Francisco has +12 years of experience in companies in the real sector, private equity, investment banking and management consulting in more than 8 countries across Latin America. He was previously CFO and CTO at MesoFoods (Café OMA/Presto) which is one of the biggest food service groups in Colombia with 450+ points of sale. Prior to that he was consultant in Mesoamerica, a leading Private Equity firm focused in Latin America, where he participated in several M&amp;A and strategic consulting projects across all Latin America in various industries including cement and aggregates manufacturing, construction materials wholesale and retail, sugar cane, energy, banking, bakery/coffee bars, airlines and telecommunications. He holds an MBA from INCAE Business School (Costa Rica), and a B.Sc. in Industrial and Systems Engineering from UNITEC (Honduras).

Business Design Director

Francisco Paz 

In order to build successful startups in developing countries, entrepreneurs need to fully understand the<a href="https://polymathv.com/building-business-latin-america-means-building-trust/"> complexity of the market</a>. These markets look very different than hubs like Silicon Valley, so how you design, launch, and fund companies need to look different. A common strategy that we see in emerging markets over and over again is the attempt to replicate business models that previously worked in developed countries. Innovators, entrepreneurs, and investors often believe that a company’s success in a specific demographic will work in the developing world, granted some cultural and operational tweaks are made to adapt to under-developed market constraints.However, more often than not these successful models fail to catch on in emerging economies. The product, the technology, and the model are outstanding, product-market fit has been proven to work but the product does not reach the consumer – what is the missing piece?The reality is that emerging and developed economies are governed by vastly different business environments. A country’s economic status is defined by factors of economic growth; including per capita income, regulatory bodies, market capitalization, and overall levels of liquidity. These factors determine the readiness of the business environment to adapt to innovation and ultimately to build successful startups systematically.In developed markets, mature business environments and solid infrastructure (both hard and soft) made it possible for business model innovation to thrive even in very specific and niche markets. The efficiencies in adjacent sectors and their supply chains supported new agile business models, thus enabling effective cost reductions, better customer experience, and good growth.On the contrary, emerging markets often don’t have the luxury of a well-established infrastructure base nor diverse industrial development. Startups will most likely need to create the adjacent efficiencies for their own operation, which market-creating innovations can achieve.<h3>The power of market-creating innovation</h3>To build startups in developing countries, entrepreneurs must focus on developing new markets that serve people for whom either no products existed, or existing products were not previously accessible – that is, innovators must target non-consumption.However, reaching the right consumers in emerging markets is easier said than done. While disposable incomes are progressively rising in regions like Latin America, price-sensitivity is still high, and finding the right cost structure to reach the masses requires a lot more than leveraging the right technology or having a good idea.In order to develop new markets and give middle-class earners access to new products, it’s important to take a long-term, holistic approach to the process of innovation. Instead of trying to “fix” these markets by bringing successful business models from other countries, the process of innovation must be carried out from within – considering business dynamics and inefficiencies across industries and finding operational models that can seamlessly work across multi-sectoral environments.Market-creating innovation requires highly specialized and multi-disciplinary talent, extensive consumer research, and an ecosystem-building approach. Identifying the product-market fit isn’t enough in the emerging world. Specific infrastructure must be built in conjunction with deploying a new product, in order to reach the consumer at the price-point that will trigger the profitable level of consumption.The original idea behind <a href="https://offer.alibaba.com/cps/snff7epq?bm=cps&amp;src=saf&amp;tp1=60511f5d1ff8230458329603&amp;pid=62">Alibaba</a>, the Chinese e-commerce giant, was to give outsiders access to Chinese goods. Additionally, Alibaba’s founder <a href="https://en.wikipedia.org/wiki/Jack%5FMa#:~:text=Jack%20Ma%20Yun%20%28Chinese%3A%20%E9%A9%AC,open%20and%20market%2Ddriven%20economy.">Jack Ma</a> realized that the rising middle class was willing to pay for convenient access to a diverse selection of products. Ma saw the opportunity to target non-consumption, to focus on the service to give access to products that the Chinese did not have an opportunity to enjoy.However, the infrastructure to support a platform like Alibaba did not exist. China did not have great broadband access, product merchants did not have a way to feature their products online, and there wasn’t a trustworthy online payments structure. Alibaba understood that if they wanted to reach its customer with its core product, they would need to build the infrastructure to support it.<figure class="image image_resized" style="width:64.39%;"><img src="/uploads/Alibaba_business_1c314538a5.png"><figcaption>Source: Alibaba</figcaption></figure>Alibaba built the business infrastructure that was needed to reach its e-commerce customers. By assembling a multi-disciplinary team of logistics, marketing, and financial talent. Alibaba not only built the foundations of e-commerce but also created a local services division that educated SME’s on how to optimize their online business sales – in turn, giving users better access to their core e-commerce services.<a href="https://intl.alipay.com/">Alipay</a> was launched in 2004 to solve the trust issue for online payments. The product was introduced to ease people’s sentiments towards making online payments before actually seeing the product. This payment “infrastructure” that was originally built for Alibaba’s e-commerce business has grown into one the world’s largest unicorn, providing every possible financial service for the massive population of China.In Latin America, startups have already begun to take a similar approach. The e-commerce and logistics companies <a href="https://www.mercadolibre.com.co/">Mercado Libre</a> and <a href="https://www.rappi.com.co/">Rappi</a> are optimizing the logistics and online payments infrastructure, by developing urban logistics networks and embedding user-to-user transfer payments and financial closed-loop systems.<h3>HUMAN-CENTERED DESIGN to build startups in developing countries</h3>One of Alibaba’s successes was to rapidly understand the needs of an underserved segment that had the resources and willingness to invest in the category. In our process as builders, we understood that this is key to build startups in developing countries with a low failure rate and the tools and resources to get faster to product-market-fit. Simple surveys or desk research are not sufficient for truly understanding the human experience. Instead, we have learned the importance of going into the field and conduct dozens of in-depth, ethnographic interviews and observations with the actual people impacted by our potential build.To do so we leverage <a href="https://polymathv.com/process/">human-centered design</a>, which allow us to better connect with the people we serve. It allows entrepreneurs to transform data in actionable ideas, it can help to unlock new opportunities and increase the speed and effectiveness of new solutions. This methodology relies on the ability to be intuitive and recognize patterns that allow business builders to construct ideas that are meaningful as well as a functional.<a href="https://polymathv.com/insight-help-us-build-human-centered-businesses/">Human-centered design</a> is a methodology implemented across multiple industries and categories in the process to build startups in developing countries. Its a versatile solution because it is inspired by behaviors rather tan demographics and it relies on dynamic conversations, rather than scripted interviews. When leveraging this methodology, entrepreneurs must consider the following characteristics.<ul><li>Empathy: Approaching a problem with a “beginner’s mind”, resisting biases or quick solutions, and deeply exploring a subject from many angles. Trying things for yourself (taking an exercise class, applying for a job). Making the problems of your users your problems, really internalizing the issues.</li><li>Creativity: Thinking in an expansionary way, exploring unexpected paths and connections between ideas. Being visual, posting things up on your team room walls, discussing, building models and prototypes. Building on the ideas of others. Saying “yes, and…”</li><li>Rationality: Determining the essential components of an idea, and exploring it in a methodical way. Building prototypes to test features of the idea, then measuring your results, in an effort to develop rich concepts that solve the issues you have found.</li></ul><figure class="image image_resized" style="width:63.01%;"><img src="/uploads/interview_real_users_de78e75629.jpeg"><figcaption>Interview with real users</figcaption></figure>When executing interviews with this methodology, entrepreneurs must have a clear understanding of what they would like to achieve and prep the conversations to make sure the objective is pursued at every interaction. The first step is to prep the session and determine the role of each participant in the interview, because if everyone does their job then all data will be captured. They should also consider that smaller groups are more effective because it will make users more comfortable.Once they arrive at the interview, entrepreneurs must consider they are getting into the houses and personal spaces of their users. So respect and courtesy are a must. They should start by introducing themselves and explaining the goals of the sessions. The final user should understand from the kick-off that entrepreneurs are there to listen and learn from them.Lastly, the conversation should flow. Users should be able to tell the story and entrepreneurs must be aware to pursue the goal during this interaction. A pro tip we have for entrepreneurs is that usually some of the most useful bits of information will come in the last few minutes.<h3>Innovation to build startups in developing countries</h3>It is commonly believed that in order for innovations to occur in emerging economies there must be a great regulatory environment in place. However, many studies of entrepreneurial success in China and Africa show that regulation is actually a result of business innovation and not the opposite.In China, when Alibaba developed its online payments system to give convenient access to its users, the regulatory bodies for payment transactions adapted to the new payment alternative. These bodies saw the rate of adoption of online users and developed policies to secure internet payments and build trust – ultimately supporting economic growth.In general, regulatory bodies will adapt to innovation as markets always work towards efficiency. However, to justify costly policy changes, it is imperative that the entrepreneurial ecosystem focuses on developing products and services that create multi-sectoral efficiencies.The Doing Business organization of World Bank clearly defines the business environment as an ecosystem of different players that act in different stages of enterprise development. In emerging markets, these players are often ready to support rudimentary practices but do not sustain new data-driven and agile business models. It is up to the entrepreneurial ecosystem to trigger regulatory change by building profitable markets worth regulating.Latin American governments are already seeking to promote technology by supporting market-creating innovations. In Mexico City, regulatory entities supported the ride-sharing environment by developing shared-economy policies, improving market transparency, and legalizing access to new sources of income.Innovation opportunities in Latin America stem beyond leveraging new technologies. As a country in the emerging economy bracket, supply chains and regulatory bodies are yet to achieve optimal performance. In order to create new markets, businesses will have to be built to not only reach core consumers but also to make the business infrastructure more efficient, and regulation will follow.Entrepreneurs and investors will highly benefit from taking an ecosystem-building approach when developing new business models. Identifying non-consumption is a great first step, that must go with a mix of specialized talent and a business model that can support synergies across industries.When looking to build startups in developing countries, entrepreneurs can take inspiration from <a href="https://polymathv.com/about/">Company Builders</a> like Polymath Ventures, which have developed the right methodology to systematically build successful startups in Latin America. At Polymath we have generated over 200 business concepts, built 10 companies, 7 of them are still operating and we have learned from failures and big wins.

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How to Build Startups in Developing Countries

“The form of an object is a ‘diagram of forces’, in this sense, at least, that from it we can judge of or deduce the forces that are acting or have acted upon it”-D’Arcy Thomson from the book “Of Growth and Form”As a specialist of any order, when one sees a representation from his or her field, there is an inevitable compulsion to analyze it and speculate on the drivers of its origin. A film director at the movies, a chef at the table. Thomson proposes that the forces; price, material inputs, market trends, for example, are all exemplified in the final execution, just waiting for the keen and curious eye to reverse-engineer and detect the challenges that the creating team contended with.Design is all about constraining forces – and how designers choose to address them. Here is some of what we have learned about constraints, and opportunities, in Colombia in our first year.<h1>Goods are expensive.</h1>Colombia sits in the Andes mountain range and while this provides for beautiful natural scenery, it greatly limits the importation of goods from the coast to the interior. In addition to the terrain, transit into and around the country is difficult because infrastructure like roads and rail are lacking. These variables drive up the prices of consumer goods like clothing and electronics, as well as foreign big-ticket items like industrial machines.When thinking about implications for design, we consider the hard numbers as well as take cues from the workaround solutions that Colombians have put in place in their everyday lives. Repair shops are plentiful as it is cost-effective to prolong the life of products. Cars are kept on the road longer, and custom furniture undercuts store-bought. In most cases, it is less expensive to hire labor than to pay retail. This is particularly interesting when considering the next constraint.<h1>Labor is everywhere.</h1>A low average wage and a large basically-educated workforce have provided a readily available and affordable entry-level labor pool. In turn, many industries are abundantly staffed, rather than technically automated. Retail stores and restaurants team with salespeople. Crews of workers maintain city parks with basic landscaping tools, where a single lawn mower might do the job in a fraction of the time (if time were the defining criteria). Even skilled professional and technical labor in a majority of sectors is low-paying. This dynamic is an important consideration both in cultural and economic observation, as well as in the solution space. A seven-man road crew in Bogotá<h1>Human cues establish trust.</h1>A common sight in grocery stores and malls in Colombia is a man or woman in crisp uniform, standing behind a small table set with promotional items, engaging with the public, attempting to promote his or her company’s wares. This phenomenon is not new, nor exclusive to the country, but where in other regions of the world passersby might avoid an attired hawker, Colombians will stop and listen. People like to hear about new products and services in person, rather than from an advertisement or website, and if they like what they hear, they sign on.From membership clubs to mortgages, a recommendation from a friend is trusted more than an institution. Talk radio is a powerful medium of influence as well. When designing for Colombia, making a personal connection is key to consumer trust.<h1>Criminals are sly.</h1>Although the country has made considerable national security improvements, and all but extinguished the fundamental threat of decades ago, the past culture of corruption lingers. Petty thieves are still a contentious force, with a craft that has been sharpened over time. Colombians have a word for the criminal technique, “avispado”, which would sort of translate to being an opportunistic wasp. From cellular phone theft (a whopping 4,000 per day)(1) to muggings, personal security is still at risk in urban and suburban areas.Interestingly, when talking to a Colombian the notion of crime won’t even come up, it is just a given. In order to really understand the matter, it is important to notice the behavioral adaptations often unrealized by the individual, as well as devices put in place within the community. In developing products and services, building strong security features is required for hack-resistant, theft-resistant systems.<h1>Smart mobile is not the go-to.</h1>There is ample mobile phone penetration in Colombia and across Latin America, as well as growing Internet and media-package TV subscription. Smartphone market share, on the other hand, is still quite low (about 7 – 10%)(2), and many people who own smartphones don’t own data plans. Combine this with the security risk attached to flashing an expensive-looking phone in public, and the speed of adaptation is decreased even more. The numbers are growing and mindsets are shifting, but while most service design ventures will need a mobile application to compete in today’s market, designing for the middle class must include high-, low-, and no-tech capabilities and connectivity.<h1>Prototyping is easy.</h1>Bogotá is a hands-on city, where people make things, install things, and still fix things rather than just replace them. Within the city, you can easily find printers, painters, builders, and specialized fabricators of everything from plastics to PCB boards. This has been fantastic for us in being able to quickly prototype our ideas, and we have met networks of wonderful, friendly craftspeople. The speed, price, and low minimum order quantity has been invaluable to our lean development process.These are just a few of the high-level forces that have surfaced within a short time on the ground. Distinct, they appear when minds are fresh and senses are sharp. It is interesting to think of how conditioning and integration will affect this vantage point, and what has already become part of the fabric of a keener understanding of the region. Thomson, a naturalist, and mathematical biologist examined growth patterns in the natural world and charted the underlying structures that drive them. Building new business ideas, grasping implicit constraints helps to better recognize behaviors and biases, and informs more thoughtful, deliberate design decisions.&nbsp;References:(1) //blogs.ft.com/beyond-brics/2012/10/11/colombia-4000-mobiles-stolen-daily/#axzz2ZuvCGTIt (2) Multiple Sources: //prezi.com/_ffduroengao/smartphone-industry-in-colombia/ //www.slideshare.net/USMediaConsulting/latin-americas-media-market //www.gsma.com/publicpolicy/wp-content/uploads/2012/04/latammoeng.pdf

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Push & Pull: Design Forces in Colombia

Business Designers are at the core of the<a href="https://polymathv.com/library/articles/6-reasons-venture-studio-mode"> Venture Studio Model</a>. It all comes down to the idea of building companies intentionally, putting humans at the center, and understanding the complexity of each sector, industry, and market.In this article, we are going to review the fundamental role of business designers in our quest to create transformative companies for Latin America, we will discuss the relevance of this discipline in our day to day work and give you some advice on how to implement Business Design in your own ventures or, why not, become a business designer yourself.<h2>What is Business Design</h2>Business Design is a relatively new discipline that combines the practice of building business models with methodologies used by designers to create unique and effective frameworks to build, rethink or enhance Businesses.Sounds cool, right?But like everything in this complex world that we live in, it’s easier said than done.Business Designers are people with the ability to understand and apply a variety of methodologies and tactics to create, launch and test business models that are not only profitable but also solve complex problems for a specific target or industry.This is basically<a href="https://polymathv.com/about-us"> what we do at Polymath</a>, and that’s why we consider our Business Design team to be at the very center of our<a href="https://polymathv.com/process"> process and methodology</a>.To explore a bit more about the nuances of the work our Business Designers do, we talked to<a href="https://www.linkedin.com/in/francisco-paz-67b0a449/"> Francisco Paz</a> (Pancho) who currently leads the team. He told us a bit about his experience working at Polymath, and the main abilities we look for when recruiting the best BDs to build with us.<figure class="image image_resized" style="width:86.7%;"><img src="/uploads/Copy_of_Francisco_Paz_03_c1774f53a0.jpg"><figcaption>Francisco Paz - Business Design Director at Polymath Ventures</figcaption></figure>&nbsp;Pancho, as he will tell us later, has not always worked as a Business Designer, although he does have extensive experience working in finance, investment, and business in general, he was previously CFO and CTO for other companies before joining Polymath.This gives us an important hint about Business Design already: there is not a unique path to get there. In fact, the best teams of BDs are made of people with a variety of backgrounds, basically because when building companies from scratch, the diversity of views is paramount to achieving disruptive and innovative thinking.These multidisciplinary teams, work together to research and deeply understand the people we want to impact with our companies, they use quantitive and qualitative data to create business models and run the initial tests to prove their hypothesis.It’s basically a scientific approach to building businesses, and in our case, they are all intended to serve the middle-class of Latin America, through intentional digital solutions adapted for the specificity of the region and the demographic.That said, let’s dive into Pancho’s view with some questions:<h2>What does it mean to be a Business Designer</h2>FP:I believe being a Business Designer in Polymath is being both the heart, soul, and brains of creating new companies.The business design team is present from scratch. From the moment we have just identified a broad need and potential opportunity on a user segment until the moment we have found Product-Market Fit and started scaling a business. Even then we are also staffed on new challenges that arise in this more mature idea.We have two types of business designers on the team:<ul><li>First is the “service designer” who would be the heart and soul of company creation: This is the person that is closer to the user and is responsible for uncovering their needs (even when the user is not aware of them) that leads to value creation opportunities. This person should be really creative and should have significant empathy with the users. Their main working tool is Human Center Design.</li></ul>&nbsp;<ul><li>Second, we have the “business designer”. Continuing with the analogy, this person would be the brains of company creation. He’s also a part of the opportunity identification nonetheless their main goal is to assess the feasibility of these opportunities and translate them into actual business models. The business designer is more contractionary and should be very savvy in understanding the status quo, competition, and developing financial models.</li></ul>&nbsp;<figure class="image image_resized" style="width:67.78%;"><img src="/uploads/Infografia_para_blog_01_85da1f8e22.jpg"><figcaption>The role of Business &amp; Service Designers</figcaption></figure>&nbsp;Despite having very specific roles, both types of profiles should be very hands-on and polyfunctional. When we have defined a concept and start the process to validate and build an MVP, it is also needed to be able to operate, iterate ideas, features and build at the same time.<h1>What is the biggest challenge of being a Business Designer?</h1>FP:I think all the phases of Company Building have big challenges. From identifying needs in the very early stages to eventually building a product that is highly valued for a user segment (product-market-fit) are no easy feats that should be done by a business designer.Nonetheless, I believe that the most important thing is being able to handle uncertainty and act on it. When you are starting a business from Zero - with no product, no processes, and just an idea, you will be facing many challenges along the way and it is our job to reduce that uncertainty.At Polymath we have defined standardized processes in order to reduce this uncertainty in a systematic way but not everyone can adapt to this. You need to have very structured approaches for very unstructured problems - which sound like a hard match but that definitely can be achieved.<h2>How do Business Designers grow and evolve within Polymath?</h2>FP:Business designers are at the center of the Company Building process. We are present in all the stages of company creation.Something additional to mention is that 50% of the founders of our Ventures have previously been business designers. It is very normal that as a business designer you end up falling in love with the ideas we develop and tend to be a natural fit for the Ventures founding team.<h2>What are the main abilities required to be a business designer?</h2>FP:These are some of the main abilities we have recognized in our most successful business designers:<ul><li>Analytical mindset and strong business understanding: Capable of creating and assessing a business model and unit economics. Outstanding problem solver.</li><li>Creative mindset: Deep and structured thinking over complex problems.</li><li>Flexible and versatile: Willing to face challenges and situations that take them out of their comfort zone. Be a fast learner and have a growth mindset.</li><li>Entrepreneurial instincts: Resourceful, proactive, and hands-on. Hunger to be an entrepreneur and potential founder.</li></ul>&nbsp;Some abilities like flexibility or being entrepreneurial are a total must. The rest are complimentary and most business designers have a stronger inclination towards one or two.<figure class="image image_resized" style="width:68.52%;"><img src="/uploads/02_769b01bf80.jpg"><figcaption>Business Design Process at Polymath Ventures</figcaption></figure><h2>&nbsp;</h2><h2>What has been the key for business designers to succeed at Polymath?</h2>FP:I think the best designers we’ve had are those that are curious, have grit, and are highly perseverant. These are traits that are shared among the business designers that are currently founders within a Polymath or an external Venture.Another must-have is a high sense of purpose. Feeling that you are helping to solve a real need is important. Of course, economical rewards are important too, but they shouldn’t be the only driver to push them to give their best every day.Another thing to mention is that background is not that relevant. Some of our best business designers had little experience or had very different backgrounds. As an example I come from a very different environment, I used to be a strategy consultant and then CFO/CTO in a more corporate world nonetheless being able to build new businesses has become my passion.<h2>What are the main goals the Business Design team expects to achieve during 2022?</h2>FP:For this year we have a couple of relevant goals:<ol><li>We are going to be launching one new Venture and designing at least an additional one. These ventures will probably revolve around Health or Fintech where we already have some interesting insights.</li><li>The other objective is team development. We have an amazing team of business designers and we want to be able to help them develop to their next level. This will help them to consistently add value to either existing Ventures or new ones. We have already defined very specific development goals as well as specific steps to ensure this.</li><li>Finally, we want at least one person within the Business Design team to become a founder or at least a vital team member of our Venture Portfolio. Our experience has shown that team members that work within the business design process tend to fall in love with the Venture and eventually move on to be successful venture leadership members.</li></ol>&nbsp;<h2>To summarize</h2>We are very happy to have had this conversation with Pancho, we hope it was as eye-opening to you as it was for us.As Pancho said, business designers will continue to be a very important part of what we do at Polymath, and we think that with time we will develop better methodologies to help our team members build and scale companies that really impact the middle-class of Latin America.To summarize, here are some of the most important insights Pancho gave us. We hope they are useful and interesting to you:<ul><li>Business designers are at the very core of the Company Building methodology, their job is to identify needs and behaviors to create solutions to complex problems.</li><li>At Polymath we have two groups, and they act as different parts of the “body” of a Venture: Service Designers (heart and soul) and Business Designers (brain).</li><li>Business Designers need to be able to thrive in uncertainty and build solutions from scratch.</li><li>The most important abilities to become a business designer are Flexibility and Entrepreneurial Instincts. Others that could be complementary are Creativity, Analytical Mindset and Business Understanding.</li><li>The most successful business designers have a strong sense of purpose, grit, and perseverance.</li><li>At Polymath we believe business designers are a great fit to become founders or part of the leadership team of a venture.</li></ul>&nbsp;That’s it! If you liked it, share it, and if you want to become a Business Designer, <a href="https://polymathv.com/join-us" target="_blank" rel="noopener noreferrer">here you can check our open positions.</a>

Francisco Paz

Business Design Director

Business Designers: Heart, brain and soul of Company Building

How to Build Startups in Developing Countries

Push & Pull: Design Forces in Colombia