Santiago Bilinkis: Applying Science to LatAm Startup Methods

It was the year football legend Diego Maradona played his last professional game for Boca Juniors, retiring on his 37th birthday in October. It was also the year the Argentina economy started to take a battering leading to recession and the big crash of 2001, but for local entrepreneur Santiago Bilinkis, 1997 was a landmark year. Armed with seed investment, Bilinkis and his co-founder Andy Freire founded Officenet, a business that was eventually bought by US retail chain Staples Inc. in 2004.

It was, he admits, an eventful ride that included a merger and a de-merger and he finally left the company in 2010. Two years later he was a founding partner in Quasar Ventures, a sort of startup fund with a difference – it doesn’t just invest cash, it helps to build startups from scratch, matching entrepreneurs with business opportunities. Does it work? Can it help Argentina and Latin America deliver greater, longer lasting start-up businesses?
I caught up with Santiago to discover if the model really works and why he took this route.

Q. When you set up Officenet, what was the most difficult challenge? The economy was on a downward spiral so it couldn’t have been easy to set up a business in that climate?
The Argentine economy is volatile. You never get a tailwind for very long. We started Officenet in 1997, with a relatively good economic climate, but only a few months after our launch a devaluation in Russia and then another one in Brazil pushed Argentina into the big recession that concluded with the big crash of December 2001, when the peso jumped from one to four per dollar in a matter of weeks. Dealing with this volatility is tough, but is one of the things that distinguishes Argentinean entrepreneurs. We are battle-tested and resilient.

Q. You seem to have a different approach to investment, finding entrepreneurs and building teams and businesses - how did this start?
Andy Freire and myself co-founded Officenet in our early 20s. After that we followed separate paths until we decided to reunite in 2011, when we co-founded [restaurant reservations firm] Restorando, together with two bright young entrepreneurs - Franco Silvetti and Frank Martin. After the initial success of this new venture, we decided to create Quasar to consistently: a) create outstanding teams; b) identify sound ideas; c) raise financing fast to separate from potential competitors. With this approach we have created four companies in the last year and a half.

Q. So it’s a ‘quality not quantity’ approach? Do you expect all your investments to succeed or is it like spread betting, where you back a number and by the law of averages one will go big?
We build very few companies, so our approach is definitely not spread betting. We are very selective before we decide to commit time, money and reputation to a team and a project. At the same time, we use lean methodology to build in stages, reducing uncertainty step by step. Often we come to realise an idea or a team we liked did not work as expected. We fail a lot, but we fail very fast and cheaply. All of our failures were not even launched, so hopefully people from the outside will see like we hit every one of our bets!

Q. How does it work? Ideas first or do you team up with entrepreneurs and brainstorm product ideas when you have a good team in place?
Andy focuses on finding the best entrepreneurs, while I focus on detecting the best opportunities. We both try hard not to be the bottleneck!

Q. You do invest money so what is your range of investments?
Over 90% of the value we contribute does not come in the form of money. For instance, out of the four companies already launched, in two we introduced the entrepreneurs to their partners-to-be and in three we contributed the idea. Moneywise, we can invest anything between US$50,000 and $250,000.

Q. Can entrepreneurs pitch ideas to you? If so, what is the most common pitch you turn down and why?
We turn down each and every one of them. When people approach us, we look for the entrepreneur, not projects. If we decide to start working with them, then we open up our cauldron of ideas and we may add whatever the team was working on before. If their idea was the best, we may both agree to pursue it. But most likely together we will find something better.

Q. Is there a strong entrepreneurial culture in Argentina at the moment? What’s driving it?
According to the surveys of the Global Entrepreneurship Monitor, Latin America leads the world in Entrepreneurial Drive and Rate of Nascent Companies. However, the region is next to last in terms of success and value creation. Argentina is no exception to that, and this is very sad - lots of brave kids betting their time and money just to hit a wall. At Quasar we want to change that. We believe success is very highly correlated with having the right methodology in building companies and creating value. The reason why most Latin American startups fail is because of flaws in methodology. We see entrepreneurship much more as a science than an art.

Q. Has Government policy or shifts in education policy had a positive influence or should the Government(s) of Latin America be doing more?
The local ecosystems have made huge strides since we created Officenet, almost 20 years ago. Endeavor, a not-for-profit organisation, has helped a lot in this regard. Some government policies have also contributed, as well as the addition of Entrepreneurship as a subject in many careers at most universities. Some role models have been instrumental as well, generating aspirational drive among the new generations.

Q. Are any sectors particularly strong in Argentina at the moment and is this growth scalable in terms of exports to Latin America and beyond?
At Quasar we normally look at Brazil first. It is not because Argentina is a bad place. Brazil is the largest market and the one you have to succeed in if you want to build large companies. Quasar only focuses on opportunities larger than US$100m and for that you normally need Brazil to be a cornerstone of your strategy. Avenida, for instance, the first Quasar company, is an exception: the horizontal e-commerce market in Argentina has so much potential that we could solely focus there for this particular venture.

Q. What is the biggest challenge facing Argentina's and Latin America's tech industry? Maintaining momentum? Skills shortages? Increased global competition?
The main challenge is to generate capital markets that allow for easier and more valuable exits. If investors see there is light at the end of the tunnel, they will more eagerly invest in startups. Relative lack of seed and early-stage funding is a consequence of that.

Q. What did you learn personally from Officenet that you can pass on to other entrepreneurs? Do you have a book of tips, for example?
Officenet, and then other companies I co-founded such as Restorando and Avenida, have all taught me numerous lessons. I was lucky that the first company I created was a success and that luck gives me a sense of responsibility to share those learnings with other aspiring entrepreneurs. To do that, for the last six years I have written over 400 articles in a blog called Riesgo y Recompensa. And that is also one of the underlying motivations behind Quasar.

Q. So what makes a good entrepreneur? Hunger and determination? Risk taking or not being afraid to fail?
I believe success is a combination of sheer determination and hard work, combined with sound methodology and common sense, all seasoned with a bit of luck!

Marc Ambasna-Jones is a freelance writer and communications consultant that has written about technology trends and issues for over 24 years for national newspapers, consumer and business magazines. He can be found on Twitter @mambjo.


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