EDITORS NOTE: VZ Economics information helpful to those rebuilding the country. A central objective is to interview those with an active engagement in the rebuild of Venezuela. This first interview is with this organization’s founder and provides an example of our interview platform for thought leaders so share their insights.
What is your connection to Venezuela?
It is a new connection, I concluded back in December of last year that something big was going to happen in Venezuela. I had always paid attention and was fascinated by the absolute economic collapse which I attributed to socialism - communism. I wondered why educated people still have some hope for such.
The cycle repeats again and again. Mistreated lower-class revolts, takes control, likes control, becomes corrupted by power, oppresses to hang on to the control and becomes as bad or worse as to what they replaced. Yet socialism among elites thinks that they can get it right if they just tweak it a bit. They never do and everyone suffers. I thought that Venezuela could put the final nail in the coffin of socialism/communism, that true capitalism based on merit (not crony capitalism based on connections) could prevail as the system best suited to make the world a better place.
So then what was the origins of the Venezuela Project?
I run a think tank (Altru Institute) that meets annually in Davos. Late in our planning mid-December we concluded that regime change in Venezuela was imminent and could happen within months. Two factors had come into place: An external force/catalyst (Trump blockade) and a clear internal mandate (Machado/Vente’s) electoral landslide. That set the stage for regime change.
As such we decided to do a “Future of Venezuela” meeting for thought leaders Davos during the World Economic Forum. Well, the regime change happened in just a few weeks. So, we put it into full forward and have been working on putting in place a strategy to make an impact.
Why did you see that it was important?
I saw the global implications and felt that could be among the most significant geopolitical events for the US in the last 100 years. If it plays out like it could play out. Which means it is well managed and that the best and brightest. Because of its natural resources and that it had been driven to basically zero, there was a chance to rebuild it with the latest innovations and technologies, unimpeded by the incumbents that slow innovation. In this case there really are no incumbents rather just most concerned about going to jail.
So what are you doing?
Establishing two integrated communications entities: Economia Venezuela, research driven, targeted to building a blueprint for the recovery, facilitating information among those engage. Our core strategy is assembling the best and brightest into industry councils to sort out best strategies, foster investment syndicates and identify the most promising opportunities and approaches.
The other is VZ Economics, a media platform that aggregates and curates’ information for those that want to return to the country, or invest in the country and want one place to get the information they need. A portal.
We read everything and spend hours each day sifting through information that is relevant to our audience. We present the information and organize it to help those who can use this critical information to make more informed decisions and learn about others doing something relevant. We get the information through interviews where we can dig deep and get highly accurate inside information that isn’t otherwise isn’t available.
Who is on your team?
We’ve assembled a core team of about seven including some very talented patriotic young Venezuelan’s inspired by the chance to build their country. As well as a number of others waiting in the wings to join as we progress and numerous thoughtful successful diaspora members
What makes your strategy unique?
Well, there is little in the way of this type of information. But I would say a key is our laser focus on: Entrepreneur, executive, and investors who need to make decisions for which our information can make the difference.
Secondarily is the resource library. Getting the right information at the right time is how progress accelerates. We believe that in every area of the economy we will have the most complete dataset upon which to make decision specific to the industry councils and our sector research.
Thirdly, an investment marketplace. A deal platform for promising projects to secure the resources needed for success. The platform is nearly built. Now we just need to populate it with projects seeking capital.
We have a laser focus on: Entrepreneur, executive, investor or policy makers who need to make decisions for which our information can make the difference.
Lastly, I would say note that our mission is aggregating and curating. We want to be the place where great content goes to find its highest and best use. We hope to work with existing content providers to give them a platform. We produce very short summaries of relevant stories and then push the reader to the full story at their site.
Great content that should be in the public discourse, it belongs in this library and to be incorporated into a blueprint.
What parts of the economy will you focus on?
We have identified 16 areas, our initial focus will be on four areas starting with Electrification. Without electricity nothing much else can be accomplished. Ironically Venezuela doesn’t have the energy (electricity) to monetize its energy assets.
And then three that are mostly about attracting investment to the country and seeing financial returns to investors more quickly. This would be oil, real estate and tourism. In all three cases anyone that gets in now will likely do very well, because in each case there is nowhere to go but up.
How are you doing this?
We start with a baseline report to take an inventory of our starting point. In the case of Real Estate, we’ve created an overview of all sectors of the real estate in Venezuela. We will build specialized reports of narrow sectors that offer the greatest upside opportunity.
In the Electrification we are now building a baseline report and a database of the key players and technological solutions.
In oil we are seeking to aggregate information around the smaller size companies that can monetize, and particularly interested in technologies to make the viscous heavy oil more transportable. There will be a lot of innovation in the supply chain and advances generally that can be brought to bear.
In Education, we’re digging in on the plans provided by Machado at her recent Harvard speech where she cited education as the key first step. We want to understand how that can happen well. We happen to have a lot of expertise in Education technology. As such we think there are some opportunities there.
Can we talk about the current situation from your vantage point?
The attention that is paid to the situation the more secure and likely will be a positive outcome. They have released 500 political prisoners, but 600 still remain. That can’t go on forever. This will be a distraction. Another will be the test of repression. To what extent are the Collectivos still operating? Is it still the case that you leave your cell phone at home when you go out because some police officer may ask to see it. That is a measurement.
How do you see this playing out next 6 months, 18 months?
Hopefully there will be steady evidence of progress and increased economic activity which increases wages and opportunity enough so the citizens can get some relief and see a light at the end of the tunnel. But ultimately there needs to be freedom of expression and property rights. Ultimately, people and capital needed won’t return if there is any chance of the elimination of private property rights.
If you were advising the US State Department, what would you tell them to do?
Several items. Stay the course and require steady increases in prisoner releases. Continue to pressure Rodiguez to change out the regime.
Come up with tangible transparent descriptions of how the oil money is flowing. How it is getting from the oil fields to the average citizens through investment in the country. It is a complex business, a piece by Emor Phillips that we published describes its complexity.
How would bring innovation and capital to the country?
Paint a picture of what Venezuela can be. And get the capital to the entrepreneurs. Make it attractive to go back. The country needs the same type of coordinated effort as the Colombia Plan from the late 90s which led to their current success. The good news is that they have the natural resources to fund it all. Really just a process of management. At the core it is information, knowledge and understanding, organization.
On what types of companies would you focus?
Any company that provides services and employs people and where their prosperity comes from having customers in Venezuela is ideal. The extractive industries much less so as they have no vested interest in what happens in the country because they have no customers in the country.
Also, companies that create products for export. For which there is a demand for skilled labor. Agriculture went undeveloped from the oil booms.
Empresa Polar is a perfect case study. If people don’t have jobs, they can’t buy beans and beer. That’s why their initiative to create 1000 companies over the next 15 years is truly ambitious, I don’t know if VCs in Silicon Valley will create that many companies. And that is their business!
But God bless them. I’m all in anything we can do to support that. If they get to 20% of their goal it will be a huge success.
Any companies that can leverage off of petrochemicals, such as pharmaceutical and plastic products. The role of naphtha is vast. Bringing that refining capacity on will make possible companies in the plastics sector.
The country needs the same type of coordinated effort as the Colombia Plan from the late 90s which led to their current success.
For that to happen, it will require a tremendous amount of talent, innovation and willingness to take risk. But it is the only way forward. You can’t have oil represent 97% of the GDP. This should ultimately be 50%. And the only determining factor is entrepreneurial talent and access to capital.
What can be done to attract entrepreneurs and capital?
Make funding readily available for entrepreneurs in Venezuela they will move to Venezuela. Why not Venezuela as a technology hub? In many aspects of the technology sector, you can live anywhere. So why not on a beach in the Caribbean? Put up a dedicated data center with the world's fastest internet and all the capital needed to build a tech company and you will have a lot of talent coming.
What are your milestones and hopes?
My hope is that progress will continue and that the funding to rebuild will be made available by the revenue from the oil.
We are confident we can find the most innovative and cost-effective solutions in every aspect of the economy. Education, Transportation, Construction, Water, Electricity. That is what we’ve been doing for many years and most recently with the Davos Consortium Technology Platform. Our focus is finding breakthroughs that can make quantum leaps, they are out there. The beauty of this situation in Venezuela is that there are no incumbents to slow innovation which could accelerate progress.
