TSP068 | Ramphis Castro – Transcription
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John Livesay:
Hi and welcome to The Successful Pitch. Today’s guest is Ramphis Castro, who is the Kauffman Fellow. Only 30 people get invited to join that a year, so extremely prestigious. He’s the founder of Mindchemy, which helps startups in foreign countries, and finally, he’s the managing director of The Founder Institute in New York City, which is based in Silicon Valley. It is the world’s largest idea stage accelerator. He has amazing insights as to what’s going on in Cuba and compares it to Vietnam that there’s a lot of talent there and a lot of solutions that are waiting to be filled as a huge new potential for investors. He said, “The best way to start is to start small, and who you partner with is really key, so make sure that you check out those references.” He said, “Puerto Rico is the biggest startup place that you’ve never heard of,” and he talks about how to get free money if you are willing to move to Puerto Rico. Enjoy the episode.
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Welcome to The Successful Pitch Podcast. Today’s guest is Ramphis Castro, who is the New York City managing director for the Silicon Valley-based, Founder Institute, the world’s most successful idea stage accelerator, which helps aspiring founders across the globe build technology companies. Graduates from this program have raised over 500 million in venture funding and they generate 12 billion in investor value. He’s also a Kauffman Fellow, a community of over 500 innovation investors worldwide, and from what I’ve read, only 30 people get in a year to do this. So, that’s incredible. As if that wasn’t enough, he’s also the founding partner of Mindchemy, a full-stack startup ecosystem, acceleration, and support organization that helps managers in venture industries. He’s a friend of Judy Robinett. They met judging a pitching contest down in Puerto Rico. So, without any further ado, welcome to the show.
Ramphis:
Thanks, John.
John:
I don’t even know where to start. Let’s start with how did you get into the startup world? How did you decide this is what you wanted to do with your life?
Ramphis:
Sure. So, the story there starts early. I mean, my mom used to be our first investor as kids when we wanted to make a trip as a family and make us sell M&M’s. We had to pay her back first and then with the profits, we could buy airline tickets to be able to go to Disney.
John:
Wow, that’s a lot of M&M’s.
Ramphis:
It was, right? So, going door-to-door, having her, a few blocks away, in the car, just kind of watching us, just door-to-door and kind of get that done definitely got us started early. And as my career moved forward, I started computer engineering, I knew, after my time in Microsoft, that I wasn’t going to be an employee forever, that there was certain ideas that I had keen on to build because I wanted to get out there and that’s how I got the bug just to, when I came back to Puerto Rico, to really just push those forward, and I started my first analytics company. So, that’s a short version of kind of how that happened.
John:
Yes, and then you were in Puerto Rico. That’s your childhood, then you worked for Microsoft. Where in Microsoft did you work?
Ramphis:
Redmond.
John:
Oh, you worked at the corporate headquarters? Okay.
Ramphis:
Yeah, I worked at the Office services team, the guys that did the user experience for Office 2007. The time’s a while back.
John:
Mm-hmm, and you started teaching down in Puerto Rico at the university there, I see, in computer science and entrepreneurship, right?
Ramphis:
Yeah, so I made all my mistakes on my first company, and that blew up gloriously, and the product and the initial property was successful, but I made mistakes on the economy and bad partners and it was just a terrible, terrible experience.
So, I got involved into everything else on the ecosystem side to make sure that others didn’t have to go through what I went through then, and that’s part of the story around getting involved in the university and supporting stuff like engineering, how that’s taught more from the entrepreneurship side and the engineering side, and then also teaching graduate students on how to use their skills to build mobile companies, and a lot of other programs that I’ve been involved with over the years, always trying to fill the gaps of what was needed in the ecosystem and anything I wish somebody would have told me when I was in school and just working on my company.
John:
What are some of the things that you wish somebody had told you that you try to tell people now?
Ramphis:
Definitely the biggest lessons learned is the best way to start is just to start. There are all these workshops, all these page events, all these articles on the internet, and really, the best way to get the experience to meet and to run a company is actually run a company, and you start small. Don’t have this grand idea. Don’t necessarily even call it a company, but really just start with a small accessible project.
So, getting started is key. The other is make sure you know who you’re partnering with. This is a long-term endeavor. It will take you a good part of your career, of your life, so make sure that whoever you’re bringing in, you’re able to be fully transparent with them, and it’s a long-term relationship that you’re building. So, you want to want to make sure that you’re honest and open, and it’s a collaboration. So, you watch out for the red flags: dishonesty, bad ethics, those kinds of things, and really reference check people. Make sure that, you know, who knows them, who’s worked with them, and make sure that you’re having the right people for your team early.
So, those are two things. There’s a lot, obviously, but those are two that I always make sure they’re the first things that I tell new, aspiring entrepreneurs.
John:
Well, you just gave us two tweets right from the episode. “The best way to start is to start small” and “Reference check your team”. So, those are great takeaways. Now, you were judging a pitching contest down in Puerto Rico. You were also a part of a Start-Up Chile judge. Tell us what you look for when you’re listening to pitches, either in a contest or as an investor.
Ramphis:
So, I operate at what is called the pre-seed and seed stage. So, that is the earliest you can get involved, which is when there might or might not be a team. There might not even be a product, but really, something that is the inkling of the start of a great project. In that space, the number one thing I’m focused on is the team, and by the team, I mean, why is this the right team to run with this idea? What particularly qualifies them to do it? Like, why would I think that this is the team to win in this space?
The other key piece is, whatever traction they have, and by traction, I mean what have they actually done already? Do they have an early prototype up? Do they have even sign-ups, a landing page where they’ve collected a few hundreds, dozens, thousands of emails, how they followed up with customers. So, traction has many forms, but it’s have they done work and how fast did they do this work, and are they moving? Those are the two key pieces I look out for.
John:
I like that; that’s so helpful. What’s interesting about that is you’re not looking for them to give you a 10-minute product demo or a long lengthy explanation of how they came up with this concept, but it’s really about, “Tell me about you and why you’re uniquely qualified, and what have you done to show some traction and how fast is that happening?” which is not normally the focus a lot of people start pitching with. They start talking about, “Oh, this is a great idea and this is going to make millions,” and you’re like, “Tell me what it is you’re talking about and make it easy for me to understand.” I want to dig in to being a Kauffman Fellow. Can you tell us how you got selected, what that process was like, and what you do as a Kauffman Fellow?
Ramphis:
Sure. So, as I mentioned, the Kauffman Fellows is with the network of innovation investors, and it’s a two-year fellowship where, as you’re actively engaged in the VC industry with a fund or through other programs related to VC industry, you learn, one-on-one, with a cohort from the best of the best in the industry on how the sausage is made, really, as we get into the insides.
So, the process for me is I heard of it first through another Kauffman Fellow, Jorge Torres, who’s a venture partner with Silas Capital. They’re a consumer-focused VC firm here in New York and he was seeing my chart records, seeing that I was in the investing world and that was my general direction, and that’s really where I’m focused on moving forward. He said, “You should look into the program,” and he introduced me into it.
So, the process was, basically, me reaching out to a lot of other fellows, understanding the program and how it matched in my vision and where I wanted to be moving forward and it was just incredible to get to meet the other fellows and what they’ve done and what they represent in their own space in the industry.
So, there’s an application process where there’s two routes. One is an affiliate, so those that are just getting into an industry and they go through an interview process and something called a finalist process and they’re selected by a firm to move forward, and there’s the affiliate where there’s an existing relationship with a VC firm or program and we’ll move forward with supporting that candidate through the process. So, after application and interviews, you get the call that you’re part of a particular class that starts every year in June in Silicon Valley.
John:
It’s a very select group. It’s almost like getting into Y Combinator or something, right? I mean, lots of people apply and they only take 30 a year?
Ramphis:
Right. The way he felt or we’re going to sometimes call it, the YC of it, the wifey for VC.
John:
Fantastic. So, what have you learned now that you’re in this prestigious Kauffman Fellowship?
Ramphis:
Well, definitely, the biggest lessons learned has come from, obviously, everybody involved and by peers, but it really has been around how the global venture industry works. Not just one particular ecosystem, but more globally focused on how innovation happens and is supported by innovation investors and what’s the role in different areas at different stages, and what’s our focus, and how do I make sure that we support the entrepreneurs, which really are the rock stars here are the ones that make it happen, and how are we really able to focus and help them just achieve what they’re going to achieve.
Just to help accelerate that and just learn the best practices and everything from how to create new venture firms, new VC funds to running diligence from companies, how to syndicate in deals, bringing in other investors, who are the right investors in the right spaces, and really engaging the entrepreneurs through the process of really exiting that company, or running it forever, if that’s what they want to do.
John:
You also are the founder of the Institute, which is based in Silicon Valley. So, it’s a stage accelerator program. Can you speak to us about how did that become the world’s largest, and what do you do as the managing director?
Ramphis:
Sure. So, the program was founded by Adeo Ressi. Adeo is based on Silicon Valley and he’s a founder of the Founder Institute. The chapters are run worldwide through directors, through regular directors who operate on a part-time basis. Myself, as a managing director of New York, operates on a full-time basis where we have cohorts operating every three and a half months.
But, to take a step back, the Founder Institute is focused on helping entrepreneurs launch their company. So, it’s focused on, essentially, employees with, generally, 10 plus years experience that are really focused and committed to launching their company from anywhere on the world, launching a global venture-backable company in whatever ecosystem they operate in.
To do that, we have a 14-week, essentially, a three and a half month program where they can participate part-time as a — considered a full-time job and validate their model, and the way that’s supported is through mentors and structured curriculum where they are basically focused on building their company.
So, there’s nothing academic about it. They are in it building their mission. They’re revalidating their idea with customers who are figuring out what’s a revenue model, is there a real business around it. Understanding the fundraising process lead on everything that a founder should know about to be successful entrepreneurs, and they learn it from other successful entrepreneurs that have been there, have done it, and other investors that actively support and invest in companies at their stage and have experience in supporting how that grows.
John:
At the end of that three, three and a half months, do you have a demo day where they get to present and pitch to investors?
Ramphis:
Yeah, so one of the things to keep in mind is these are starting, so they are the earliest you can get. So, for many of them, demo days is way too early so they might have, by the end, a fully formed business model validated and a lot of different pieces, and a fully vetted due diligence ready company that’s able to accept a venture funding with our legal partners that operate in different cities around the world.
Here in New York, the money’s right and they support the companies getting launched and there’s basically a first look where we basically bring in the best pre-seed and seed investors in the community here in New York and wherever our chapters are operating to see the companies first.
So, we call it First Look Event, and some of them will be too early. It may require a little bit — or take three to six months extra where different investors at that stage will go in, and there will be other companies that have either quit their day jobs throughout the process and are moving forward full-time on the business and investors are able to get an early look before the rest of the investor community takes a look at them and wants to come in.
John:
So, that seems to really be a big differentiator from other accelerators, which most everybody who’s in those programs is doing this full-time, and you’re so pre-seed that you let people have a full-time job and do this part-time, is that right?
Ramphis:
That’s correct. They operate on a full-time load with their jobs, which could be anywhere, 50, 60, 80 hours a week, and on top of that, they do between 20 and 40 hours’ worth of work on top of that. So, the focus is on getting them to experience working 100, 120 hours plus what it feels like, and feel that pressure over the course of three and a half months. Just gets them into the cadence of running a company, just keeping up with the tempo and moving forward fast with limited resources, limited time, limited information. They need to keep moving forward, and after that time, it really transforms their thinking and they’re able to really just take the reins and just move forward. It’s really amazing to see the transformation.
John:
Do you start working with them that early on who they might be looking at to get on an advisory board?
Ramphis:
Yes, so the structured career program involves 10 different topics. Everything from their vision and the idea is just understanding why they want to start that particular company and why them and why now, those kinds of things. Then also, the topics around teams and advisers. Who are the right advisers for their company? They’re able to look at our global mentor network of over 5,000 CEOs and investors, and obviously, there’s a lot more in the ecosystem.
So, when they’re operating, they may not be a part of our network, which we can reach through our network as well. So, they think about that broadly and they really think about how to start engaging and how to start those relationships throughout the course of the program. So, by the end, they know they either have them already on board, or they know what they need to do in order to get that done.
John:
Well, this seems to me that the skill of pitching is needed not only to pitch investors for funding, but also to pitch potential people to join your advisory board and then pitch potential people to join your team, right?
Ramphis:
That’s exactly right. Everybody thinks that — when I say everybody, generally first-time entrepreneurs think that pitching is for investors. Pitching is everybody. You’re pitching your spouse, you’re pitching your team, you’re pitching your parents that you’re not crazy and you’re really pitching everybody on why this is going to work, or even if it’s not, why you have to do it. Money is a part of it, but you’re not aiming just for the money, you’re aiming because you have to put this out to the world and you’re the right person, you could build the right team to go after it.
So, pitching is an essential skill because you only have yourself in the beginning. You only have your dream, your background, your track record, your commitment, and with that, you have to pick somebody to quit their job to come and work with you on something that will most probably fail. So, pitching and being clear about what problem you want to solve, why you’re the right person to solve it, and what you’ve done to move that forward, and what’s unique about your approach, you got to get out there in 15, 30 seconds, right?
John:
Mm-hmm.
Ramphis:
Then if you’re graced with more time, then you go 30 seconds more to how you do it, what’s your product. If you get another minute, then you go into how do you make money, right? So, it’s really just buying every piece of someone’s attention when they engage with you.
John:
Mm-hmm, I love that. So, as part of the program at the Founder Institute, do you have a section where you teach them how to pitch?
Ramphis:
Yes. So, pitching is an essential component of the program and they pitch in different formats. I mean, there’s no right way to pitch so we do everything from 30 seconds, 60-second pitch, 3 minutes with a deck, with no deck, 5 minute with a product demo. So, they really go through everything and the way it’s done, instruction in the program, is that it builds on previous weeks.
So, in the beginning, they’ll pitch why they want to be an entrepreneur and what are they passionate about or what are they the best at, and that’ll evolve into sort of what problem are you solving and what is your unique — differentiate a unique approach, solving that problem, and it will continue to grow into the other pieces of your pitch, such as what’s your actual solution? How does it work? How do you make money? How big is the market? And those other pieces of a pitch.
John:
I love how you structured that, that it really starts with you being able to pitch, why you’re uniquely qualified and passionate to do this before you even get into how something works, let alone how it makes money. So, let’s also talk about that you’re the co-founder of managing partner of Mindchemy, which is a combination of, you told me earlier, “mind and alchemy”. Tell me about what you’re doing there.
Ramphis:
Sure. So, Mindchemy is a partnership between Marcos Polanco and myself where we’re both Kauffman Fellows and we both met doing ecosystem work in Puerto Rico and we’ve been collaborating and working on different aspects of ecosystem building over the past almost eight years now where our focus with Mindchemy started with bridging the gaps in ecosystem.
So, if you go into somewhere where there’s no startup community, that’s probably the first thing is to just say, “Well, I’m starting a startup community,” and that’s, essentially, what happened in Puerto Rico is when we started our own companies, at the time. I started in Puerto Rico and Marcos spent time in Silicon Valley, there was no ecosystem, really, to speak of and no community. So, we started with the startup weekends and organizing the pieces that move those communities forward.
But now, Mindchemy has evolved to more global focus and, over the years, we’ve been fortunate enough to advise governments over the world and ecosystems of the world around, really, how to really engage and support Grassroots leaders, and also now, more recently, engaging with emerging managers. So, the people that are starting new funds that basically operate like entrepreneurs, but these are VCs that have worked at VC firms, but now are setting off on their own to start their own firm to fill a particular gap in the funding ecosystem.
So, Mindchemy really has sort of evolved into, “How do we support programs globally and really support from other ecosystem builders that reach out to us where we, from experience, support ecosystems in Puerto Rico, Dominican Republic, Columbia, and now more recently, Cuba to really move those communities forward?”
John:
Well, let’s talk about an article you recently wrote about, Cuba, and comparing it to Vietnam in the early days and all the potential there with the talent and the solutions that are needed.
Ramphis:
Yeah, thanks for asking that because one of the key things when people think about Cuba, obviously, it’s 50, 60 years of, basically, unknowns. It was very difficult for us from — everybody, generally, from the outside to think about and understand sort of how the coach in the economy and other aspects of it works. So, when people think about it entirely, they would talk about it from a sort of past tense of things that are not up to date on what they have, and people lose sight of, sort of, the fantastic education system that they have.
So, when you think about the key ingredients for ecosystems and startups, it really starts with talent, number one, and that’s something that they’ve invested in for the past half century in more ways than most countries in the western hemisphere, the World Bank, and other organizations that have recently recognized Cuba as having the best education system. So, we’ve had the opportunity. We had the privilege to support some Grassroots organizers that are sort of outside of the politics and really are focused on supporting and growing their communities and their startup ecosystem.
In that perspective, people need to think about where we’ve already seen this evolve. So, our people lose sight of the world, kind of, in their day-to-day sort of seeing the new cycles and all these things. But, really, it’s nothing new. We’ve seen how some of it has played out in the process of Vietnam where it’s still a socialist government and you’re seeing some of the fastest growing companies in Asia coming out of Vietnam now. You have Fortune 500 companies operating there, like Microsoft and Intel. So, we’ve already sort of seen a piece of that movie, and now we really get the opportunity to be supportive in whatever the community wants to really grow into and how they want to evolve and what are the ideas that are going to come out of such a high quality talent that is sort of based on the island.
John:
Yes, I was reading in your article there about just some basic things like you need your medical things from the pharmacy delivered to you quickly, almost like an Uber version of medical pharmacy delivery. That’s one, and tourism, of course. So, there’s lots of different things going on there.
Ramphis:
Right, because things that we take for granted everywhere is something that, when you think about it, there are a lot of communities everywhere, not just in Cuba, that don’t have access to certain commodities. So, having somebody, or being able to access your medicine is something that if you go to rural places across U.S. and Latam, they might have the same challenges where they might not be able to find what they need, and that basically tells you, “Hey, this is where you can find what you need and get it.”
It’s something that, obviously, they’ve experienced over time in Cuba, and this is some ideas that came up directly from the community, but it’s something that you could easily see scaling through other ecosystems because it’s a real problem not just there, but in a lot of communities around the world.
John:
And of the internet connection, whether it’s Vietnam or Cuba, is pretty standard now, or is it still evolving?
Ramphis:
It is definitely evolving. Obviously, it’s one of the bigger challenges coming in, kind of, the first time I was there. It was very difficult. But, it may also appreciate the use and optimizing your time. So, there’s a lot of engaging and a one-on-one with people and just talking and just really engaging in human contact. But, the huge advantage that Cuba has is it’s just 90 miles away from one of the largest, most sophisticated Nox fiber optic connections in the world. There’s the Terramac Building is just in Miami.
So, it’s not as if you’re trying to interconnect all of Brazil, if you really just want to increase the balance in Cuba, the government is sort of moving forward with improving their technomic cases infrastructure, and as a relation to it, when the U.S. continue to improve, you’ll just fiber deployments. Maybe Google will come with Project Loons and others that they can initially test up.
So, there’s a lot of technology that we have now that can really enable economies, like Cuba’s, to just quantum leap other economies that have invested in other traditional telecommunications infrastructure over time. So, that’s a huge advantage that Cuba has over other economies is that they can take advantage of all the mistakes that everybody else has made in deploying their infrastructure, and now they can really get it right the first time because we all know how to do it now, how to interconnect in the role of fiber and other high-speed solutions, and they can learn from other governments like South Korea, right? I mean, that the leader in excellence in broadband, South Korea, Singapore, and they can sort of see what works and just really build on top of that.
John:
Tell me about P18. We briefly talked before the show a little bit about that.
Ramphis:
Sure. So, the next evolution of Puerto Rico is really break out as, essentially, the Hong Kong or the Singapore or the Caribbean. So, if you’re an Asian company, you’re thinking about doing business in China, you could do it in China, but you could build through Hong Kong and there’s very sophisticated business environment that you can take advantage of to really expand and really roll out your Asian strategy. So, when you think about Puerto Rico, it’s the same way. It’s basically inside the USA, but outside the IRS. So, that enables companies such as Microsoft to globally, really, capture and maintain and reinvest their capital abroad in expansion and supporting their operation.
So, that is something that is available for companies. So, as that evolves, the P18 programs, called Parallel18 after Puerto Rico is located in the Western Hemisphere is a way for companies that are U.S. companies that want to expand to Latam to take advantage of the same thing Microsoft takes advantage globally, or for Latin American companies that really want to expand into the U.S. really have a softer landing into the U.S. market that, basically, you have a fully Latino culture in Puerto Rico, but it is a U.S. based commercial engagement.
So, you’re able to have companies from all over the world that want to expand into the U.S. really, really have a taste of what being in the U.S. economy can be like and they can take advantage of the fantastic talent that Puerto Rico has to offer that has been a secret for decades now. We have Microsoft, Procter and Gamble, IBM recruiting for the past 30 years not telling anybody about it, and now having startups from all over the world come down from the P18 program to come down with a 40k, equity-free, and spend five months there like the Start-Up Chile, and if they decide to stay and leave some operations, they could get 75k follow on funding from the Puerto Rico Science and Technology Trust.
John:
What an amazing opportunity for somebody who’s willing to do what it takes and live where it takes, to move to Puerto Rico, and get some startup seed money, and even more if they stay, right? It’s great.
Ramphis:
Yeah, it is fantastic. Actually, one of the first ones to buy that pitch is Sebastian Vidal, which he was the former executive director of Start-Up Chile. So, you have a guy that’s been there, done that, we’ve seen the effects of that in Chile, and he believes so strongly in this that he moved his family, has a newborn that is sort of settled in Puerto Rico doubling down on this. It’s something they just — an Inc. article just came out today around how it’s the biggest startup hub you’ve never heard of.
John:
I love that. That’s fantastic. We’ll use that as a definite tweet. “Puerto Rico, the biggest startup hub you’ve never heard of”, right?
Ramphis:
Yep, exactly.
John:
What book would you recommend our listeners to read, either about business, startups, or just life in general?
Ramphis:
That’s a great, great question. One of the things I definitely love for startup founders to really dig into is a book called Venture Deals by Brad Feld and Jason Mendelson, and they’re the partners out of the Foundry Group, and basically, it walks founders through a lot of the thinking that investors go through from how to start your deal, how to think about investment, how to think about how things are structured, and what are the incentives for investors to support your company and really invest and follow on investing.
So, it’s really an opportunity for entrepreneurs to get insight into the minds of VCs, and also to know more than your lawyer. It’s very important that your lawyer supports what you’re doing but then you know enough so that you can ask smart questions about your company and the future of finance.
So, I think Venture Deals is definitely one. Another great one is Early Exits by Basil Peters. Early Exits is really around everybody — you know, Unicorn hunting nowadays really matters for those companies, but an 80-million, 100-million-dollar exit is the life-changing event for a founder, and you could go in that direction, and then just go again and launch your second company, like Elon Musk did after PayPal, and launched Tesla and SpaceX. So, that book is really about how to engage your advisers and think about an early exit strategy and think about how does that work and how do you position your company for acquisition, and really, the mindset around how to actually execute on that strategy.
John:
Those are both great, great recommendations. Thank you. How can people follow you on social media? What’s your Twitter handle, all that good stuff?
Ramphis:
Sure. So, I have a big advantage is that my name, Ramphis, is number 2 on Google. So, if you search “Ramphis”. There’s a moth on Wikipedia that’s sort of beating me out, so if somebody, someday, can do a Wikipedia entry, hopefully, I could be at number 1. But, easy enough to find if you Google. Then, definitely, Twitter, @jramphis, J-R-A-M-P-H-I-S. That’s sort of the easiest way to reach me. And across properties on the internet, AngelList, Twitter, Facebook, you name it, it’s still jramphis.
John:
Great. Well, I can’t thank you enough for being on the show and sharing all your wonderful global insights. It’s very exciting to hear about what’s going on in Puerto Rico and Chile and Cuba, and then of course, everything you’re doing here in the U.S. with the Founder Institute and the Kauffman Fellowship. Thank you again.
Ramphis:
Thank you, John. Really appreciate the opportunity.
John:
Thanks for listening to The Successful Pitch podcast. If you liked the show, please go to the iTunes and write a review.