Nearshore Americas

Q&A: What’s Cooking Between Austin and Monterrey?

The Mexico-US border has for decades been a hot button issue which catalyzes some of the most passionate discussions about politics, economics and culture. Yet, as the debate rages on, the inhabitants of Monterrey (Nuevo Leon, Mexico) and Austin (Texas) have been building a relationship across that border, taking the concept of nearshoring to another level.

In a way similar to Tijuana and San Diego within the so-called Cali-Baja region, Monterrey and Austin have developed a cross-border ecosystem which has been of great benefit for business and entrepreneurship on both sides of the Rio Grande. 

To have a better understanding of the history, nature and potential of this relationship, NSAM reached out to Kevin Koym, Founder and CEO of Tech Ranch Austin, an incubator dedicated to help Mexican startups break into the US market.

Kevin is one of the architects of the current entrepreneurial ecosystem in Austin, and he’s been involved in Mexican business and nearshoring initiatives for over three decades. That wealth of experience has given him a rich understanding of the entrepreneurial culture from both countries. It also gave him the chance to be one of the hands involved in building the Monterrey-Austin innovation bridge.

In the following Q&A, Kevin shares the history of the Monterrey-Austin ecosystem, his views on the trade relationship between Texas and Mexico in general and tips on how Mexican entrepreneurs can better navigate their way into the US market.

NSAM: When we speak about companies from Mexico coming to the US market, what are we speaking of exactly? What are they doing?

Kevin Koym: Let me preface this by saying that Tech Ranch is an incubator out of Austin, Texas. I started the first co-working space in Austin and the first privately funded incubator in Austin. Part of what I’ve seen in more than 30 years of doing business in Mexico and being here in Austin is that a lot of different types of Mexican companies have landed, including technology companies. 

Kevin Koym, Founder and CEO of Tech Ranch Austin

Technologies developed in some of the major cities in Mexico, as well as what you could consider minor cities in the country, have come and landed in Austin, Houston, San Antonio and Dallas. They have come from the major three cities [Mexico City, Monterrey and Guadalajara], as well as smaller ones, like Chihuahua. I’ve also seen a lot of software factories from Mexico. I’ve personally nearshored development in four different cities in Mexico: Morelia, Monterrey, Saltillo and Durango. Actually, I could add Chihuahua to that list as well. Guanajuato and Queretaro too.

One of our first Mexican companies is one in which I’m now business partners with their VPO. A company called eKepler. A gentleman by the name of Enrique Dunhe, from Queretaro. My way of coming across Enrique and a number of the entrepreneurs from Mexico was through a group organized by the Mexican government, which had opened an incubator here [in Texas]. Since I was another incubator guy, when the group was shut down here in Austin, a lot of the Mexican entrepreneurs ended up coming to Tech Ranch. In my view, because I had the experience of living and working in Mexico, that move was very natural culturally for those entrepreneurs. 

Enrique and a few of the other entrepreneurs from Mexico came to Tech Ranch, opened offices here and we worked side by side on a bunch of different things.That was really the first time that Tech Ranch got deeply involved in supporting Mexican businesses as a service.

We also had a number of software development firms. We helped them figure out how to speak gringo, if that makes sense. Not speak English, but speak “gringo business”. Part of the work we’ve been doing is helping bridge companies from Mexico into Texas.

I think Texas is closer to Mexico than any other state in the US. California and Mexico touch each other, but I think the mentality between California and Mexico is really different from the mentality between Texas and Mexico. Texas’ number one trading partner is Mexico, and Mexico’s number one trading partner is Texas. So we should really focus on taking care of that relationship.

I’m so convinced from a firsthand standpoint that not only is there interesting software talent in Mexico, but also really interesting, durable, breakthrough technology as well. I’ve gotten to tour a lot of the science parks in Mexico; not only in Nuevo Leon, but also across the Bajio region, and Mexico City as well. I’m really impressed with what’s there. 

I feel that Mexico and the US are waking up to a different entrepreneurial awareness

People in the states don’t necessarily understand the levels of talent and insight there. Not only manufacturing capability and software development, but science. I try to speak to all three different levels of sophistication in Mexico. 

NSAM: Why do you think US companies, either from tech or other industries, aren’t aware of Mexico’s capabilities not only as a provider of tech services but as a developer of technology also?

Kevin Koym: A lot of times, in the US, the Chinese and the Indians have done a better job of installing themselves in the networks that bring a lot of that work to their countries. I don’t think that the average person in the US actually spends enough time to understand the depth of what’s there [in Mexico]. 

I feel that Mexico and the US are waking up to a different entrepreneurial awareness. I’m not anti-Chinese, but I believe that, with the opportunity that stands in front of us, all 32 states from Mexico, not only Nuevo Leon, have this massive opportunity. All of them could get saturated with business and still not displace some small percentage of the Chinese economy that’s available right now. 

I get excited about it because I’ve been pro-Mexico my whole career. It does seem that people are waking up to it. And people in Texas have woken up to it faster than others in the US, because of that cultural connection.

NSAM: The innovation bridge between Texas and Mexico began around 2018/2019. Mexico’s federal administration has been the same since then, with several changes happening within the presidential cabinet, and particularly inside the Ministry of Economy. When it comes to this sort of initiatives, have you been dealing directly with the Ministry of Economy? If not, with whom?

Kevin Koym: We had a very good relationship with INADEM, when it was still around. And we had a very good relationship with Promexico. The reason is that, in Austin, I am one of the persons who built the local entrepreneurial ecosystem. INADEM knew that about me, and that’s how we built the original relationship.

With the shift in the political landscape, INADEM was shut down, and Promexico was shut down, and we lost a lot of our connections there. I would love to recover those connections, but we haven’t been able to figure out how. 

And COVID made it really difficult. I was part of a delegation, built by the mayor of Austin, that traveled from Texas to Mexico City, Monterrey and Saltillo in September of 2019. A lot of conversations started then and got shut down really hard by what happened in March of 2020, when COVID shut everything down.

Another thing that changed is that the previous consul of Mexico here in Austin was really well connected into the local community. During the administration change, he moved to San Diego. I’ve met the new consul here in Austin, but I do not have a relationship with him because COVID made things so difficult.

NSAM: Tech Ranch provides certain services and resources to startups wanting to break into the US market. Mexican tech companies in particular, what are they looking for the most?

Kevin Koym: What they’re typically looking for first are connections to investors or customers. For the ones that we really get a chance to work with, the key thing is learning how to think in terms of the other side. 

There’s a lot of learning to be done, and it can be in ways that are kind of subtle. We have similar –but not the same– legal frameworks for business. And there’s a certain “gringo style” of doing business; that’s really important to keep in mind.

For example, typically, most people know that if you’re meeting with a person from the US, you talk about business first and then about family. In the Mexican case, the family talk comes first; you get to know the person, and at the end you talk business. 

That’s the first layer. The second layer –and I think a lot of Mexican business people fail at these without even realizing it– is that one of the ways of missing a deal with someone from the US is a lack of awareness about how we do supply chain and how we do some of the legal frameworks that we have to work with. It’s something very subtle, but it will affect the person’s reptilian emotional system, and they won’t know about it. 

NSAM: Is that the biggest challenge for Mexican startups trying to break into the US market? Or are there bigger challenges?

Kevin Koym: I think these are the subtle ones. Since selling is an activity that deals also with a reptilian part of the brain, there’s a bunch of subtle things that, if you can be aware of them and even bring them up, it can create a lot more safety and trust in the relationship. 

There’s the basics, like having a US-based company; being able to show that you have credit worthiness; those types of things. There’s the hardstop of can you receive dollars and get products to people. Even though they might be hard, they are not necessarily the most difficult. The more subtle ones, what happens around emotional things and that you might not know, especially when dealing with different regions of the US, that can be problematic for a Mexican entrepreneur. 

There’s a certain ‘gringo style’ of doing business; that’s really important to keep in mind.

NSAM: Is the Cali-Baja tech and business ecosystem unique or do you see a similar phenomenon emerging in other places?

Kevin Koym: I think it is happening in other places. There is something very unique between Tijuana and San Diego, because I think it’s easier to cross the border there than in any other place; the cities are so close. And there’s considerably better English in Tijuana than in other parts.

When we see Monterrey and Austin, we see a similar thing, even when the distance between both cities is far greater; it’s like six hours by car. There’s also something between El Paso and Ciudad Juarez [Chihuahua]. 

I think there’s a deeper industry, in a wider space, just based on the numbers, between Texas and Mexico. I haven’t looked at the numbers across the different states, but I remember seeing the data [for Mexico and Texas] and thinking “Wow, these numbers are so radical that there must be something big happening between us, and I didn’t realize it.” 

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The great thing about it is that we’re achieving integration in many different points, and I believe that integration is going to accelerate with the shift away from China. 

It’s natural that the software development houses are going to produce the entrepreneurs that will build the next level of startups. It’s natural that you go from engineers that graduate from college, then move to software development houses and then, in the next generation, within a decade, the number of startups is going to magnify massively. I believe we’re going to see greater integration across different areas.

Cesar Cantu

Cesar is the Managing Editor of Nearshore Americas. He's a journalist based in Mexico City, with experience covering foreign trade policy, agribusiness and the food industry in Mexico and Latin America.

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