Mexico’s 'Silicon Valley' Senses Opportunity Despite Donald Trump’s Threats
Mexico’s burgeoning tech sector sees the threats posed by the Trump administration as an opportunity to lure foreign talent and ease its dependency on the US.
Donald Trump's obsession with tearing up NAFTA, bringing back jobs, deporting millions of undocumented immigrants and making Mexico pay for his infamous wall has inspired much fear and uncertainty south of the border, causing the peso to plummet to record lows.
Tens of thousands of Mexicans marched across the country on Sunday to show they will not be bullied, but also to castigate their own president, Enrique Peña Nieto, whose approval ratings have slipped to 12 percent partly because of his meek response to Trump's threats.
In Mexico's burgeoning tech sector, however, concern is offset by recognition of an opportunity to build a more self-sufficient scene and capitalize on Trump's rejection of foreign talent.
Long famed as the birthplace of tequila and mariachi music, the western state of Jalisco is now known as "Mexico's Silicon Valley" due to the proliferation of local and multinational tech firms clustered around the state capital Guadalajara.
Last week, Jalisco governor Aristóteles Sandoval ran a bold full-page ad in Politico magazine offering to work with any American tech firms affected by Trump's policies, while providing opportunities for their 85,000 foreign workers "with no discrimination of origin, religion or legal status."
"If the United States shuts the door on people with visas and skills then of course we'll open the doors to them here in Mexico, where there's no barriers for talent," Sandoval said in an interview with Motherboard on Monday before flying to California for talks with local officials and dozens of major tech companies and startups.
Tech giants like IBM, HP, Oracle and Intel all have operations in Jalisco and there remains a risk that they could be adversely affected by Trump's protectionist policies. "Of course they're worried," Sandoval said, "but they're waiting to see what decisions President Trump takes and which reforms will be passed before taking any decisions."
To offset any additional risk, Sandoval added that Jalisco offers investment incentives like subsidized infrastructure and training programs, college grants, use of government facilities at competitive prices and state payroll tax breaks, alongside other federal government incentives.
Ironically, the Trump-induced decline of the peso could also make Mexico more attractive to foreign investors. Another effect of Trump's aggressive stance is that some Mexicans have begun prioritizing locally made products while boycotting American businesses like Walmart, Starbucks and McDonalds.
The backlash against Uber that led CEO Travis Kalanick to resign from his role on Trump's business advisory council also went viral in Mexico. This has created opportunities for local alternatives like CityDrive, a startup founded in Guadalajara in 2013 that now operates in five Mexican cities.
CityDrive CEO Luis Petersen told Motherboard the Uber controversy coincided with his firm's launch in Mexico City, helping them to gain greater publicity in the local press and a spike in downloads across the country.
"With all the risks the Trump administration could bring us, one positive aspect is that for the first time we're seeing a serious movement focused on consuming local products," Petersen said. "This can be a commercial advantage for Mexican businesses. If we come out of this with the habit of consuming local products then I think we'll come out of it stronger."
Andy Kieffer, a former Silicon Valley entrepreneur who founded the Agave Lab accelerator and venture fund after moving to Guadalajara in 2008, also believes Mexico can benefit by looking inwards and using technology to make its antiquated industries more efficient instead of trying to compete in America's saturated startup market.
"Mexico's tech sector is manically and unnaturally focused on being relevant in the United States while completely ignoring the immense opportunity that's here. There are huge, billion-dollar industries that are still operating 20 years behind the times, so in some senses I'm wondering whether this might be a great wakeup call for Mexico," Kieffer told Motherboard.
"Look at banking, transportation and logistics, we're still operating like it's 1973 here. Why not look around you and fix the problems that you know intimately and you're living with?" he added. "This is a great opportunity to focus inwards and apply our technology here."