The Caribbean is one big startup ghetto!? Do we follow Dave McClure’s (500 Startups) argument? Or…

OPINION– The argument for Caribbean tech startups to focus on going global is compelling if we’re to follow Dave McClure’s world view. In his 14 slide presentation he recently gave in Amman, Jordon he answers the question – Should startups stay local, go global or do both?!!

He kicks off his argument by sharing facts on the global languages, how many of each language block is online, do they have a low to high GDP and what’s their scope for growth. He then gives a snapshot on global markets, their available spend and if there’s anything special about them like infrastructure and mobile growth.

Dave then follows that up with a how-to-assess -the-global markets slide in a bid to show us where is worth pursuing, where may be better to create and launch a startup. He then offers up another snapshot of the current distribution mechanisms in play – social, search, mobile etc and their potential too.

why you should NOT go global and stay local.

Dave by slide 9, launches into 6 key reasons why you should NOT go global and stay local. And this is where the first gut punch comes,and would for any Caribbean Tech entrepreneur– when he states that one of the reasons for you to stay local is that “your local market has 50+ million users” and by that I assume he meant internet users. Ahm the entire Caribbean’s population is just about 41 million and yes I included Dominican Republic and Cuba.  Of that population according to  internetworldstats.com, only 12.4 million are internet users making it a 29.8% penetration and then further, of that number, we have just about 6.3 million Facebook users, a mere 15% penetration. Now those are some sorry, sorry ass numbers, depending on how you look at them too.

We can make ourselves feel better when we look at our mobile numbers – they are impressive (average of 90% in most countries) when it comes to penetration and usage – it’s what’s made Digicel and LIME in this region ridiculously RICH and still has tons of growth potential in terms of mobile internet, apps, m-payments, m-banking and m-remittances.

why you SHOULD go global.

Then Dave served the uppercut, with his rationale as to why you SHOULD go global. The first slide sums it up McClure style ( if I didn’t meet him here in Kingston in June for Digital JAM 2.0, been following him and 500 startups for months, respected him alot and loved that he is a curser like myself, I’d have been super pissed at him even as he speaks some truth).

He said you SHOULD go global ….brace yourselves…. “if you live in a ghetto little country, all the local investors are too conservative who don’t write cheques and/or give you crappy,low valuations.” Whoa! It’s like he was speaking to certain Caribbean countries. Come on, let’s be real. Now let’s ignore the word ghetto for a minute and focus on the message here.

What I get is this, if you live in a small country like Jamaica ( 2.7m pop.), St Lucia(174,000 pop), Trinidad (1,346,350 pop), Barbados (273,925 pop) your tech startup may not be able to thrive or enjoy any significant growth there. Added to that if like most of the Caribbean, there are little to no investors who will cut a cheque to invest in your business. Well, you see his point right?!

His last two slides is a shortlist of reasons to pretty much move to Silicon Valley and we can forgive his glaring Silicon Valley insider bias here and ignore, because as we’ve seen especially over the past 2 years, tech entrepreneurship has gone global and each region while inspired by the virtues and victories of the Valley, is choosing also to fashion what works for them locally, while also connecting to other global tech hubs and the people, money and resources there. So moving to Silicon valley in my opinion, is not necessary for you to become successful,  but I do believe that visiting the events, reading about it, watching the videos and connecting with successful people who are from that space is- all while connecting to your own local, regional communities, tech hubs and events.

But let’s get back to our Caribbean realities.

1. Our Market is too small. Our collective market is too small, only 41 million people, not internet or mobile users. But, small for whom? Venture Capitalists like him? Too small for tech entrepreneurs to launch and create a very profitable million dollar business which would likely be, in American and European terms, be considered a small business? Suppose your goal is to have a US$5 or 10 million dollar business? Is that possible while remaining focused on the Caribbean? I believe so and while statistically and realistically we all can’t launch more companies like Amazon,Facebook or Google, there’s a lot more room in the middle. And maybe that should be the goal. What do you think? What would Dave say?

2. Local investors are too conservative who don’t write cheques. Tell me about it! There are still too few companies who get the tech industry and its potential to change the landscape, transform their industry for the better, create jobs and boost the economy. Too few who are putting their money where their mouth and understanding is. They are yet to be alot of companies who understand tech outside of telecoms, who understand and value aligning themselves with the emerging tech talent and community even with basic sponsorships, much less investment cheques. Yeah I said it!

But the few who got in early, are getting in early and have begun to establish mutually beneficial relationships, will be rewarded very, very well. Those who have already aligned themselves with events, programmes, competitions, micro communities of talent –  will be the ones closest to the pipeline of fresh talent, new ideas and game changing startups. I have to add though, that I’ve seen alot more activity across the Caribbean especially this year, in terms of interest in accelerators, incubators, innovation challenges, apps competitions and I am excited and encouraged – we need for this to keep going and growing. Will more companies, agencies and governments get involved and move the needle on this at a meaningful pace?

And yes we know, there is no angel/venture capital culture in the Caribbean to speak of. None, nien, nada, zilch… but of course there is now recently lots of talk of establishing angel networks, as well as enacting legislation to make the setting up of venture and angel funds more worthwhile in the Caribbean. So yes the awareness, openness and talks have become more robust, especially in the last year, as tech entrepreneurship has become sexy, moving it to being seen as necessary, even pivotal in helping Caribbean countries to solve local problems – like jobs, corruption, crime, government and business inefficiencies, still with the possibility of going global.

So what’s a Caribbean Tech Entrepreneur to do ?

1. Be ok with being small ( by American/European standards) and know that having a thriving business focused on the Caribbean market, means you will likely have to bootstrap it or attract a couple hundred thousand in angel funding from a friend of a friend, then go on to make a few million USD dollars a year. And hey there are some people who’d be quite happy with that.  Again I say, there’s alot of room in the middle. Not everyone can be another eBay.

Added to that, the Caribbean pales when compared to Africa ( the hot global tech darling), just by looking at the sheer numbers – the huge market, their leapfrog mobile culture and their growth trajectory especially over the next five years. That’s ok too, nothing wrong with being small and being successful at that, just as long as you don’t fool yourself that your very national or regional idea can somehow travel well globally when all the numbers scream NOOOO!!!

2. Think local. Export your idea global. We’re human here in the Caribbean too, having human problems like many around the world. It is very likely that an idea that’s local in any Caribbean nation, that’s universal in application, can resonate in larger more lucrative markets, once we’re not afraid of testing our mettle there. In the last 10 years I’ve been involved with tech entrepreneurs across the region and I’ve seen a number of these, but what they lacked was mentorship, connections to a global network and yes some funding to seed and scale their idea. So being based in the Caribbean isn’t all negative and great things have emerged from ghettos – Hello Jay-Z! 🙂

3. Know that you’re just like anybody else, anywhere in the world. American, African, Asian and European tech entrepreneurs startup and fail and many times having spent other people’s money.  I mean have you read some of those blogs and been to some of those sites for accelerators and incubators? Do you read Techcrunch? You read some of these stories, briefs on startups what their ideas are and how much money they got from angel or venture firms…. you’d point to your laptop screen and shout…WHAT?! all that money for that horse sh*t?! Then lament, “Do you know what I could do with just a tenth of that money?” I know, I’ve been there and done that personally myself. LOL. But my message is, consider yourself just as talented, just as likely to fail and succeed like everyone else. At the end of the day, all other aspiring and current tech entrepreneurs around the world are doing whatever it takes to become successful….are you?

Thanks Dave for inspiring this ramble of a post just two days before we stage Caribbean BETA –Tech Entrepreneurship Conference. Come back to Jamaica soon now Dave, with your geeks on a plane and connect your pipeline of experts and funds to us too. And please, we know that no matter how many countries you’ve visited around the world, there is no place like the Caribbean dude and you know that! 🙂

See Dave’s entire presentation here. Follow him on Twitter here