4 ms·

Ask HN: A Startup in a Developing Country

7 points by pcmonk 13y ago

I've wondered for some time whether it would be possible to do a startup in a developing country. I mean, obviously it's possible, but how would it affect its chances of success? The country I'm thinking about is Guatemala. I've spent time there over the past two summers, and I love the country. I speak Spanish well enough to live there, and I have friends there, so I don't think I'd have too many issues on that front. Incidentally, the plan would be to move back to the USA after getting the startup off the ground. I can see advantages in that the cost of living is low, giving me a slower burn rate, and I don't think there would be very many distractions, so I could focus completely on the startup in a low stress environment. The reason why I'm even thinking about this is that I love Guatemala and it would be a lot of fun to live there for a while. Since I want to do a startup as well, I'm wondering whether I can combine the two goals. Disadvantages would be that there's not many potential investors or potential employees. Obviously, the startup would have to be runnable almost exclusively over the Internet, but almost any kind of startup I would do would be like that anyway. My question is, can you all think of any other advantages/disadvantages to doing a startup in a developing country? Do any of you have any experience doing this? Any general advice?

thesingularity 13y ago
This is a hard question to answer without knowing what kind of startup you are planning on starting. If you can share more details on that, you would get better advice that the generic one I am about to give here. I believe one of the biggest disadvantages that you are not seeing with respect to the location is the distance from the market. Startups are more successful in the Valley compared to anywhere else, because the early adopters are in the valley too. These early adopters/customers allow a startup to know what to build, know when to pivot and know when to scale. Facebook was created in Harvard. Sure, it could have been created anywhere in the world, but looking back, being in one of the most prestigious schools in the world made a huge difference in its success. So, unless you are building something for a set of people that you will find locally, you should look at moving closer to where other startups in your domain have been successful.
- soneca 13y ago
  Exactly, "get out of the building" would be "get out of the country", making much harder to follow the advice.
- pcmonk 13y ago
  Well, the project I'm working on right now is a graphical programming project, but I'm not sure that it will end up as a startup (I plan to open source in a month or two). I really don't know what kind of startup I would do, but I'm pretty sure that it would be centered around some piece of software, and not likely a mobile app, but rather either desktop software (most likely) or a web service. Okay, so I would be physically distant from the early adopters. Would this be a similar problem for me if I were to stay where I am (Phoenix)? We have a small startup community, but nothing like the Valley. At any rate, I'll probably finish my degree before I do a startup.
benologist 13y ago
I have a little bit of experience doing this - I built my former startup in a dusty little corner of Nicaragua and then we opened an office in Buenos Aires, Argentina. I'm in the mvp-building process of starting a new company here in Costa Rica. The biggest benefit of starting in Latin America is the cost of living ... I worked for 2 years without a salary because rent was like $200/month for a house. Downside is that makes building an unsustainable business easier as well heh. Disadvantages can include poor infrastructure, in Nicaragua I used to get elec/water/internet outages each week for hours at a time. It's also a very hot part of the world although I'm Australian so that doesn't phase me much. Language and culture can be barriers in subtle ways, it's hard to surround yourself with like-minded people outside of the internet and this will be especially true the further you get from Guatamala City. The distance from your market may or may not be a problem as thesingularity mentioned, I don't think it matters that much for most of the time plus you can fly up to SF or anywhere else pretty cheap. You will have trouble hiring sales/marketing/bizdev guys with a global worldview but that may not be a problem for today.
- pcmonk 13y ago
  Thank you for this response. If you don't mind me asking, why did you choose to start in Latin America? Was there some reason why your startup needed to be there? I know that utility outages can be a problem, but I don't think it'll usually be that much of an issue. Guatemala has beautiful weather all year round (particularly the City; even high end houses rarely have air conditioning unless they're down near one of the oceans). I understand not being able to surround myself with like-minded people. Honestly, though, I haven't really done that even in the States. If I moved to SF, then I might be able to do that kind of thing, but I'm not sure how important that would be.
  - benologist 13y ago
    I was just randomly traveling around, this was in 2005 and I was contracting and able to live anywhere I wanted, fell in love with this part of the world and a couple of the women, and had myself a half-nicaraguan, half-australian, costa rican daughter which is my main reason for opening my next office here. I didn't "plan" to build a startup as such, I built something and it became popular.
meerita 13y ago
The problem I found is, internet connection. Oh God, it's so terrible in Latin America than it made me change all types of provides and systems and no matter what, the system was so awful that I found a fatal flaw to move those places. I would look around.
teni 13y ago
1. Infrastructure - Even if you overcome Internet and Power outages remember that your users may need to overcome these too to use your product except they absolutely don't need any kind of infrastructure which i think is rarely the case 2. Niche focused - Remember hierarchy of needs. If you are running a startup in a country where 90% are at the bottom of the pyramid your solution has to be properly tailored to the few 10% or the many 90%. It is doable even in Africa. It is a good thing because the countries are DEVELOPING so there is hope.
TaffeyLewis 13y ago
Whatever locational disadvantages your startup has, they are (I think) more than made up for by the fact that you're working from a location with very low costs of living and a very undeveloped frontier market. Now, Im not sure if you're building your startup for the U.S/developed market or for the Latin American market, but I'd say there are a lot of opportunities for you if you play to the latter instead. I live and work from Mexico, just north of you and I can see all sorts of extraordinary opportunities for those of us who have a more expansive knowledge of services and product concepts combined with our familiarity with the language, culture and economic landscape of our newly adopted home in Latin America. You can work on this angle and really create something for your region from your region, instead of working at a disadvantage by trying to reach the more established U.S market needs from a place where you arguably have access to less resources than someone in Silicon Valley does.
- TaffeyLewis 13y ago
  Think along the lines of simple business services for midsize and larger companies in Guatemala and the surrounding central American states in my opinion. If you can create a good pitch and show that you know what you're talking about, the very fact that you're a foreigner will make potential customers more likely to listen to you. At least in Mexico that mentality applies frequently.

7 points by pcmonk 13y ago

thesingularity 13y ago

This is a hard question to answer without knowing what kind of startup you are planning on starting. If you can share more details on that, you would get better advice that the generic one I am about to give here. I believe one of the biggest disadvantages that you are not seeing with respect to the location is the distance from the market. Startups are more successful in the Valley compared to anywhere else, because the early adopters are in the valley too. These early adopters/customers allow a startup to know what to build, know when to pivot and know when to scale. Facebook was created in Harvard. Sure, it could have been created anywhere in the world, but looking back, being in one of the most prestigious schools in the world made a huge difference in its success. So, unless you are building something for a set of people that you will find locally, you should look at moving closer to where other startups in your domain have been successful.

soneca 13y ago
Exactly, "get out of the building" would be "get out of the country", making much harder to follow the advice.
pcmonk 13y ago
Well, the project I'm working on right now is a graphical programming project, but I'm not sure that it will end up as a startup (I plan to open source in a month or two). I really don't know what kind of startup I would do, but I'm pretty sure that it would be centered around some piece of software, and not likely a mobile app, but rather either desktop software (most likely) or a web service. Okay, so I would be physically distant from the early adopters. Would this be a similar problem for me if I were to stay where I am (Phoenix)? We have a small startup community, but nothing like the Valley. At any rate, I'll probably finish my degree before I do a startup.

benologist 13y ago

I have a little bit of experience doing this - I built my former startup in a dusty little corner of Nicaragua and then we opened an office in Buenos Aires, Argentina. I'm in the mvp-building process of starting a new company here in Costa Rica. The biggest benefit of starting in Latin America is the cost of living ... I worked for 2 years without a salary because rent was like $200/month for a house. Downside is that makes building an unsustainable business easier as well heh. Disadvantages can include poor infrastructure, in Nicaragua I used to get elec/water/internet outages each week for hours at a time. It's also a very hot part of the world although I'm Australian so that doesn't phase me much. Language and culture can be barriers in subtle ways, it's hard to surround yourself with like-minded people outside of the internet and this will be especially true the further you get from Guatamala City. The distance from your market may or may not be a problem as thesingularity mentioned, I don't think it matters that much for most of the time plus you can fly up to SF or anywhere else pretty cheap. You will have trouble hiring sales/marketing/bizdev guys with a global worldview but that may not be a problem for today.

pcmonk 13y ago
Thank you for this response. If you don't mind me asking, why did you choose to start in Latin America? Was there some reason why your startup needed to be there? I know that utility outages can be a problem, but I don't think it'll usually be that much of an issue. Guatemala has beautiful weather all year round (particularly the City; even high end houses rarely have air conditioning unless they're down near one of the oceans). I understand not being able to surround myself with like-minded people. Honestly, though, I haven't really done that even in the States. If I moved to SF, then I might be able to do that kind of thing, but I'm not sure how important that would be.
- benologist 13y ago
  I was just randomly traveling around, this was in 2005 and I was contracting and able to live anywhere I wanted, fell in love with this part of the world and a couple of the women, and had myself a half-nicaraguan, half-australian, costa rican daughter which is my main reason for opening my next office here. I didn't "plan" to build a startup as such, I built something and it became popular.

meerita 13y ago

The problem I found is, internet connection. Oh God, it's so terrible in Latin America than it made me change all types of provides and systems and no matter what, the system was so awful that I found a fatal flaw to move those places. I would look around.

teni 13y ago

1. Infrastructure - Even if you overcome Internet and Power outages remember that your users may need to overcome these too to use your product except they absolutely don't need any kind of infrastructure which i think is rarely the case 2. Niche focused - Remember hierarchy of needs. If you are running a startup in a country where 90% are at the bottom of the pyramid your solution has to be properly tailored to the few 10% or the many 90%. It is doable even in Africa. It is a good thing because the countries are DEVELOPING so there is hope.

TaffeyLewis 13y ago

Whatever locational disadvantages your startup has, they are (I think) more than made up for by the fact that you're working from a location with very low costs of living and a very undeveloped frontier market. Now, Im not sure if you're building your startup for the U.S/developed market or for the Latin American market, but I'd say there are a lot of opportunities for you if you play to the latter instead. I live and work from Mexico, just north of you and I can see all sorts of extraordinary opportunities for those of us who have a more expansive knowledge of services and product concepts combined with our familiarity with the language, culture and economic landscape of our newly adopted home in Latin America. You can work on this angle and really create something for your region from your region, instead of working at a disadvantage by trying to reach the more established U.S market needs from a place where you arguably have access to less resources than someone in Silicon Valley does.

TaffeyLewis 13y ago
Think along the lines of simple business services for midsize and larger companies in Guatemala and the surrounding central American states in my opinion. If you can create a good pitch and show that you know what you're talking about, the very fact that you're a foreigner will make potential customers more likely to listen to you. At least in Mexico that mentality applies frequently.