Thoughts on Portugal and entrepreneurship: trying to find their way out of the mess through new venture creation
Most people don’t put the words “Portugal” and “entrepreneurship” in the same sentence. And most folks from the US don’t know much about Portugal; most haven’t visited.
But I can tell you that Portugal is lovely, almost surrounded by the sea, with a temperate climate, great food, terrific wines from local vineyards, and friendly people who speak English really well!
I have visited this balmy and beautiful country three times in the last several months as part of the Carnegie Mellon/Portugal program and our participation in the University Technology Enterprise Network (UTEN) program. The purpose of my visits has been to give a series of seminars and workshops around entrepreneurship American-style, in particular on entrepreneurship and innovation at Carnegie Mellon.
Clearly the Portuguese believe that we know how to do this in the US and that they can learn from us – the American way of entrepreneurship. And, like several European countries, perhaps all of them, they realize that entrepreneurship is a path out of their current economic mess.
The Portuguese used to rule the seas and they basically invented modern navigation. Now, they are using entrepreneurship as the latest and most profound tool to navigate their way out of the country’s recession.
We think that there are no jobs in America. But there are really no jobs here in Portugal. Unemployment is around 13%.
The economy is in the tank; the government collapsed in March, the first time that I was there. Now there is a new government in place administering a €78B bailout (around $115B, depending on the exchange rate).
The bailout imposes new austerity measures on the debt-burdened country but doesn’t seem to include cuts to the minimum wage or reductions in public-sector jobs, requirements that were unpopular in earlier deals for Ireland and Greece. It is almost impossible to fire someone from a public sector job in Portugal, regardless of performance (or lack of it).
Some of that attitude has changed in the last few weeks, but in September, when I was last there, the Lisbon streets were full of people that didn’t seem too worried about their future.
A New York Times article puts it like this: “Portugal languished for much of the 20th century on Europe’s geographic and cultural margins. From the 1920s until the 1970s, a repressive dictatorship smothered the nation and its economy. Once the center of a global trade empire, Portugal became Western Europe’s poorest nation.”
In the 1970s Portugal became socialist and I can see that philosophy embedded in the entrepreneurial culture of the country. Or, should I say, the lack of entrepreneurial culture.
We are there (from CMU) to impart the wisdom of American entrepreneurship. That they recognize the problem (they lack an entrepreneurial culture) and that they want to fix it (hence our, and other, programs), and that they recognize that entrepreneurship is the way out – all of this is positive.
New Venturist profiles Portuguese entrepreneurs. In my visits to Portugal, I met many entrepreneurs. I can see that they are the future of Portugal. They are passionate and smart; their ideas are good.
In the next few posts, I will profile some up-and-coming Portuguese entrepreneurs and their startups that are part of the new generation of entrepreneurs who will drive Portugal’s economy forward – because they must.
The entrepreneurs include: computer science professor turned entrepreneur, Mário Zenha-Rela and his company Dognaedis, Sérgio Santos and his company, Bundlr, and Vera Moura and her life sciences therapeutic startup, TreatU.
Challenges to overcome. Here are some of the key challenges that Portugal has to overcome to adopt an entrepreneurial mindset:
Attitude. Many workers in Portugal get paid for 14 months’ work while only working 12 months. This attitude spills over into a “the government owes me support” attitude among young entrepreneurs. While this may work in Portugal it is not going to work in the US (or many other countries) where success is merit-based.
- Policies. Current tax policies don’t favor entrepreneurship. I learned that taxes are due on invoices sent, even if you haven’t received the money yet. Entrepreneurs tell me that they try hard not to make profits in Portugal because of unfavorable tax laws. This is counter-intuitive to new venture creation.
- Reliance on the government. Portuguese entrepreneurs rely on the government for funding and as customers. This instills in them a lack of the “live for the hunt,” and “eat what you kill” attitude that we take for granted in the US.
- Private investment. In Portugal, many venture capital firms and what they term “business angels” are investing money from both public and private sources. Portuguese entrepreneurs looking to expand their funding bases need to understand better the expectations of investors that have only private money.
- Naivete about markets. Most Portuguese early-stage entrepreneurs are in multiple markets in Portugal. They might sell their products and services to banking, telecommunications, and utilities. But marketing within the smallest European nation is not like marketing to the US or even to larger countries like the rest of Europe or Brazil. They will have to pick particular target markets for which they have strong value propositions.
- Naivete about competition. Portuguese entrepreneurs need to realize how competitive it is out there. They need to hone in on how they are different and how to erect sustainable barriers to competition.
- The pitch. I have seen about 30 Portuguese early-stage companies pitch and I have yet to see one that knows how to really pitch their opportunity. They are all about what, not about why. They need to communicate the problem they are solving and then their solution. And a 3-second elevator pitch takes 10 minutes in Portugal!
- Mentoring. Successful Portuguese entrepreneurs do not seem to give back. It is rare for them to teach entrepreneurship; they don’t seem to mentor other younger entrepreneurs. This is something that is so engrained in the US innovation and entrepreneurial ecosystem it never occured to me that there were places where this didn’t happen!
- Entrepreneurial education. I found that much of the teaching of entrepreneurship in Portuguese universities was by academics, not by entrepreneurs. While there are some exceptions, notably at Católica, the “been-there-done-that” philosophy of hearing it from the horse’s mouth is rare.
Changing the culture. We are bringing entrepreneurship à l’Américaine to Portugal. Our goal for this program is to impart valuation information, methodologies and our own experiences to the Portuguese attendees (entrepreneurs, university faculty, researchers and students, tech transfer professionals, government officials, business angels, and other interested parties).
In addition, we hope to leave them with recommendations of how to do this right, how to encourage entrepreneurship in this smaller European country and maybe not make some mistakes that we have made in the US.
But Portugal, which invented navigation and once ruled the seas, has put resources into education. The quality of the technologies that we see, the minds of the professors and students that we meet, the fact that they celebrate science and technology from grade school on up (we witnessed the end-of-the-academic-year celebration on a university campus of a middle and high school program that accelerates math and science education) is impressive.
If the Portuguese can continue this trend, producing novel technologies and if they can foster the entrepreneurial spirit, knowledge and experience to bring these innovations to market, I believe that we will see much influence on both sides of the Atlantic from this small nation.
A 2009 blog post calls Lisbon the Silicon Valley of Europe: “According to Paul Graham’s wisdom, Lisbon is all about style, hipness and quality of life. The message that Lisbon sends out is the same as Berkeley’s or San Francisco’s: you should live better.”
And if I stand on the coast of Portugal, I can just about see Delaware. It really is not so far away. Portugal is, after all, the West Coast of Europe. Maybe it’s about time we paid attention?