For the past two years Flavio Feferman has led an initiative to bring the Berkeley-Haas Lean Launchpad entrepreneurship training program to Brazil. In this interview, he discusses the program, how BayBrazil members can participate, as well as his new book on broadband internet in Brazil.
BayBrazil: What is the vision for Berkeley’s training program in Brazil?
Flavio: First, I’d like to thank Bay Brazil for the opportunity share our story on the Berkeley-Haas entrepreneurship training program in Brazil.
I’ve lived in the Bay Area for more than 30 years and, through my academic and professional work, have tried to build bridges between the US and Brazil, as a way to contribute and to give back. Bringing the Lean Launchpad (LLP) program to Brazil seemed like a clear opportunity to make a difference, given the growth of entrepreneurship in Brazil and our experience with the LLP methodology here at UC Berkeley, where the pedagogical approach was developed by professor Steve Blank.
The idea for program in Brazil surfaced about two years ago. At the time, Berkeley-Haas had successfully implemented the LLP curriculum in our MBA program and had been selected to deliver the curriculum more broadly through the National Science Foundation’s “Innovation Corps” (I-Corps) initiative, a national program to support the commercialization of scientific innovations. Along with Andre Marquis and Mark Searle from the Berkeley-Haas Lester Center, we began talking to institutions in Brazil about the LLP methodology and the I-Corps program as a model, including institutions such as BNDES, federal ministries, universities, incubators/accelerators, as well as entrepreneurs across the country. Everyone we talked to was very receptive to the idea. Over the course of these conversations, we met two Brazilian venture capitalists, who have been our partners all along: Robert Binder, former ABVCAP, and Andre Massa, from Antera Gestão de Recursos. They immediately understood the impact the LLP program could have on the Brazilian ecosystem.
Specifically on the vision, the goal of the program is to adapt the I-Corps national model to Brazil, training entrepreneurs and instructors in the “lean” methodology that we use at Berkeley, and then replicating the program across the country. Our program in Brazil follows three important principles, which are part of our vision. First, from the beginning, we envisioned the program as a way to transfer our methodology, building the capacity of local institutions and instructors to deliver the program on their own. While Berkeley will help initiate the process, with direct participation from faculty and staff, the idea is to partner with institutions of excellence in Brazil to disseminate and replicate the LLP course. Second, ever since our early conversations with the BNDES, we wanted to “start small but think big”. While our vision is to eventually roll out the program to ten centers of excellence in Brazil, in order to achieve scale and impact, we decided to start with two pilot programs, to show how the methodology works in practice, and to invite partner institutions to observe the course. We are grateful to the U.S. Department of State, which provided a seed grant of US$250,000 for the first two pilot programs. The third element of our vision is to learn from our partners in Brazil, and to adapt the methodology to the local context.
BayBrazil: Who can enroll? What are the requirements one must meet in order to qualify?
Flavio: We plan to deliver the program through different channels in Brazil. Partners such as universities will be trained to offer the LLP course through their entrepreneurship curriculum, as well as through University-based incubators, accelerators and technology parks. Universities and other institutions can also deliver the programs to their alumni and to the entrepreneurial community more broadly through executive education and continuing education programs. Additionally, as with the I-Corps program in the US, state and federal agencies can fund programs that utilize the curriculum to train entrepreneurs in the scientific community, creating a new channel to commercialize innovations, as an alternative to the technology licensing model.
We hope to connect with BayBrazil members who are interested in participating as entrepreneurs or mentors in the program. Each pilot program will train anywhere from 15-30 teams of 2-4 entrepreneurs, and will include a group of 10 experienced mentors, who are typically successful entrepreneurs with deep industry or technology experience.
The pilot programs will likely take place in Florianópolis, Belo Horizonte, and Rio de Janeiro. We have also discussed the program with institutions in São Paulo, Curitiba, and Recife. The program is delivered with a combination of in-person and online workshops, and mentors can participate through the online interface in real time.
In summary, we would like to provide different ways for entrepreneurs and mentors to participate in the program, and we believe that the BayBrazil community, with its Silicon Valley experience, can add tremendous value to the initiative.
BayBrazil: What would be the cost to enroll?
Flavio: The first two pilot programs will be free of charge for the teams that participate. As noted earlier, the cost of the pilot program is being funded by the U.S. Department of State and local partner contributions.
During the “roll-out” phase, after the pilot programs, the program will be offered both as part of university academic programs and to the broader entrepreneurial community, as an “open” program. Within universities, the program cost will be covered as part of the tuition. For “open” programs, we believe that the cost of the 7-week, intensive program will be around US$5,000-10,000 per startup. This is a modest investment for an in-depth training that can save years in time, effort, and resources of the founding teams, as well as their friends and families. If federal and state governments agencies embrace the LLP program in Brazil and contribute to the cost of running the program, the cost could be significantly lower for startups.
BayBrazil: You have a bold goal to train about a thousand Brazilian entrepreneurs per year. How do you expect to achieve this?
Flavio: As I mentioned, we would like to start small but think big. Our LLP program at Berkeley and the national I-Corps program achieve impact through scale: by training hundreds of teams each year, the winners emerge from the process. (As each team has 2-4 members, more than a thousand entrepreneurs can be trained each year). As my colleague Andre Marquis from Berkeley-Haas emphasizes, entrepreneurship training needs scale and intensity to have impact. Many programs in Brazil work with startups at a very superficial level, or without a replicable methodology that can scale.
Our presentation about the LLP in Brazil includes an ambitious goal of “creating 100 high-impact ventures with combined revenues of US$1 Billion”. Based on our experience at Berkeley, if the program in Brazil can be rolled out to ten centers of excellence, each training 40 teams per year, then 400 teams will be trained each year and 2,000-4000 teams will be trained over a period of 10 years (the range depends on the phasing of the rollout to the ten centers). If only 2.5%-5% of these teams achieve reasonable success, as they have achieved here at UC Berkeley, this would lead to 100 successful ventures with potential combined revenues of $1 Billion ($10 million per company). The key principle is to increase the number of companies that go through the training “funnel”, and to work with the companies to maximize their chance of success.
Krave Jerky, a single company that participated in the Berkeley LLP program, was sold for US$268 million to Hershey’s. Other success stories from LLP and Bay Area I-Corps include Carmenta Biosciences, AppScale, Picoyune and Stemkids. Many other companies received venture funding after participating in the LLP program at Haas, or in the Bay Area I-Corps program, which is also run by UC Berkeley. Again, it’s all about establishing a replicable, scalable process.
BayBrazil: Entrepreneurship is flourishing in Brazil. Yet, there is a high rate of startup failure and very few exits. Will we see more success cases in Brazil?
Flavio: The program has two related goals: to create more robust startups and to improve the deal flow for investors. Back in 2013, I did research for a book chapter on entrepreneurship in Brazil. I would talk to startups and they would say: “our technology is great, but we can’t get funded”. Then I would talk to investors and they would say “we have money to invest, but we can’t find good startups”. The reality is somewhere in between, and it’s not enough to increase the supply of funds without working to prepare startups for investment and growth. Entrepreneurial training is especially important in Brazil, which has many young founding teams, relatively few experienced entrepreneurs to provide mentoring, and high startup failure rates.
The preparation of startups for investment and growth includes all the elements addressed by the LLP program: finding a scalable business model, validating the business model with real customers and pivoting if necessary, developing prototypes, understanding industry dynamics, acquiring customers, and establishing metrics. At the end of the training, the startups are in a much better position to make a go/no-go decision. If it’s a “go”, then the program has already prepared the company for funding. If a “no-go”, then program has trained entrepreneurs to pivot or to evaluate the next opportunity, saving months (or years) of time, effort, and money.
In the NSF I-Corps program, companies that go through the training are three times more likely to receive follow up funding compared to companies that do not participate in the training, which is an indicator of success rates. Even if we achieve 2X improvement in funding rates and success rates in Brazil, this would have a big impact. If companies are more prepared for funding, they are also more likely to be positioned for growth and successful exits (most likely through acquisitions).
BayBrazil: You and a group of co-authors just launched a book on broadband internet in Brazil. Tell us about some of the highlights and lessons learned.
Flavio: Yes, thank you for the plug. I recently attended the annual BayBrazil Conference at Google, and the lack of reliable, high-speed broadband internet service in many parts of Brazil came up in discussion as a serious impediment for economic development. So I thought the subject of the book would be interesting for BayBrazil members. The book has been published in Portuguese (Banda Larga no Brasil) and is currently being translated to English, with support from Google. My co-editors are Peter Knight and Nathalia Foditsch.
Back to the comments during the BayBrazil Conference, when we talk about Custo Brazil (Brazil Cost), we generally think of physical infrastructure such as roads, ports, airports, as well as institutional constraints such as bureaucracy, the convoluted tax system, corruption, and so on. But increasingly, information infrastructure plays a crucial role in economic development. Fast and reliable broadband internet is important for competitiveness, economic growth, and social inclusion. The quality of the ICT infrastructure can also constrain innovation − for example, I met with a well known IT company in Brazil that could not fully roll out its cloud computing offering because its clients had unreliable internet service.
The book brings together several perspectives: economists, lawyers, policy makers, industry associations, and so on. It is divided into four sections: Overall Vision, Policies and Regulation, Institutions, and Case Studies. The Case Study section presents some very interesting stories: the development of the Ceará Digital Beltway, which has had a big impact on digital inclusion in the state; NetRocinha, a company that provides internet access at Rocinha, a squatter community (favela) in Rio de Janeiro; and the Connected Amazon project, which aims to improve connectivity in the Amazon region using under-water cables.
The final chapter summarizes the key lessons and insights from the book focusing on six areas: regulation for competition and innovation, investment in the sector, taxation and subsidies, the government’s role in “universalizing” access, the participation of civil society, and the importance of innovation, whether in technology or business models.
BayBrazil: How connectivity among populations who don’t have access today may impact the development of Brazil and other emerging economies?
Flavio: Almost everything we do today requires access to information, or some kind of information exchange: think of GPS and driving, online banking, taking a class at school, interacting with your customers, voicing your opinion in a democratic society, and so on. Furthermore, digital literacy and access to technology also impact economic inclusion − they affect productivity and the ability to effectively participate in the labor market. The book discusses academic research linking broadband penetration to employment and economic growth. The case studies highlight the human element, showing how access to broadband is bringing change to the interior of Ceará and to the Rocinha community in Rio de Janeiro. The book argues that access to reliable, low-cost broadband internet service is fundamental for economic development and social inclusion, whether in Brazil or in other developing regions, and proposes an agenda for the policy debate involving government, business, academia and civil society.
See news link on UC Berkeley-Haas Lean Launchpad program in Brazil:
See link about the book, Broadband Internet in Brazil: