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My two cents about the death of Steve Jobs is that it will coincide with death of Apple over the next three to five years. The decline will have nothing to do with Steve Jobs’s passing, however, but with the limitations of the Apple business model.

 

Jobs did with Apple what Steve Case did with AOL, only better: he built a magnificent “walled garden”, an extraordinary — but closed — ecosystem.   Eventually, like AOL and like all walled gardens in the information age, Apple will die: no matter how innovative a single company, its innovations cannot keep up with the innumerable innovations outside its walls.  

 

AOL provides a great example of a closed system: it used a proprietary programming language (Rainman) and limited usage to those who paid monthly subscription fees. Business partners had to pay upfront and guaranteed fees for a place on the AOL platform.   AOL was the king of Web 1.0, yet it died a quick death with the ascent of Google's "open" platform; today AOL walks the earth as an harmless corporate zombie.

 

Apple does the same as AOL did: it uses a proprietary programming language and limits usage to paying consumers, i.e., those who purchase its hardware.   As such, Apple walls its garden not with subscription fees but with devices: the iPhone, iPad and Macbook, etc.   (At least with business partners, Apple follows the revenue share paradigm.)

 

Apple has succeeded because, over the last eight years, it has built some of the most elegant, sophisticated devices in the history of mankind.  Consumer have devoured them.  Its best hope for the future lies in continued domination of devices, such that its operating systems become the world’s default operating systems, much like Windows did at one point. That’s unlikely, however, thanks to Android, HTML5 and the multitude of companies innovating and price-cutting in mobile hardware.

 

Right now, the big winners of the next five years appear to be Google and, surprisingly, Amazon.  Google is a beautiful, open platform but AWS has pushed Amazon's platform even deeper than Google's. 

 

Imagine the access to data that Amazon has, imagine the services it can begin to offer through AWS?    Amazon may one day be the most valuable company in the world, due to the openness, and depth, of its AWS platform.

 

As for Apple, over the next five years, its share of the device market will shrink and with it the Apple platform and the company itself.

 

  “Walled gardens” are beautiful but, because they are shut off from the innovation outside their walls, they don’t endure.  Just ask AOL.

 

I can’t tell you how many times I’ve heard that “Brazil doesn’t have enough good entrepreneurs”.  I’ve never believed it. Brazil has plenty of entrepreneurial talent. Many of these entrepreneurs choose non-entrepreneurial paths, however, because of the high risk of starting a business in Brazil.

 

Specifically, punitive Brazilian bankruptcy laws make the cost of failure so high that many people prefer not to even try the entrepreneurial path.

 

Bankruptcy laws are complex but suffice it to say, declaring bankruptcy in Brazil causes many years of problems for an entrepreneur. Basically, he cannot take ownership of another company for at least two years and active threats from the bankruptcy loom for at least five years.

 

Of course, the cultural stigma of failure also hurts but that is a concept of the mind rather than a tangible problem like the liabilities that arise from bankruptcy.

 

In my opinion, most great successes derive from failure. Henry Ford went broke several times before succeeding with the Model T. Steve Jobs failed with Lisa and NeXT, and Bill Gates failed with “Traf-O-Data” before forming Microsoft.  Failures serve as critical experiences for entrepreneurs, lessons from which they can “iterate” to better ideas. 

 

Unfortunately, onerous bankruptcy laws force entrepreneurs to stay with losing ideas.  Instead of closing their companies and applying their experience toward new and better projects, entrepreneurs get trapped in failing businesses — they simply can’t afford to close them because the cost (and stigma) is too great.   

 

This “failure trap” has a devastating effect on innovation – it prevents agility and hobbles the entire venture ecosystem.  Gates might have spent his career on on Traf-o-Data and Steve Jobs on the Lisa computer if they could not cut their losses and move on to Microsoft and the Apple II. 

 

We are succeeding despite this trap but imagine the innovation Brazil would have if it were eliminated.

 

 

Every startup scene has it cafes: Palo Alto has Coupa Café, San Fran has The Grove and New York has… Starbucks (on every corner). Below I posted my vote for the two most relevant coffee locales in Sao Paulo. I probably have a bias because our offices are nearby but I’ve spent time in other areas of Sampa and I'd still stick with these two.

 

Av. Brigadeiro Faria Lima, 2996 – Jardim Paulistano

 

Octavio is king of the business breakfast/coffee/lunch. On any given day, the place is packed with businesspeople circled around laptops at the low-slung tables.  Many of them – entrepreneurs, investors, journalists – are connected to the startup scene.

 

The Good:

 

Solid Menu. Octavio has a simple but satisfying menu of breakfast, lunch and dinner. If you want heavier fair, Rubaiyat, one of the best steakhouses in Latin America, sits right next door (ironically, Rubyai is not Brazilian churrascaria but rather a steakhouse with Argentine roots). 

 

The Coffee. Octavio’s building resembles a giant wooden coffee cup. It should. Octavio offers great coffee brewed in every manner ever invented by humans. Previously, I favored the chorreador method, where the waiter pours hot water through a sack at the table. Now, however, Octavio has a Clover machine.  For those who don’t know, that’s a new device that essentially grinds and presses each individual cup of coffee. They are rare – only a few Starbucks in the US have these machines – but for my money they give you the best cup of coffee.

 

The Wifi. Free.

 

The Bad:

 

The Service. The service sucks.  It pains me to write that but it’s true. The staff is friendly and skilled but there are just too few of them. If you have spent time in food establishments in Brazil, you will find that ironic: most places have too much staff, often more than staff than diners. Inexplicably, Octavio has far too few.  It’s maddening.  On good days, you will only get slightly annoyed at the negligence. On bad days, you can wait 45 minutes in between contact with an Octavio employee. Often, you have to stand up and go find one but, alas, there are usually three or four frustrated customers ahead of you doing the same thing.

 

Hours: it opens at 7:45am. That’s late for a coffee house.  5:30am is optimal. 6am is ok. 6:30 is pushing it. 7:45? Even in Sampa, where people party late, that’s excessive.

 

Anyway, Octavio Café is still the best – I love it and will keep taking meetings there until the day it closes. I once spent eight straight hours taking meetings there. It was a great day.

 

Rua Amauri, 286

 

I doubted whether Starbucks would find success in Brazil. Bringing coffee to Brazil is like bringing soccer to Brazil – it’s already here and it’s better. 

 

Yet, Starbucks has thrived. The one on Rua Amauri seems busy all the time. You may wait a bit longer for your coffee but otherwise the experience compares to visiting to any Starbucks anywhere, which is to say, great.

 

I think the crowd skews younger at Starbucks and, if you took a poll, you would find a higher percentage of customers from the startup scene at here than at Octavio.  Many of the customers come from just across the street at the headquarters of IG (one of the Brazil’s largest portals).

 

The Good:

 

It’s Starbucks. Good service, good coffee, good seating.

 

The Bad:

 

Mediocre food options.  Starbucks offers good sweets but there’s not an ounce of protein in the place, unless you count the stale, overpriced nuts at the cash register.

 

Hours: I don’t remember what time it opens but I do remember trying to get there early in the morning (6:15ish?) and it was closed. 

 

The Wifi.  Not free.

 

 

Anyway, if you are in Sao Paulo and want to run into a VC or entrepreneur or, maybe, just work on your laptop in a place that has the startup vibe, Octavio Café and Starbucks Amauri are good bets. They may soon become the Sampa equivalent of Coupa, Grove or, well, Starbucks.