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About hype and performance

You founded a top performer, but is it sexy?

‘You need the simplest version of the idea-the one that will grow naturally in the subject’s mind. Subtle art.’ ― Christopher Nolan, Inception

Diiiiing. When the elevator finally reached the main floor of the fancy Maddison avenue building, I realized my host, a big potential investor, had politely turned me down. They started and ended the meeting congratulating us for our historic exit. Despite our fund’s performance, one of the best they had seen so far from a VC in Latin America, they were not interested in exposing capital to the region. By now, after seven years raising capital for three funds, I’m used to getting rejected. ‘It’s not you, it’s Latam’, we keep hearing. That day, however, I felt worse. For the first time, we were leading our space, delivering DPI and IRR like no other firm.

Our region seems indeed uninteresting to most international tech investors — too uncertain, too small, too unproven. Given that context, I argue that to fundraise internationally for any tech initiative, performance is not enough; an enthusiastic perception of your space is vital. Eventually, every founder and VC face reality: no hype, no cash.

You make performance happen. We all agree entrepreneurs should strive for performance from zero to one. The key indicators of your effectiveness will vary from startup to startup and evolve as the company grows. Velocity in execution is however the only repeatable path to success. Performance builds up like pushing a flywheel with hard work, competence, courage and perseverance.

Hype mostlty happens to you. It is read on twitter, chatted in Monday’s partners meetings, it is forwarded in Pro Rata newsletters. It’s sold by media and bought by investors, entrepreneurs, corporate and government officials. It’s traded in magazine covers and trending topics. It includes memorable acronyms like AI, BRIC, ICO or slogans like Mexican Momentum. It’s instant, sometimes undeserved and, oh man, so fragile.

While in general, sexy does not drive performance in the long run, it can help kickstart scale. It can indeed shine a spotlight on your achievements. Understanding and influencing awereness has become important to win in faster and shorter tech waves.

‘Truth Well Told’ — McCann, world’s first advertising trademark registered in 1912.

Grind your high profile. Yes you can. Lobby your way to a shiny magazine cover as the next ‘unicornio’ or ‘Midas touch’ or convince the editors to get you on ‘world’s most innovative co’ listor ‘all around coolest’ company — yes, this exists! — . Craft your story and get it out to the world with a simple message about a personal journey, a technical breakthrough or sheer speed. A TechCrunch post, a TED talk, an exclusive on WSJ can build up buzz just before going out for your next round or next fund. If you’re not gaining traction with your story or simply hate the self-promotion, it’s ok to hire a boutique PR firm to help you. Join communities that can amplify your message such as Endeavor, YC and 500. If your product launch did not create a splash, launch again and… again.

It takes a village. As an ecosystem, we’re so bad at selling Latin America, it hurts. Somehow, we feel the responsibility to be objective, modest and introspective. We can’t help criticizing the overvalued startup or the incoherent portfolio of our competitors. Whatever you think about Rappi’s units or Unibank’s CAC or Yellow’s series A valuation, this needs to stop. We need to build on the successes of Clip, Cornershop or Monashees to make our case. Having new populist presidents leading our two largest markets won’t help this mission but hey, we’ve survived worst.

Beware! Hype is useful even exhilarating. It’s also dangerous. For one, it can distract you from performance. If you’re not careful, you’ll find yourself dedicating more time to raising your personal brand than building your company. A high profile may provide a false sense of confidence that can cause you to make mistakes or ignore problems. If you focus to much on appearances, soon you’ll be playing with your numbers for your demo day or delay a write off to protect your IRR. Never, ever do this.

Strangely enough, getting so many NOs from investors has given me the discipline of collecting them. The more they reject me, the more I know I’m stretching our network. Every rejection, I learn and get better. As a firm, we work hard on performance and strive to contribute to raise the sexiness of our region. That’s what we try. You can always jump right in time for the last tech craze or move to Bengalore. Otherwise, don’t hate hype, embrace it like salsa and assign a tiny yet consistent amount of time to shaping the perception around you and your space. As stakeholders of the Latin American ecosystems, we need to perform a very particular inception in large VC firms and corporates all over the world: FOMO — fear of missing out. While we figure this out, let’s keep pushing with sincerity and discipline to reach top performance investors can’t ignore.

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I write about my work as an investor, a lecturer, and a mentor. In general, musings about Latin American tech, VC and life.

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