Startup School Radio, Part 1: Sofia and Vasco talking about startup scene in Portugal

10 min read

Two of Unbabel’s Co-Founders – Sofia Pessanha and Vasco Pedro were guests on Startup School Radio hosted by Aaron Harris, partner at Y Combinator. In this first part of the interview, they speak about how they both got into startups, how the startup scene in Portugal was born and what’s the state of it now.

Aaron: Let’s start with being an international team in Portugal which, rightly or wrongly, isn’t associated with startups. How did you both get into startups in Lisbon? Where did that come from and what was it like starting companies there?

Vasco: I guess my first startup was right off my PhD and it was in Pittsburgh, Pennsylvania. For a long time I had been wanting to do startups. The moment for me that it became real that it was a thing that I wanted to do was at Google. It was a feeling that there were so many amazing people around me, but the probability of having an impact in the company that I was in was very low. I felt that I needed to do something that would have an impact in society, but also to be able to have an impact in that project. So I guess my first startup was in Pittsburgh, and then at some point I moved to Portugal. I was doing another startup at the time, and the goal was to set-up a technical team there. That’s how I started – when I moved to Portugal, I was already doing startups and the goal was to continue doing that.

The scene in Portugal has been growing a lot and at the time there was a lot of people coming back from PhD’s in the US, and there wasn’t a lot of opportunities for them to do really exciting things. There was this opportunity to capitalize on engineering talent and research talent that was just there, begging for great projects.

Aaron: That’s really interesting. The idea that you went back to Lisbon and said „Hey, all these people who could be founding startups if they just had the right mindsets, or the right set of experiences, or the right push.”

Sofia: And that’s exactly how we met. My journey started in Portugal when I was working for someone else’s startup. I was employee number 30 at TIMWE. I’m a business major, and all my colleagues from school thought I was nuts. „What are you doing working for that 30 people shack?” There was no startup community.

Aaron: That’s funny because 30 people doesn’t sound like a a particularly small company.

Sofia: But you’re taught to aim for Accenture. So we wanted to go to all the big guys, and in fact my first two years were at Sonae, which is the biggest Portuguese company with 10,000 employees. We’re a tiny country. But I saw the business model which was subscription, the growth curve which is exponential and I was like „Oh my God, I need to get on this train.”

I totally fell in love with working with software engineers – writing these lines of code on their screens and then things happening on your phone – it was just magic. I never looked back.

Aaron: Was it hard for you to tell your parents, your family all that “Hey, I’m not gonna go work for a big company”?

Sofia: People thought that was nuts. Totally. „What are you doing?” – several people actually told it to my face. Nobody has ever heard of that company. For TIMWE, it was hard. They had to pay people a lot more, so our salaries were 50% above average, just because people would not go work for them.

That’s what got me started on the journey, and then when I thought „okay, this is what I want to do” I started with other friends a non-profit to promote entrepreneurship in Portugal and to start a community, to start talking about this, to start events. And that’s how Vasco and I met.

Vasco: I had met one of the founders of Beta-i, which is the non-profit, while in the US, and he said „There’s this thing we’re gonna start which is going to really help boost the ecosystem in Lisbon”. When I moved back, they had started – Sofia is one of the founders, and I joined as an associate. There’s a lot of events going on. Beta-i has been really one of the strengths in Lisbon, the hub, and it’s working.

People now say that Lisbon feels like Berlin did about four years ago. Sometimes in Silicon Valley, you get a little myopic. Obviously nothing is like Silicon Valley or San Francisco, but Europe-wise, things are progressing and you’re feeling this energy. It’s happening all over the world, where people are starting more and more startups. Even in smaller hubs, you can feel the energy. We were the first in YC. But then there were other companies that went through Seedcamp. A ton of companies would start in Portugal, go out for a while and then create these connections, from Lisbon to either San Fransisco, or to London, and then keep growing. That’s been changing the ecosystem.

Aaron: What do you think it is that has actually changed the ecosystem – just the fact that Beta-i showed up and said „Hey, you should be thinking about startups”?. Or was something else happening?

Vasco: I think it’s a perfect storm – a combination of having a lot of people that have high education – they go out, they do graduate school somewhere really awesome and they come back and there’s not a lot of things happening – then there is more capital, like seed capital, and finally there was a lot of austerity. Portugal went through a crisis, and obviously that was unfortunate. But one good side effect of that was that people were more willing to risk. They were thinking „well I don’t have a job anyway, so I might as well go and start something”.

Sofia: I think several things popped up. It wasn’t just Beta-i, there were other organizations, there were other groups, there were a few success stories,.

Vasco: The way I think about it – if this was a history, we’re kind of in the trenches now and we need heroes. There are companies now in Lisbon that are a little bit ahead of Unbabel in terms of time. Talkdesk – they’re already here in the Valley and also in Lisbon, Uniplaces is mostly in Europe, Feedzai – all these guys raise now over 15 million rounds. But now we need exits, right? That’s the thing that’s missing right now from the Lisbon ecosystem.

Aaron: This is something that we see a lot when we’re looking at international founders, and companies internationally. Which is, the thing that seems to generate the most new applications [to Y Combinator], from a given country is a very successful company deciding to go home. Not the best founders from country X moving to San Francisco and staying there, but actually going back to, let’s say, Lisbon and creating the model of „Hey, this actually isn’t impossible, this isn’t just something that happens in California. This is something that wherever you are you can do and we’re proof of that. We’re the best out there and we’ve decided to come home.” And that gets press. They meet people and people are inspired by them, which creates the cycle of entrepreneurship.

Vasco: That’s the thing. For example, when we decided to apply to YC, I had lived in the US for about ten years and Sophia had also lived in the US before. I remember having this conversation at a time when we were really focused on building our product. „Hey shouldn’t we apply to YC?” – it was in the back of my mind. And of course I had heard about YC, I remember when it launched. But I thought „Well, we’re in Portugal, we’re doing this, there is a very low chance of us doing it”. And Sophia said „No, we should definitely try and go for it.”.

We wrote the application in three days. It worked out well obviously. After that it all suddenly became possible. Other companies before us wouldn’t even think about it – now it’s „well, clearly there’s examples of companies that did it, we should”. You know how it used to be impossible to run the mile in under four minutes?

Aaron: And now everyone does it.

Vasco: Right, just because it became possible.

Aaron: One of the hardest things for me to hear from founders internationally is „I didn’t apply to YC or I didn’t start a company because I just didn’t think it was possible”. You can read as much as you want about people saying that it’s possible. But I think the only thing that really convinces you is seeing someone who looks similar to you, someone who was born where you were born or lives where you live, going and doing that thing. And proving that there’s no barrier here – the only barrier is really in your mind, that’s stopping you from doing it. That’s the power of the Internet, right? That everything is really, really close and all you need is a plane ticket sometimes to prove that.

Vasco: I think our model, the thing that we’ve been seeing successful startups do in Lisbon, is what we call the Israeli model. A company starts in Lisbon, but then very quickly they start getting anchors into San Fransisco or London and create this connection, very strong connection of founders that share time between the two. And that tends to be very positive.

Aaron: That’s actually this incredibly important point – It’s a small market thing. No matter how good you are, if all you think about is Portugal, you are constrained on the size of what your business could be. And as soon as you start saying „okay, I’m going to go after London which gives me access to the whole European market or San Francisco, which gives me access to the US market” – it’s not that it just gives you access to capital, it actually forces you to broaden the vision of what the company could be. I think that without that vision of what it could be, whether or not it’s right, what’s the point in trying to build something huge?

Vasco: I’ve been having this on and off conversation with someone from Spain. I think Spain has this issue and France too, where the markets are big enough for you to build a medium sized business. So it’s not apparent from the get go that you need to focus globally. That is actually an advantage for Portugal where we have such a small market that you just can’t think of Portugal you have to think of US or Europe, or the world.

Aaron:  At least when someone shows that it’s possible for a Portuguese company to go and do that and actually broaden those horizons.

 

You can listen to the whole podsact here. Coming up – Part 2, where Sofia and Vasco talk about starting Unbabel and why surfing is so important to us.

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