Thursday, December 2, 2021

The Power of Global Networks to ‘Blitzscale’ Puerto Rico’s Economy

By on November 12, 2021

Editor’s note: This column was first published in the Nov. 11, 2021, print issue of Caribbean Business.

The power of network effects has been a constant source of growth through my career as a tech entrepreneur living in Silicon Valley.  After my first few meetings in San Francisco in the early 2000s, I reported back to my wife, Margarita, “You can smell the Wi-Fi here!” That exclamation was a hyperbole of how connected this place was. Today, entrepreneurship is democratized globally and I see those global networks as catalysts that are accelerating the economic success of Puerto Rico.  

As the world starts to come out of the pandemic, Puerto Rico is finally on the verge of a period of hypergrowth. A myriad of factors including logistical advantages, tax-incentives, high vaccination rates, remote work, and pent-up desire from our diaspora to come back are creating network effects like never before. The result might be nothing less than the equivalent of Operation Bootstrap in the 21st century. You may be skeptical about this statement coming from someone who has not lived in Puerto Rico in almost two decades. I get it. And I will add that many like me feel ashamed of not being on the island. At the risk of criticism, I want to share my vantage point as an Endeavor Entrepreneur and investor from Puerto Rico in the Bay Area.  

Like every entrepreneur, my journey has been a roller coaster. Through successes and failures, I learned that many people have the ability to make money, but entrepreneurs have the ability to create value. And value created by entrepreneurs is compounding when network effects are at play. I saw this in my early days when I joined Techstars and Disney Accelerator. Techstars’ “give first” mantra inculcated a karmic predisposition to help other entrepreneurs succeed. Relationships became the most valuable social currency, ever appreciating through value exchange. Like trading NFTs—the trade itself became the self-fulfilling prophecy of value. After a few successful ventures, I was invited to join the ultimate entrepreneurial network, Endeavor. The selection process was tougher than raising capital in Sand Hill Road, but somehow I found myself at Endeavor’s international selection panel in Tokyo, Japan, in what was seemingly the Summer Olympics of entrepreneurship. Few things have been as meaningful in my career than joining Endeavor’s global network of high-impact entrepreneurs. I came to the realization that creating value is about more than wealth. It is about having a positive impact in communities and transforming entire industries.  

A few months into the pandemic, I started to wonder what could help Puerto Rico sprint forward and perhaps leapfrog other economies. That is when I noticed a void in my entrepreneurial networks—the Puerto Ricans around me in the Bay Area were not organized to help each other. What if we could connect the Puerto Ricans who hold key positions at big tech companies like Google, Apple, Airbnb and Salesforce to the most promising tech entrepreneurs from the island? Could we “blitzscale” Puerto Rico’s entrepreneurial ecosystem by engaging the braintrust of Puerto Rican tech leaders in Silicon Valley? Well, we are doing just that. A group from Endeavor Puerto Rico, Ashford Ventures and my company, Trip Ventures, started a “good mafia” of Puerto Ricans in high places and the tech entrepreneurs who are starting to soar. We call this initiative PR415.  

For reference, Reid Hoffman, founder of LinkedIn and one of Silicon Valley’s most admired investors, coined the term “blitzscaling.” He defines it as “the science and art of rapidly building a company to serve a large and usually global market, with the goal of becoming the first mover at scale.” I believe and propose to you that we can apply blitzscaling to economies if we focus on the entrepreneurs and companies creating high impact. PR415 focuses its efforts on connecting two nodes: Puerto Rican leaders in Silicon Valley and promising tech entrepreneurs from Puerto Rico. After all, more than half of all the venture capital in tech still comes from the Bay Area, and tech entrepreneurs scale faster and with higher valuation multiples than any other sector.  

We have seen this movie before. Endeavor has transformed the entrepreneurial ecosystem of many countries by helping high-impact entrepreneurs create jobs and wealth at scale. The growth is compounding as team members of companies led by Endeavor entrepreneurs go on to create their own companies. The graph below shows the multiplier effect in Argentina, where Endeavor started. Unlike other economies where Endeavor has offices, Puerto Rico has unique advantages for this flywheel to spin at warp speed. To prove this point, we started to map out the tech diaspora of Puerto Rico. We found that there are more Puerto Ricans in key roles at big tech companies than from any other market where Endeavor has offices outside of the United States. For example, there are over 400 alumni of the University of Puerto Rico working at tech companies in the Bay Area alone, including 14 at Apple and five at Google. In other words, there is a longtail of connections that can accelerate growth.  

We are only scratching the surface but the connections are proving to be extremely valuable. For example, a few weeks ago, PR415 introduced Beatriz Ayala, the dynamic CEO of Musicasa, to Antonio Lucio, the former CMO of Facebook, HP, Visa and Pepsi. Both boricuas hit it off and Antonio is now giving pointers to Bea on her go-to-market. If having access to one of the top CMOs in modern history is not a catalyst for growth, I do not know what is. 

My journey as an entrepreneur is far from over but a big part of my role today is to help other entrepreneurs succeed. I am energized by these blooming opportunities for Puerto Rico. They remind me of the sense of duty and excitement that my grandfather, Carlos Passalacqua, conveyed to us when he told the stories of his years as president of the Puerto Rico Industrial Development Co. (Pridco) in the ’50s and ’60s, when the island’s economy transformed from agricultural to manufacturing. This time, our island is poised to be a protagonist in what is being called the Fourth Industrial Revolution. I encourage you to dream up and seize this momentous opportunity for Puerto Rico to become a global player in the post-COVID era.   

– Carlos García Passalacqua is an Endeavor Entrepreneur and the founder of Trip Ventures, a holding group of innovative tech companies in the travel and hospitality industry.  

Endeavor is an entrepreneurial network that was founded in 1997. It spans nearly 40 countries and supports more than 2,000 entrepreneurs, whose companies generate combined revenues of more than $28 billion and have created more than 3.9 million jobs.