Innovation in Tijuana: Eager for the Future, Hampered by the Past

6/3/14Follow @samquinones7

[Corrected 6/3/14, 10:05 am. See below.] One day last year, Oscar Franco, a Tijuana tech engineer, was taking a break from work and noticed an upcoming soccer match between Los Xolos, Tijuana’s team, and Monarcas, the team from the city of Morelia, Michoacan.

With many friends in Morelia, Franco wondered how he might use an app to bet his friends from far away. He spoke to some colleagues and Matchap was born.

The Android app (Android is Mexico’s preferred mobile operating system) would enable friends and soccer fans a way to challenge each other to wagers over upcoming games, follow their favorite teams, view game results, and see, at season’s end, who’d made the best picks.

Franco and his friends figured a market for the app had to exist. “There are about 70 million smartphone users in Mexico and six of every ten Mexicans consider themselves passionate football fans,” Franco said.

But the Matchap founders lacked expertise in marketing and business administration. They also needed contacts in high tech and financing.

They turned to MindHub, a Tijuana-based attempt to cultivate budding entrepreneurs, and that reflects the high-tech startup ecosystem in this rambunctious city of 1.3 million, just across the border from San Diego.

[Corrects spelling to ArkusNexus] MindHub is the brainchild of ArkusNexus, a Tijuana company that designs business management software for U.S. firms.

The idea began a couple years ago as the company’s young owners—Jorge Arroyo, Angel Sanchez and Juan Reynoso—realized that several of their employees had ideas that could be the kernels of future high-tech startups.

One employee had an idea to provide textbooks on computing—hard copies and e-books—to Mexico’s Department of Education for use in the country’s elementary schools. An accountant at the firm had the idea for accounting software that was integrated with Mexican tax law.

In January, Arroyo, Sanchez, and Reynoso figured Tijuana might be buzzing with similarly promising ideas. They announced the company would assist aspiring entrepreneurs whose ideas seemed promising.

Arcos Nexus would help shape their ideas, design marketing, and find seed financing—giving each promising idea $25,000 worth of in-kind assistance. In exchange, Arcos Nexus takes a 10 percent stake in whatever might result, though so far none has gone much beyond the conception stage.

“There’s no doubt that there’s a little bit of philanthropy in what we’re doing,” said Ulises Elias, an entrepreneur who was brought in to lead the incubator part of Arcos Nexus.

In 2012, the company also helped initiate Tijuana’s Start Up Weekend, which brings entrepreneurs together twice a year to brainstorm ideas for a new product or company over one weekend.

Since then, people have come from all over Tijuana with ideas they have tinkered with, but never before saw the chance to make real, Elias said.

The fifth Start Up Weekend, focused on health-care products, takes place this weekend (June 6-8) at Tijuana’s Business Innovation and Technology Center, a space for entrepreneurs to develop and collaborate on high-tech ideas. The MindHub experiment, now five months old, reflects the just-emerging tech scene in Tijuana. The town has a large, educated middle-class, and people who’ve come to Tijuana are often looking to the future. Their efforts include a partnership with HardTech Labs, a San Diego accelerator program established recently to give startup founders access to low-cost manufacturing in Tijuana.

“Every day there are more people that I know getting into startups,” said Franco, whose Beta version of Matchap was being prepared for a “Demo Day” presentation set for the end of May, along with two other product ideas that MindHub has fostered.

Of course, MindHub is not the only organization formed in recent years to cultivate Tijuana’s entrepreneurial effervescence. Endeavor and Tribu Emprendedora are two others. And Hub Station, on Tijuana’s Avenida Revolucion tourist drag, recently opened to provide a space for U.S. companies to collaborate with Tijuana engineers.

Still, Elias said, “we’re just beginning, and I’d say that characterizes the quality of the ideas as well. Most are copies of ideas that already exist in some other part of the world, but are adapted to the Mexican market.

“We’re still working to open the entrepreneurial mind to think globally. We can start locally but think globally.”

To that end, MindHub is aiming to start Mind University, offering classes in problem solving and business solutions for aspiring entrepreneurs.

Financing is another problem. Over the decades, a wealthy class formed in Tijuana that made its money selling and renting land to maquiladoras—the squat foreign-owned assembly plants that put together everything from car parts to appliances and Bluetooth headphones. But these investors got used to almost guaranteed returns, and are risk-averse when it comes to investing in technology.

“We have to either educate them or cultivate their children who’ve been educated in the U.S. and speak our language,” Elias said. “What we need are success stories. We need more adventurous investors who say, `I’m willing to invest, run the risk, to generate the ideas that can succeed to show others that this can produce good returns on investment.’ This is happening but not at the speed we need.”

The MindHub experiment encapsulates much about high-tech in Tijuana: bursting with energy and eager for the future, while hamstrung by the past.

Even the lot where the MindHub building stands embodies where the city is going and where it’s been. Across the lot from the building, with its rooms of tech-educated 20-somethings slouched at computer flat screens, is a house where a family has raised fighting roosters since the 1920s— 150 birds in all.

Elias at times has been talking on the phone with clients, while the roosters crow in the background.

“They’ll hear it and say, `Where are you? Are you on a ranch? I say, `I’m in the city,’” Elias said.

Sometimes, he said, “it feels like when this was Rancho Tia Juana.”

Sam Quinones is a former Los Angeles Times reporter. You can reach him at samquinones7@yahoo.com or www.samquinones.com Follow @samquinones7

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