AI Makes Starting Up More Democratic, but Concentrates the Epicenter in the Bay Area
AI distributes technology to the whole world, yet concentrates the fastest change back in the Bay Area; the borderless founder's leverage is not local knowledge but a diaspora network they can mobilize across borders.
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In the US everything can be as a service; elsewhere it can't
Angela says that when she was doing fintech she found that in the US every layer has an as a service, but in Latin America there is no fraud as a stack, no KYC as a stack, and founders have to build everything themselves. This leads to a counterintuitive conclusion: the less mature the local market, the deeper the local knowledge required of the founder, but once it's built, the thicker the moat. Her first check went to Adi's CEO Santiago Suarez, and today Adi serves the banking and payments of a quarter of Colombia's population.
— Angela StrangeCramming 30 unicorns into one WhatsApp group
When Gabriel was doing Latin American mapping, there were only 30 unicorns in all of Latin America, and founders in Brazil, Colombia and Mexico weren't talking to each other. So they built a WhatsApp group and put Angela, Marc Andreessen, Alex Rampel and these founders in it. The unexpected payoff: these people are themselves prolific angel investors and started exchanging deal flow in the group, so a16z both saw early-stage projects and took part in the community. This was the starting point of the whole global strategy.
— Gabriel VasquezAI democratizes and centralizes at the same time
Gabriel says AI has an interesting dichotomy: the technology is very democratic, distributing capability to anywhere in the world and opening new markets; but it simultaneously concentrates the fastest-changing epicenter in the Bay Area. The result is a reversal of behavior — previously founders in Brazil and Colombia needed a16z to fly to them to connect, now they all want to come to the Bay Area, and to be integrated faster. This point is the premise for understanding every mechanism that follows.
— Gabriel VasquezThey all carry a chip on their shoulder
Gabriel says borderless founders often have a chip on their shoulder: coming from an overlooked country or a small place, no one will build the benchmark for you, you have to become the benchmark yourself. He gives his own example — growing up in El Salvador, after coming to the US no one would say "I know another impressive person from El Salvador." Angela adds that this isn't limited to countries; people from small rural towns in the US are the same. The driving force is "no matter where I was born, I can achieve greatness."
— Gabriel VasquezPoaching Capital One people to Bogotá
The most practical use of brand advantage is hiring. Adi expanded extremely fast and needed credit officers who could handle billions of dollars in GMV, and the best credit talent often comes from Capital One. The problem: how do you get someone at Capital One in Virginia to be willing to go to Bogotá? The answer is to become Colombia's hottest company — rather than joining one of 50 look-alike companies in the US, join the one that is already the clear brand winner. Brand also brings government relations: Jeeves works with Brazil's central bank, using stablecoins to help companies move money across borders.
— Angela StrangeThe AI talent isn't at the university you think
Angela gives the example of an AI insurance company in Brazil: the best AI talent isn't at the most famous university, but at the one you've never heard of. How to find them? Go to the scholarship programs that scour the country for the best students, go to robotics competitions. If you get 10 extremely smart people early on, the 11th person in the US holding a hundred offers will look at your team and think "how did they get such strong people there," and the talent flywheel starts. The same goes for customers: no one wants to be the first bank or the first insurance company, but through a borderless network you can get big banks and big insurers faster in another country.
— Angela StrangeEvery market has a local luminary
Gabriel gives their concrete method for entering a new market: first find the local luminary — someone extremely respected in the local ecosystem who desperately wants their ecosystem to be seen. Company size and degree of success don't matter. In Sweden the example is Boy's founder Frederick Yeom, who from the outside looks like just a scooter company founder, but he has invested in almost every relevant company in Sweden because he connects both young and senior founders. The first step is understanding who these people are and how to help them; the second is finding the country's rising stars, like Swedish high school dropout Gabriel Peterson, who worked at MidJourney and later became one of its youngest researchers, and is now starting his own company.
— Gabriel VasquezThe first wave of founders didn't go the whole way
Gabriel says the first wave of entrepreneurs in these local ecosystems got to the $1 billion to $5 billion scale but couldn't go the whole way — because the ecosystem itself was too hard, they have many lessons and failed to realize their vision. This group now wants to build a second company, bringing all their knowledge and network to do something bigger. a16z's approach: track them, help them come to events, help them reactivate their networks (especially connecting to Stanford's smartest engineers), help them ideate, and introduce customers for early validation. When Frederick Guillaume's new company pip.com came to the Bay Area, they arranged meetings with executives at DoorDash and Lyft; after going back the direction was clear, and they ultimately chose a16z.
— Gabriel VasquezThe visa is the most anxiety-inducing first hurdle
Asked what it's like for a seed-stage founder entering this ecosystem, Gabriel says the first thing is the visa — it sounds unimportant, but it's the most anxiety-inducing process of moving to the US: which one to apply for, whether I qualify, who will write my recommendation letter. a16z invested in a visa company, Extraordinary, and works with it to help founders figure out eligibility. Second is the hacker house: they sponsored Palo House, where four students from Germany's CDTM program wanted to open a house in Palo Alto and bring the smartest people to live there, hosting 1200 people over four months through dinners and lodging.
— Gabriel VasquezThe next generation of family businesses wants to become AI native
Angela points out an internationally specific opportunity: many countries have a few powerful families controlling a large number of businesses, and the next generation of these families very much wants to become AI native. a16z pulls them into the borderless founder group. If you want to find global operations and finance leaders to ideate with and talk about their problems, they are very willing to talk with the smartest people in the community about what to build. This mechanism has already gotten portfolio companies real contracts.
— Angela StrangeStay at least three to six months
For international founders who want to come to the Bay Area, Gabriel's advice is: you must come and stay for a while, because no one who comes says it was a waste of time, everyone goes back more excited, and you can calibrate speed — what the Bay Area still leads other ecosystems in is speed. His personal advice is at least three to six months; a few weeks isn't enough, because you need to get through the depth of the network; a few weeks can sometimes be frustrating instead, because it's hard to connect with people. People who stay longer go back with the right connections, whether they ultimately decide to go back or move here. Angela adds: lean on your diaspora, the Bay Area's diaspora network is much deeper than you think.
— Gabriel VasquezIn their own words · checked verbatim
you could compete to be the fifth financial services for every customer in the U.S. Or you could go to a wide open market with five fat, happy banks that only serve 20% of the population.
Angela Strange2:04
this technology is very democratic. It distributes the ability to get it anywhere in the world. It opens up other markets. But then it also concentrates the kind of epicenter of where things are moving the fastest to the Bay Area.
Gabriel Vasquez6:19
they tend to have a chip on their shoulder. So like they either grew up in a country that was overlooked.
Gabriel Vasquez11:27
How do you attract somebody from Capital One in Virginia to want to work down in Bogota? You become the hottest company in Columbia.
Angela Strange21:51
you might think, oh, the best talent is at the top, most well-known universities there. Actually for AI talent, it's at a, you know, university that you haven't heard of.
Angela Strange24:01
The scale of the company and the success of the company doesn't really matter, but it's people that try really, really hard to make their ecosystem, you know, valid.
Gabriel Vasquez27:08
I never met somebody that came to Silicon Valley and was like, this was such a waste of time. Everybody goes back excited and it helps them calibrate as well on the level of speed.
Gabriel Vasquez41:41
Figures
| Number of Latin American unicorns (when Gabriel did the mapping) | 30 | 4:12 |
| Share of Colombia's population Adi serves | a quarter | 3:09 |
| Number of people Palo House hosted in four months | 1200 | 38:39 |
| Share of a16z investments from international founders | 40% | 42:45 |
| Split of a16z's international founder investments between in-US and abroad | half in the US, half in other countries | 42:45 |
| Minimum time Gabriel recommends staying in the Bay Area | three to six months | 41:41 |
Glossary
- borderless founder
- A founder who starts in their home country but has global ambition, or builds a team across borders.
- local luminary
- Someone extremely respected in the local ecosystem who works hard to make that ecosystem seen.
- preferential attachment
- The flywheel in which attracting the best talent and customers early makes subsequent connections progressively easier.
- hacker house
- A base that provides early founders with short-term free lodging and exchange.
- fraud as a stack
- Turning anti-fraud capability into a ready-to-call service layer.
How to listen
Chinese founders considering going abroad or moving their team to the Bay Area, VCs doing cross-border investing, and anyone who wants to understand how diaspora networks convert into deal flow.
The show intro from 0:00-2:04 can be skipped; go straight to the main topic starting at 2:04.