around $1350 in family income if they are smart, hard working and lucky. And to make matters worse, because of severe classism (really just racism), most of the people in the bottom 85% can never marry up anyway, so that avenue is closed off to them.

Put yourself in the shoes of someone in the bottom 85%. You probably can’t marry up, basic elementary education only works for a lucky few, universities require borrowing large sums of money and when stealing an iPhone is the same as two weeks salary, stealing a Toyota Yaris is the same as six months salary, you can see why people would be attracted to crime or are resigned to their fates. You can also see why taxi drivers try to screw over passengers for $2-$10 if they have the chance. When people see elites and large businesses acting with impunity, it takes another excuse away and pushes people into a destructive path.

As the internet has permitted people to know about cases of impunity that previously would have been swept under the rug and have magnified wealth differences, the elite is faced with a choice: allow the bad apples who act with impunity and continue to get away with their behavior in all of the elite’s name and continue to stifle opportunity for the 85% or decide enough is enough and strongly condemn bad behavior when it happens and begin to loosen it’s grip on society.

If the elites continue down the business as usual path, they risk consequences from increased crime and political instability to potentially a populist leftist leader who can undo the real progress Chile has experienced that has set it apart from its neighbors over the past 50+ years, or even worse.

I believe the US is going down a similar path and is taking big risks by not addressing the situation now. As the US elites continue to amass wealth on a scale reminiscent of the years just before the Great Depression and continue to move toward Chilean levels and you see things like affluenza being used as a successful defense for drunkenly killing people and large corporations paying nominal fines and nearly zero taxes while normal people are punished severely for similar or lesser transgressions.

I think solving these issues and putting the impunity index and Vautrin’s Law back into balance requires buy-in from government, politicians and most of all the elites that are currently benefiting from these conditions. I don’t believe that these conditions can last forever without some sort of reaction, whether its an economic reaction like the financial crisis or the election of a populist leader who will implement already disproven ideas that will punish the elites, but not raise the standard of the rest.

My 2014

Every since I started blogging, I’ve done a year end post summarizing what I’ve done in the past year. These posts are mostly for me, so that I can look back and remember what I did, what I was thinking and what was important to me each year. Previous versions (2000s200920102011, 2012, 2013). Here’s what I did in 2014.

Like 2013, I rang in the new year on a friends balcony overlooking Santiago surrounded by friends, including my friend Polsky who was visiting from the US. Polsky and I took off for southern Chile, visiting Pucón, Frutillar and Puerto Varas during the first week of 2014. I was back in the south six weeks later when my parents and brother came to visit, adding Chiloé to the list. Every time I go to the South, I don’t understand why I don’t go more. It’s relaxing, stunningly beautiful, has incredible food and, in summer, has amazing weather.


I always come back from the south with new ideas, rejuvenated to get back to work and this time was no different. While 2013 was a year of starting many new projects, 2014 was the year that I focused.

In January, I partnered with Francisco Sáenz and Diego Philippi to launch Magma Partners, a private seed stage investment fund and accelerator based in Santiago, Chile. Our goal was to bring US style investment and know how to Chile and pair it with Chilean connections and mentorship to help entrepreneurs create successful businesses.

magma partners fondo inversion chile

A year in, I’m extremely proud to say that we’re already starting to see results. Over the course of 2014, we reviewed over 350 startups, met hundreds of entrepreneurs and finally invested in 13 startups. Running a fund has been much more work than I thought it would be. But it’s been worth it.

We’re already starting to see promising results from multiple companies, but 2015 will bring the hard part: helping our 13 portfolio companies make their way from nascent startups to real, scaling companies. I have high hopes and 2015 will be an extremely important year for Magma and our portfolio companies.

In addition to Magma, I started the year with four active projects Andes Property, La Condoneria, Startup Chile consulting and teaching entrepreneurship at multiple universities. By mid year, my head was ready to explode from so many different projects taking up brain space and I started to focus.

First, I realized that I was using the same part of my brain to mentor Magma companies as  I had previously used to teach entrepreneurship at universities. I knew I had to stop teaching because I was getting mentorship overload, so I found other entrepreneurs to take over my classes. Next, I stopped doing Startup Chile consulting, as it was taking up too much brain space and tried to figure out how I could get La Condoneria and Andes Property to run more autonomously.

After a long search, I hired employees to help run La Condoneria and Andes Property, both of which continue to grow quickly month over month. At the start of the year, I was personally picking, packing and taking packages of condoms to chilexpress (chilean fedex) five times per week and was personally showing apartments to foreigners for Andes Property.  I still work on both businesses, but Andres, Gonzalo and Bernadette have really stepped up to the challenge to take responsibilities away from me.

2014 was the year that I finally started to get better at spanish again after feeling like I’d plateaued in 2013. I still speak with a strong accent, but I can say 95% of what I want to say and am now happy making a joke per day, up from one per week last year. Baby steps.

2014 was the first time I wrote an entire post on my blog in Spanish and the first time one of my spanish blog posts went semi-viral in Chile. It was the first year I presented to large audiences in Spanish without notes, just like I do in English. I also did multiple radio interviews in Spanish for the first time. I’m still not as good as I’d like to be and I hate to see eyes glaze over because I’m not as engaging in Spanish and I am in English.

2014 was a great year for travel, as I explored Chile’s south on two separate trips to kick off the year. In February I took an incredible ten day trip to Uyuni, Potosi and Sucre in Bolivia. I’d previously been to Uyuni in 2011, but never to Potosi and Sucre, both of which were amazingly different from anything else I’d ever seen. I took a mile long tour of the Potosi mine, where miners as young as 10 years old use pick axes, dynamite, coca leaves, pure alcohol and their brute strength to try to scratch out a living. Sucre was an amazingly beautiful window into the Spanish Colonial past.


Cerro Rico, Potosi

Cerro Rico, Potosi

I took an express trip to Lima for the first time when my Aunt Nancy and Uncle Paul decided to come go to Machu Picchu. It was fun exploring old Lima with them and I ate the best meal of my life at Maido, a japanese/peruvian fusion restaurant. I can’t wait to go back to Peru to continue exploring the rest of the country.

2014 was a World Cup year and I made it three world cups in a row, spending three amazing weeks in Brazil. I saw 10 matches in five different cities, traveling over 14,000 miles in the process. My friends Enrique, David, Sandra and Tiago each traveled with me for parts of the trip, making it an incredible trip. I’ll never forget the marathon trips getting to the first three USA games, early and late goals in USA/Ghana, Jermaine Jones’ goal in USA/Portugal and the trip to the jungle, and the incredible spirt of the Chilean fans, even in defeat against the Netherlands and Brazil. I’m so thankful I’ve been able to attend.

USA Germany

USA Germany

I took three quick trips back to the US, one in late May to visit family, another for a friends’ wedding and the third for my group of college friends’ 10th annual Friendsgiving and the holidays with my family. I think I stayed better connected to family and friends by visiting more, but for shorter amounts of time each visit, a plan I’d like to keep up in 2015, rather than one 5-6 week long trip as I’ve done in previous years. It still isn’t fun to miss weddings, bachelor parties, thanksgiving, the Forward Festival and birthdays, but life is all about tradeoffs.

I made it back to Madison on all three trips, including an extended stay where my friends and I reunited for a weekend of Badger football and memories. I honestly can’t believe it’s been ten years since I started college. Time really flies. Madison is noticeably more dynamic each time I visit. The tech scene is on the leading edge of this new dynamism and I’m thankful and proud of Madison’s entrepreneurs for paving the way. Capital Entrepreneurs (made one meeting this year) and Forward Fest (sad I missed it this year) continue to be pillars of he newly emergent startup scene, with other entities and institutions arriving to continue to progress.

2014 saw me focus on two key businesses, continue to explore South America, attend a world cup and still stay connected with my friends and family in the US. I’ve been very lucky that the years keep getting better and better and I hope 2015 is no exception.

Favorite Posts of 2014

2014 was my lowest blog output in the six plus year history of my blog. And even worse, I didn’t make up for the lack of quantity with better quality. I’m not sure if its because I’m writing less or because my brain is getting mixed up because I’m speaking more spanish, but my writing is noticeably worse than in previous years. Last year 10 posts made my list. This year only four made the cut. I need to get back to writing more.

Seeing Things From Other People’s Perspectives

Never Give Up Is Terrible Advice

The Chilean Mindset Needs to Change From Extraction to Value Creation

Lack of Skin in the Game is the Root of Our Problems

My best posts from the Magma Blog

Ten Frequent Mistakes of Chilean Entrepreneurs / Los Diez Errores Frequentes de Emprendedores Chilenos

The Magma Partners Latin America Investment Thesis / Tesis de Inversión de Magma Partners Para Chile y Latinoamérica

The best books I read in 2014:

1493: Uncovering the New World Columbus Created – I learned more from this book and its companion book 1491 than I’ve learned in a really long time. 1493 talks about how things changed after Columbus arrived in the Americas. It busts myths, adds new facts and really made me think.

1491: New Revelations of the Americas Before Columbus – This book completely changed my understanding of what the Americas were like before Columbus and opened my eyes to some of the amazing things that native cultures in our hemisphere had done. Really worth reading and makes me want to explore Peru and Mexico.

Five Days at Memorial – An investigative journalist looks at what happened at Memorial Hospital in New Orleans before, during and after Hurricane Katrina where doctors potentially euthanized patients.

The Everything Store – A Jeff Bezos biography and the history of Amazon.com.

The Boys In The Boat – A history of the US rowing team in the runup to and at the 1936 Olympics. Entertaining story at the confluence of history and sports.

The Best Lectures From How to Start Up – Stanford and Y Combinator

I watched all 19 classes from Sam Altman’s Stanford and Y Combinator’s How to Startup class over the past month and recommend them fully. Sam Altman, Ycombinator’s President, took all of YC’s internal learnings from investing in 716 startups with over $30b in value created, and produced a masterclass on starting a startup.

If you’re thinking about starting a company, have already started a company or just want to see what starting a startup is really like, please watch all of the classes. I’ve been prescribing certain classes for founders we’ve funded in Magma and I’ve seen good results. If you want to save time, you can read the transcripts below each video, but I strongly suggest spending the time to watch the videos.

But if you don’t have time to watch all 15 hours and still don’t have time to read ~150 pages of text, I’m here to help. I’ve selected my favorite classes so that you can get 80% of the learning in 35% of the time. Before you get started, I reiterate, don’t get lazy. Watch or read all of them. But if you’re lazy, here’s my list.

Lecture 1: Intro: Ideas, Products, Team, Execution

Watch the first half with Sam Altman if you’re an experienced entrepreneur. If you’re just getting started or haven’t started yet, watch the entire class with Dustin Moskovitz, one of Facebook’s cofounders. Altman gives his overview of the class and his view on what’s important in a startup and Moskovitz walks you through evaluation your options when you start a startup.

Lecture 2: Ideas, Products, Team, Execution 2

Sam Altman continues talking about the four most important things in any startup. The biggest take away is that its much more important to build something that a small group loves a lot, rather than something a large group of people just simply likes. This is something I see many founders getting wrong. Watch the entire class.

Lecture 3: Before the Startup

Paul Graham, YC’s founder, gives his advice that he would give to his own kids when they are thinking about starting a startup. The most interesting point for me here that most founders get wrong is that Graham wants founders to do things that don’t scale. In my personal experience, doing things that don’t scale has been the only controlable difference between success and failure. Mandatory. Watch the entire class.

Lecture 4: Building product, Talking to Users and Growing

Adora Cheung of Homejoy, tells her story to illustrate how to build product, find users and grow. My biggest take away is the importance of going to where your users are. Most founders stay in their office too much or when they get out of the office, a la lean startup, they don’t go to where their users are. Watch the entire class.

Lecture 6: Growth

Alex Shultz, VP of Growth at Facebook, talks about growth rates, churn and how to know if your business is sustainable. I had to rewind in places and listen again, as its math centric for a humanities graduate like me. Many founders underestimate how important churn rate is and getting the user to their first magical moment as quickly as possible. Its completely worth watching the entire class.

Lecture 7: How to Build Products Users Love

Kevin Hale, the founder of Wufoo and now a partner in YC, tells his story about how he got his customers to love him. This class is probably my favorite or second favorite and is probably the most or second most important class for entrepreneurs who haven’t found product market fit yet. He also talks about bootstrapping a business to success, which is important in a VC focused course. Watch this class.

Lecture 8: Do things that don’t scale and PR

Stanley Tan from Doordash starts out talking about doing the things that don’t scale when you first start your business. Doing things that don’t scale is very intuitive to some entrepreneurs, but many get it wrong. Stanley’s story is a great example of how you can get started doing things that don’t scale are. Next, Walker Williams from Tspring gives his perspective on doing things that don’t scale and how to get users quickly. Watch these first two speakers.

Justin Kan talks about what PR is good for and what it’s not good for. Like money, PR can paper over problem areas in your business, but if you don’t fix the problem areas, you’ll have played your PR card and are still left with a startup with a bad foundation.

Watch the first two presenters and add in Justin’s if you have extra time.

Lecture 16: How to Run a User Interview

Emmet Shear, founder of Twitch, talks about how to run a user interview and then does a mock user interview after his lecture. This is the most important lecture for a first time entrepreneur or an entrepreneur who is still looking for product market fit. Watch this entire class, but if you’re pressed for time and have experience in user interviews, you can skp the mock interview at the end. But I suggest watching the entire class.

Lecture 19: Sales and Marketing

Tyler Bosmeny is the founder of Clever and he has one of the best overviews of startup sales I have seen. He talks about how to run a sales meeting, how to systematize sales calls, the percentage of time a salesperson should speak on an optimal call and many other topics. If you’ve found product market fit or are close, this is the most important class. Watch the first founder.

Bonus: Lecture 5: Competition is for Losers

Peter Thiel, founder of three billion dollar companies and prolific investor shares his view of the world. This is probably the only class where it makes sense to read the transcript or just go directly to his book Zero to One, as his presentation is choppy and can be hard to listen to. The ideas are interesting and I probably only agree with about 60% of what he says, but it’s worth reading.

If you’ve already launched your business and you can only watch two classes:

Lecture 7: How to Build Products Users Love (full class)
Lecture 16: How to Run a User Interview (first 75% of class)
Class 19: Sales and Marketing (first 25% of class)

If you’re thinking about raising money, Lecture 9 with Mark Andreessen, Ron Conway and Parker Conrad and Michael Seibel’s portion of Lecture 19 where he gives the most clear description of how you should talk to investors I’ve seen.