An Interview with Startup Chile Company Founder James Kennedy in Santiago

James Kennedy is the founder of Mineral Rights Worldwide. He has been a participant in the the Startup Chile program for over a year, and I spoke to him in detail about his experiences while visiting Santiago. You can find him on Twitter as @JamesKennedy.

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Transcript

Niall: We're sitting here in a german beer hall in Santiago, Chile and I'm here with James Kennedy who is a fellow Irishman from Dublin, whose the founder of Mineral Rights Worldwide and he's doing the Startup Chile program. So James, tell us a bit about what you're doing here.

James: Ok well right now I'm working on Mineral Rights Worldwide, I've been here for a year and I came down as part of startup Chile last November, I'm kind of staying on in the place because I like it and I see a couple of opportunities here and now what I'm doing is building a mineral rights marketplace where yo ucan buy and sell gold and silver mines more or less. so yeah, thats what i'm doing here

Niall: Cool, yeah Chile have a lot of commodities and natural resources so it seems like it makes sense why you are doing such a thing here. So you're from Dublin, Ireland - tell us a bit about how you got into the program in the first place and what was attractive about Startup Chile.

James: Sure so about two years ago I left Ireland, I read a book called "The 4 Hour Work Week" and I wanted to work for myself, I was kinda a bootstrapper working with my girlfriend at the time, couldn't really afford to live in Ireland off our startup, which was PieHole.ie, which was like a marketplace for voiceovers. So we decanted to Argentina, lived in Argentina for a while, kind of built up the business, then we were kind of floating around - South Africa, London, and then eventually San Fran - and it was when we were in San Fran that I met Diego, one of the promoters of Startup Chile. He had this brand new idea which was basically one of the fouders of the program had studied at Stanford, he had done his MBA there, and he kind of wanted to come up with ways to promote entrepreneurship in what is traditionally a risk averse country. So he decided that rather than the traditional approach - you could say the Russian approach - is to buy a big technology transfer park beside a university, and spend a couple of billion dollars doing that, which has kind of been proven not to work. Because people think they can copy the Stanford model, they think, oh Stanford was there and they had companies in a park beside it and therefore Silicon Valley was created. But not really, thats coincidence, what really creates it is the people not the buildings. So his idea was ok why don't you just give a bunch of foreigners some money to come to Chile and artificially create this startup environment, this culture of, you know, its ok to create new business as opposed to just graduating from college and going to work for a bank. Which is a little bit what happens down here traditionally. So anyway, he gave us that whole pitch and he said, listen you guys should apply , we applied, not really expecting to get accepted but we got in, so basically within two months - I remember clearly I was sitting in a hotel room in Boulder and two things happened in the same day. I got a tax bill for about 3 times more than I had in my bank account and then we were about to jump out the window and then about 40 minutes later we got a letter from Startup Chile saying we'd been accepted.

Niall: Good timing!

James: Exactly. So I might not be here, on the bigger scale, if it wasn't for Startup chile. So anyway we ditched all our plans - we were going to go sit on the beach in Mexico for 3 months, instead we packed up all our bags and arrived in the airport in Chile, and we met all the Startup Chile team. We were kind of half expecting for it to be some elaborate scam, like if it was from Nigeria I don't know, like, oh yeah, fly down here, will give you forty thousand dollars, and it wasn't totally like that in the end, by and large we did get the forty thousand dollars and we basically poured that into what was a kind of a dude business and it meant that we were able to hire a couple of people to do our sales, it meant we were able to take a few more risks with paid advertising, do some more experimentation that we couldn't afford to do and it meant now a year later we have four people working on it and it's doing reasonably well and basically my way of looking at it is it maybe sped up our progress by about four years, because they gave you forty grand but they didn't expect any equity so we basically had nothing to lose.

Niall: Right, well that kind of goes to the next thing, which is when I first heard about Startup Chile which was a couple of years ago on Tech Crunch or something like that, it almost seemed too good to be true - you know, the deal supposedly is you get forty thousand US dollars and they take no equity which is obviously great for anyone who wants to maintain control - but how does it really work? Is there any catch - could you talk a little bit about that?

James: Its not totally - they don't give you forty thousand dollars, they subsidise you for forty thousand dollars, and there is a subtle difference there. The upside is like you said they don't take any equity , the downside is that they basically reimburse you for the money that you spend - so you spend a couple of grand on this and that and then they give the money back to you about six weeks later. So it means that you do need to have a float of about 5-10k in order to come down here to start spending the money, but once you have that its fine. And so lon gas you're spending the money on legitimate business expenses - it's very much like when you go on a business trip and you're supposed to submit your business expenses when you get back - it's very much like that. Someone will look over it and say, ok I see that you spent money on KY jelly, how were you using that in your business? How did it really help you? And if you can't come up with a good reason then they won't give you the money back. But that aside, really, the point is that you're just supposed to be here.

Niall: So you have to spend 24 weeks in Chile, that's part of it right, so you have to be here for 6 months and do you necessarily have to have a company here or do all your founders have to be here or - details like that, how does that work?

James: No, so you don't have to register a Chilean company, although worldwide income for the first three years is tax free, so you may want to consider doing that so you can avoid paying tax for three years, depending upon your own domestic tax situation. But you don't have to create any entity here - you can do it through any American or European entity you already have set up. You can send down one co-foudner, as long as you have someone here on the ground, you are supposed to send down a founder, it's not good enough to send down an employee. But you can name someone as a founder and send them down and they can use that money inside or outside the country, so you could hire developers in San Fran if you wanted to or you can outsource your work wherever the hell you like, just so long as you have an invoice. And then you're expected to basically go to networking events and mix with the locals, and kind of the things you might want to do anyway if you are looking to hire some people or make some contacts, so there is a little bit of expectation that you get out there and mingle, it's not like they fine you if you don't do that. So you can come here, sit in your apartment for six months and piss off afterwards and noone will care. And plenty of people have done that. And some people have come down here and just enjoyed their time here, networked a lot, create some connections with Chile - other people come down here and they're more focused, they're just hammering away all the time, so there's a mixture of people and I'm not really sure that one is more valid than the other.

Niall: Right, because either way you could be contributing to the scene here, bringing your own connections. And on a little bit of a different note, how've you found living here, in terms of the social life, obviously Spanish is the language here, is the language barrier an issue, is there any issue say with the banking system, you know, moving money in and out of the country, or regulation - how have you found all these kinds of things?

James: Well the team themselves handle all the visa stuff really well - within a week or two of being here I had a bank account and a visa for a year. So all the admin side of stuff is taken care of. Spanish, if you're single the best way is to find a Chilean chick or a Chilean dude to help you practice, and I can definitely see the people who have done that are a lot better at Spanish, so if that's an option, that'd be the recommended way to learn your Spanish. But there are plenty of schools down here. Obviously you can survive, I mean there's a bit of an ecosystem of English speaking people because of Startup Chile - you could basically not speak a word of Spanish for the 6 months and you could get away with it, but obviously it's a lot more fun if you give it a go.

Niall: And what do you think of Santiago as a place to live? Cost of living, the kinds of amenities available. I mean I've been here for a few days and it seems very well run and very modern in fact. What's your impression having been here for a year?

James: Well before I came to South America I literally didn't know what to expect. I was expecting to like fly into a two bit airport and see two guys beating the crap out of donkies outside but that was obviously completely ignorant and when you get here you've seen yourself, it's basically the standard of any American city. It has fantastic transport system, great underground, it's a very comfortable place, it's very western, you can get your burger, you can get your Starbucks - it's just like anywhere in the world. There is a little more culture clash in that there's a difference between the rich and the poor here. You don't really see it that much but you might see it more than you'd be used to somewhere like London or somewhere like that. But it's definitely a very comfortable place to live.

Niall: Yeah and it's very walkable too, I've been walking around a lot on foot and it has all these beautiful parks that are all very well maintained.

James: Yeah, and it's afterall a very rich country, they produce 60% of the world's copper and it means that services are very good and they have a lot of money to spend on services. You've probably seen a lot of the architecture in terms of the more modern buildings, it's pretty impressive, it's fancier than anything you'd see in a lot of other places. It's the richest place in South America and it definitely feels that way to be honest with you.

Niall: Yeah, certainly compared to Buenos Aires, you can feel there's been a lot more investment in the city. And so would you recommend the Startup Chile program to - I guess you could call them aspiring entrepreneurs? What kind of people should check out the program? Who do you think it suits?

James: I think there's a couple of different types of people it suits very well. One is if you are a tech guy and you're in the early stages of getting your prototype, your minimal viable product let's say, out and just hang out for six months and put your head down and get that done. Because your cost of living is going to be lower. I mean it's not super low compared to the rest of South America, it's like, about equivalent to about a mid to small-sized American city - I've heard people compare it to that. But of course Startup Chile give you forty grand.

Niall: That goes quite far.

James: Yeah, like you'll live off about 1,500 dollars a month quite comfortably, that's going out to eat whenever you want etc. So I'd recommend the program to tech guys who just need time to build their product. I would say bring your tech co-founders with you, so if you have a team convince them all to come down here, work here, build out the product - there are good designers here they'll help you with the design side of it or maybe some of the UX but the technical side of it - I wouldn't necessarily bank on finding a technical person to help you with it. Like I've seen people who are Biz Dev quote un quote come down here and kind of struggle trying to find someone to build their product. The other kind of group - it worked well for us, we were kind of a bootstrapping business, and it just meant that we were able to turn things up to eleven, without giving away any equity. So if you've got something that's making a couple of hundred or a couple of thousand dollars a month and you've just always wondered, well what would happen if I focused on this more full-time - then that would be a great thing to do as well. I mean they are looking for the mythical billion dollar business down here, and in terms of furhter funding, there are further sources of so-called free money, so you can get a further eighty thousand dollars of funding again for no equity if you have a good idea.

Niall: So I know that we were talking about this, you've spent several months in the Bay Area, and you're quite familiar with the scene there. Do you have any comments on how it would stack up or compare - or what's the opportunity cost of being here in Santiago, Chile versus say San Francisco , California. What are your thoughts there?

James: Well the biggest thing for me is like, an Irish guy, when I went to San Francisco I was just another wannabe tech guy. I was just one of the crowd. Which is good in that there are people there with similar interests but it is hard to stand out. Now if you compare that with down here, Startup Chile is a far more focused group of people, ironically I've made much better contacts with the Bay Area here in Chile than I had when I was in San Fran.

Niall: That's very interesting.

James: Because like people like yourself, you know, we met up because you heard I was here, we had a few beers, and that's happened several times where peopel are seeking me out to find out about Startup Chile. And also the connections you get inside Chile are pretty phenomenal. I've seen several people here start selling into companies here that they just wouldn't get a look in the door with in the States or Europe. They just wouldn't be able to get the meeting. But because you're part of the program you can get a foot in the door quite easily. One guy, he's done a deal with CNN Chile which means he has the CNN brand to use elsewhere, another guy has done a deal with like the largest retail conglomeration in South America. So, comparing the two, I'm getting far more out of it down here, because up there I'm kind of a nobody.

Niall: Sort of a small pond, big fish. That's a great summary and certainly answers a lot of my questions coming from the Bay Area. So James can be found as @JamesKennedy on Twitter and he's more than happy to answer any questions you may have. Thanks a lot James.

James: Cheers!

Niall O'Higgins is an author and software developer. He wrote the O'Reilly book MongoDB and Python. He also develops Strider Open Source Continuous Deployment and offers full-stack consulting services at FrozenRidge.co.