Volume 89, No.4, May-June 2003

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Duke Magazine-South American Start-Up, by Ben Cramer  

Map of South America

Back in Coroico, the town on the other end of the World's Most Dangerous Road from La Paz, Reale looks across a wide jungle valley to the opposite mountain range. "Do you see that road over there?" He points to a modern, paved roadway that snakes its way along a ridge. "That's the new road to La Paz. That road is perfect. But what's wrong with this picture?" he says, using his hand as a visor against the sun. "There is not a single car on it. Why? Ten years ago, the government decided to put the funds up to build a safe road to Coroico. But in Bolivia, the government must give a job to the contractor with the lowest bid, regardless of whether that bid is realistic. To save money, as they dug the road in, they simply pushed the loose dirt down the mountain, totally destroying the beauty of it.

" After five years of construction, the road reached a mountain, which was to be tunneled, but the company had torn through all of the contract's funds. So now, construction has stopped, and that beautiful road takes people from Coroico right into the side of a mountain in the middle of nowhere. This kind of thing happens in Bolivia all the time."

Reale and Vernon are alike in their ambivalence toward life in Latin America. Both have enjoyed the area enough to call it home for stretches of their lives, and both have developed a general frustration about the region's inefficient modus operandi when it comes to operating anything from a car to a business. Colosa's products seek to streamline projects--whether scheduling appointments or selling financial products--and to reduce inefficiencies.

In their search for industries in need of improved efficiency, Reale and Vernon have taken aim at one of the trademarks of contemporary Latin America culture, the tramitÈ. The two face a Sisyphean task. The tramitÈ includes any of thousands of bureaucratic errands or processes Latin Americans must confront to accomplish rudimentary facets of daily life, from obtaining a permit to paying a bill. It is as indigenous to modern Latin America as strong families and income inequality.

" You need a license to chew gum and walk down the street in Latin America," says Vernon. "Just to pay phone bills in Argentina, you have to actually go down to some place and walk in with cash. They then hand you a substantial amount of paperwork, which you must save. If you don't save it for ten years, you can be audited and forced to pay anything you can't show a receipt for. That's a business-to-consumer issue in Argentina, but those exist throughout Latin America. Latin Americans are very fearful of being defrauded. In the insurance industry, there are regulations just to submit advertising. All kinds of documents must be filed and you're constantly waiting for approval."

The culture of tramitÈs even supports its own sub-economy. Men sit behind typewriters on the city sidewalks awaiting customers in need of their ability to type X's in the small check boxes found on bureaucratic forms. Businesses, which can grind nearly to a halt under the burden of tramitÈs, have taken to hiring tramitistas--people whose full-time job is pushing paper between necessary parties--to stay legal. In this baroque system, if you fall behind in your licenses and permits, you effectively are breaking the law and, thus, operating illegally. And, the tramitÈs system is self-engendering, in part, because a highly bureaucratic system offers opportunities for kickbacks at virtually every point of contact.

Reale and Vernon became inspired to find a better way. They gave Colosa's senior programmer the challenge of creating software that could be used in Bolivia's most bureaucratic sectors--government agencies and regulators--to reduce the strain of tramitÈs. A mere two weeks later, a new so-called "workflow" product, eventually named FLUID, was born. Shortly after, Reale sold the product to Bolivia's Economic Ministry and then to the Superintendency of Telecommunications.

FLUID now allows a business to file applications with the telecommunications regulator online rather than carting a stack of accordion files to a government office. What's more, says Reale, "you are now able to track your tramitÈ at all times. This is based on the very same system that FedEx and UPS use." In addition, by uploading these processes to the Internet, Colosa is bringing a much-needed degree of accountability: "This should make it more difficult for it to get 'stuck' somewhere," he says. "When something like this gets stuck in a Bolivian institution, it is usually waiting on a coima, bribe. We want to put an end to that."

Assuaging the exhausting hassle of tramitÈs has become Reale's personal mission. He imagines creating a network of "e-tramitÈs," public-use computers throughout Bolivia and beyond, that would allow even Aymara- and Quechua-speaking indigenous people with no computer experience to tackle everything from obtaining a driver's license to applying for a government benefit. He imagines doing the project in cooperation with an international organization such as the World Bank.

Although in the beginning Bolivia was used as a mere default location and a place for cheap labor, it has since so informed the agenda of Colosa that it is difficult to imagine the company's being located anywhere else. Colosa could certainly pick up and move to a new home base--and the directors have entertained the idea-- but you can bet it won't be in a place as well trodden as New York or San Francisco. After all, Colosa's home in Bolivia is a function not so much of thorough market research as it is of the personalities of its directors.

The depth of Reale's comfort with his surroundings in Bolivia is striking. He invited some friends and Colosa's Duke interns to a small dinner party in his apartment last year. One guest recalls, "Brian explained that there's an indigenous tradition in Bolivia that when you get something new, like a house, or open a new office, you have to offer some sort of sacrifice so that it will be blessed. For laughs, Brian said he had a dried llama fetus in his closet."

In fact, Reale was only joking. He keeps the llama fetus in his car.


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