During the past 80 years, Tijuana has been portrayed as the city of sin, a place where one can partake in drugs, sex, and liquor.
Ever since the 1930’s its proximity to the US, allowed the famous “Mob Entrepreneurs” to take advantage of its geographically strategic location looking to satisfy US demand. Such is the case of Al Capone with alcohol during prohibition, and of Bugsy Siegel (the founder of Las Vegas) with drugs from 1942 to 1946; which proved to be a highly profitable business model known today as narco-trafficking.
“Mob Entrepreneurs” ventured in the drug business during the past 70 years. Barriers of entry began to appear when our city went through a bloody narco-war from 2008 to 2010. The “Siegel’s Promise Land” was threatened during the “drug war”, which the government decided to undertake, resulting in many deaths, fear in the streets, and a horrible reputation for the city.
Today we know the good guys won, given that violence has decreased dramatically due to the aggressive, yet effective, safety strategy. Now one can read in the NY Times about its rebirth, stunning architecture, outstanding culinary and art scene, and, last but not least, its massive business and technology potential.
The reason why Tijuana has grabbed the public’s attention lately is because of its underdog’s story. It’s simply the character in the movie that the audience cheers to win.
Tijuana today is the largest and most influential border city of Latin America, with unofficially, around more than 3 million inhabitants. A city completely built on immigrants and US deportees, amounting to over 60,000 per year.
It’s also California’s gateway into Latin America, which makes its potential real.
But really, what does California offer that Latin America wants and vice versa? We know that the industries that dominate California are technology and entertainment. Therefore, we need to learn how “Mob Entrepreneurs” did in the first half of the 20th century, but with legitimate business ventures of course. We need to exploit the technology and entertainment industries for customers in Latin America and the US, using Tijuana as the gateway passage for these transactions to take place.
3DRobotics, a drone hobbyist company, Boxel Studio, a small Latin American Pixar, Busca Corp, one of the top digital media firms in Latin America, and Uber, a multibillion transportation company, have already pioneered by using the “Tijuana Connection” for proximity, access to talent, and market. The following detailed below:
- Proximity – the cross-border logistics of the city are:
- Tijuana – Mexico City: 3 hour flight
- Tijuana – San Diego: 20-30 minute drive
- Tijuana – Los Angeles: 2 hour drive
- Tijuana – San Jose: 20-40 minute drive to San Diego airport plus 40 minute flight
- Talent – the proximity to San Diego, Los Angeles and San Francisco, along with the high immigrant population, gives Tijuana the advantage of having programmers and technical workers that speak perfect english and some even have technical studies in the US. This effect is also very viable for startup bootstrapping, given that the price of rent in TJ is .5 cents per square feet VS $10 USD in the Bay Area.
- Market – the potential of the Latin American market today is:
- 231 million internet users
- Mexico is the 5th largest Facebook user base
- Middle class consumption grew by 70 million in the past 8 years
- Its population is 2X the size of the US and Canada combined
By following these three benchmarks, Tijuana should become the test bed for the tech industry in product development and market validation. It should give the ability for biotech firms to reach faster clinical trials, and give Internet companies the opportunity to study and truly understand the Latin American customer.
For all of these reasons, through SV Latam, an early and seed stage Venture Capital fund, we will aim to have a strong presence in the Calibaja-Mega Region with a focus on linking technologies from Latin America into the US, and vice versa.
I believe Tijuana should take advantage of its turbulent past by understanding its controversial profitable business models driven by market needs, and apply it towards its future in the technology and entertainment industries of the US and Latin America.
Who knows, maybe the legitimate “Bugsy Siegel” will rise from Tijuana and will give way to a new industry led by a generation of successful cross-border entrepreneurs.
Partner, SV Latam Fund