Carl Lewis: Welcome to the Connected Enterprise Podcast. I’m Carl Lewis, your host from Vision 33, and my guest is my good friend and colleague David Strausser. David, please tell us about yourself, your background, and what you're doing today.
David Strausser: Carl, thank you for having me. I love the show. I’m David Strausser, a forbes.com contributor and member of the Forbes Biz Dev Council. During the day, I'm also the general manager of the Northeast region for Vision 33, where I love helping businesses break through bottlenecks with SAP Business One and Sage Intacct. I’m your guy if you’re ready to automate and digitally transform. At night, I run a podcast called Shark Bite Biz.
Carl Lewis: David, I wanted to speak to you because you've worked internationally and gone from the West Coast of the US to the East Coast. You bring a lot of cultural awareness to your business acumen. Tell us how you got to Mexico. What would you say if you were an American going there today with no background?
David Strausser: I left coal country, Pennsylvania—a small city called Pottsville—20 years ago. I needed to be somewhere bigger. Somewhere international. Six months after turning 18, I was going to go to London.
My buddy said, “No, don't go to London. We're going to Tijuana.” And he made me watch the movie Born in East L.A. After the movie, we decided we were moving to Tijuana because Cheech was so funny. We were young and dumb but thinking strategically. September 11th had just happened—what if we wanted or needed to go home? So, we chose a place close to the United States. Most people don’t realize how close Tijuana and San Diego are.
If you took any major US city and put a fence in the middle, Tijuana is on one side, and San Diego is on the other. It's one of the most interesting places I've ever been because it’s weird melting of culture within 10 miles of the border on each side. You get the best of Mexico and the best of the US.
We went down on vacation first. And we loved it, so we stayed. I lived and/or worked in Mexico for 15 years. I didn't plan it that way. I took the hard path, but I took it willingly, and so much was happenstance. There were lots of highs and lows. For a few years, I lived in a Tijuana ghetto. That gave me a unique perspective!
I'm not unique, though. I get so many people on Shark Bite Biz who discuss traveling places and living places and how it affected them and their future ventures. My experience gave me a different twist on life. It helped me understand the Mexican culture more than if I’d stayed in the tour zones.
Carl Lewis: Absolutely. You're right about that border. Thousands go across every day.
David Strausser: People don't realize there’s a huge American presence in Baja California. And I'm not just talking about a white guy like me from rural Pennsylvania who moved there, works in San Diego, and takes the dollars to Mexico. There are also Mexican Americans, like my son, who live down there and work up here. Probably 100,000 Americans live in Mexico and get their incomes from the US.
Carl Lewis: I believe that. What are three things about doing business in Mexico that are unique to Mexican culture/border life?
David Strausser: Moving to Tijuana was culture shock to the highest degree. In terms of business, there are a few unique things, like the tax system. If you're doing a business receipt in Mexico, it needs a QR code. And usually, the QR code has an RFC, which is like a federal tax ID. They do it all digitally, which is odd because you don’t think of Mexico as a place that could digitally transform their whole tax system.
Their people live in extreme poverty. But even if their only source of income is a small taco cart, they must do taxes digitally with QR codes for every transaction to be legal. It was a rough start, but the government said, "This is it. If you can't do it, you'll have to pay more taxes because you won't get the write-offs," and really twisted the people. We don't have that up here. People still use a pen and Excel.
Carl Lewis: Yes.
David Strausser: That was one big difference. Have you heard about the QR codes?
Carl Lewis: I have. It’s fascinating. I wonder: Is it because of their stronger commitment to technology when it comes to government oversight, or is it our pushback against government oversight that causes that chasm?
David Strausser: There was a lot of confusion. I had my own business when this was rolling out, and it was tough. Say you’re my client, Carl, and I take you to lunch in a Tijuana restaurant. I could write 50% of that off. But I have to request the code by giving my email address to the cashier, who puts it in the computer and says they’ll send me the code in 48 to 72 hours.
And then I hope they send it because if they don't, I lose the write-off. It was the Mexican government’s way of getting paid everything they could from their population. It also reduced the rampant tax fraud—well, you can still do fraud, but now it's digitally traced. Your transactions are all digital.
It's like putting a transaction into GAAP-compliant software in the US. You could erase it, like, "Oops, that never happened." You can’t do that with SAP Business One or Sage Intacct because you must put something to offset it. The US doesn’t have the buy-in because it’s too hard. But as of January 1st, I think the IRS will require Venmo, PayPal, and digital services to be like that. If you receive $600+, you’ll get a tax document starting next year. They say, “It’s not because we're trying to tax money that shouldn't be taxed—it's to make sure we get every dime we're supposed to get in the digital age.”
We're shifting toward that, but Mexico went hardcore. Almost overnight, it was like, "We're going digital on January 1st, and this is the only thing we’re going to accept. Get with it or pay the missing tax."
Carl Lewis: Did the government help those small businesses? Or was it, “You have to, so make these investments”? What helped them transition?
David Strausser: I'm sure some people got help. Mexico has programs for minority businesses, low-income businesses, etc. I was lucky because one of my clients made me use their accountant, so I didn't worry too much. They dealt with everything for me. But there were a lot of complaints, so Mexico provided some services like seminars and speeches online.
But it forced many Mexicans to get help from accountants, which cost money and headaches. I'm sure people lost some precious tax write-offs too. But it's stabilized now, and everybody's used to it.
Carl Lewis: David, after Mexico, you went to Los Angeles and started working for Vision33. What’s the difference between selling an ERP system in Mexico and selling one in LA?
David Strausser: I didn’t sell ERP directly, but I did sell technological solutions. For example, there’s a visitor permit you get when you go into Mexico. I sold the initial incarnation of that to the Mexican federal government. The sales process is wildly different. In the US, we want instant gratification. We want the sale now. Consumers want the product now. That’s a win/win.
In Mexico, it's extremely drawn out. For my first 8-9 years, I lived in Mexico and worked in San Diego. When the economy tanked, I couldn't find a job in San Diego that paid me wages worth my time.
So, I found contracts for companies that weren’t getting good business in the US and wanted to go to Tijuana or South America, and I expanded into Central and South America.
I was trying to sell to the State of Baja California, the Mexican federal government, and Mexican corporations. And it was so frustrating. If the customer said they’d get back to me by the end of the week, I didn’t hear from them for a month.
The timelines are very elongated. It’s hard to get a quick win in Mexico. You might get lucky if you had pre-established relationships, but mostly it will take a lot longer, especially if you're doing a big tech system. And they always negotiate more.
Until they sign on the dotted line, they're trying to get cheaper. Something that takes four months to sell in the US might take six to ten months in Mexico. Even simple things, like website advertisements. They’re quick business decisions up here, but not down there.
Some of it is because everything goes through Mexico City. In the US, most things are decentralized, but for most companies or the government in Mexico, everything is routed through Mexico City for approval. That adds time.
Carl Lewis: Interesting. It also feels like there's less of a sense of urgency about a lot of things, culturally.
David Strausser: Even when they say there's a sense of urgency, there's not. They need it now, but that could be three years. I still don't get it—and my wife is Peruvian, and my son is Mexican! If I could figure it out, I'd have the perfect marriage.
Peru is similar. Say you need to sell something that will be in Trujillo, in the north. That's where you meet with the directors/managers, and they're the "decision-makers." Quotation marks because their decisions must go through a bureaucratic process between Trujillo and the capital, Lima.
And even if a business is based out of Tijuana, the owner might be based in Mexico City. That centralized process threw me a curveball. Someone down there is reading your reports and has nothing to do with your daily business, and they’re making decisions for you.
Carl Lewis: Interesting. We both know it's easier to sell to a referral.
David Strausser: Absolutely.
Carl Lewis: How much does a referral mean in California versus Mexico?
David Strausser: Referrals mean a lot in Mexico. I worked for the Mexican government for two years as the binational advisor to the Secretary of Tourism. I’m one of the only white guys with a letter of recommendation from the Mexican government. That was a bucket list item! When I interviewed with Vision 33, it was on my résumé. I used that paper down there, too, to open doors. Or I'd use my contacts to get me calls with this or that company.
It sounds shady, but it's culturally acceptable in Mexico, so I did it. Having a referral like that was critical—especially as a foreigner. Many people have the mentality that Americans are there to take their money and run. I had to give people the warm fuzzies upfront. If I hadn’t had those references/referrals, fewer doors would've been open for me, and I would have been less successful.
Carl Lewis: Interesting. So, you came from Pottsville, Pennsylvania.
David Strausser: Yes, home to Yuengling.
Carl Lewis: Most people don't know Yuengling is the oldest brewery in the US and still very active. But I don’t know if they sell over the Rocky Mountains!
David Strausser: They just announced a partnership with somebody—probably Coors or Budweiser—and they’ll be in all 50 states soon. I think Yuengling is the number one or two American-owned beer right now.
Carl Lewis: After Pottsville, you were in Mexico and Los Angeles. Now, you’ve taken over a region in the Northeast with an office in Philadelphia.
David Strausser: Yes.
Carl Lewis: What’s different? What’s it like moving across the country? Are any parts of the legends about Philadelphia, New York, and Boston true?
David Strausser: I spent most of my adult life in Mexico or Southern California, so I had no sales experience in the Northeast until I moved back here. I had moved to Los Angeles because of Vision33, and then the VP of America asked if I wanted to move back home. I said no, but he wanted me to duplicate my LA performance in the Northeast. I wasn't thrilled. I love LA and Mexico. The culture is part of my identity. I miss it.
Business is different. You can't put the West Coast into one basket, though. People think San Francisco is like Los Angeles is like San Diego. But they’re all totally different.
In San Diego, you go to the office in flip-flops with your dog. You don't see that much in Los Angeles. And you see none of it in Philly, Boston, and New York. That's one of the biggest differences: It’s more formal here.
I’d start emails to clients or prospects with, “Hey, Name." And they'd write back, "Hey, Dave." Super casual. Here, it’s, “Hello, sir.”
Negotiating the sales cycle is different too. My sales rep says New Yorkers negotiate software like they do a pound of sugar. They're more hardline as far as wanting discounts and lower prices. I don't know if it's because everything else is so expensive and they're trying to save as much as they can, or because they feel the price is inflated. Either way, there's a much harder stance with them in New York vs. LA, San Diego, or Mexico.
Carl Lewis: I wonder if that bartering mentality is cultural.
David Strausser: There’s more bartering in Mexico than San Diego or LA. In Mexico, they want to do trade-offs. If you're selling something at $1,000 per month and they have a service that's $200 per month, they'll say, “We’ll give you the service free, and we’ll pay $800 a month.” They call those intercambios. Inter-exchanges. That’s how it feels negotiating with businesses in Philly, New York City, and Boston. Mostly in the cities, not the suburbs.
Carl Lewis: Interesting. I spent three years in Puerto Rico as a boy. My mother used to shop at the open market. My brother could speak Spanish, so he went with her to the market to do all the haggling. It was very important not to buy anything for the stated price. I’ve visited since then, and it's more like a normal US experience, but you still haggle in fruit markets or open food markets.
David Strausser: At the border, where you’re waiting in line in your car, it's full of vendors. You can buy anything known to mankind there. And whatever price they say, automatically offer them 20%. You’ll end up with 60-70% off.
Bartering only goes to a certain degree, though. You don’t barter at a taco stand or restaurant. In tourist areas, I think they think Americans like the bartering.
Carl Lewis: I bought my first guitar in Tijuana at a place like that. I think it started at $100 and I paid $40.
David Strausser: I want to hear your Tijuana stories, Carl.
Carl Lewis: That’s the only one I can recall. Well, except one when I was older and after I was married, but it was to go to a specialty medical clinic in Tijuana.
David Strausser: Yes, they have a lot of those. My best friend's wife is a dentist, and we didn't buy Vision33’s dental plan for years because we’d just drive to Tijuana, and she’d charge me $20 for everything. She’d charge a normal American three or four times more, but she's known me since I moved down there.
And my wife got free braces from an orthodontist who was a part of a software website and website advertisement deal we did for three years! That’s the best example I could give you about bartering in Mexico.
Carl Lewis: Well, David, this has been a lot of fun.
David Strausser: Thank you so much for having me on, Carl.
Carl Lewis: Absolutely. And for everyone else, we'll see you again soon. In the meantime, please stay connected.