Mexico’s Silicon Valley fends off cartel concerns

GUADALAJARA, Mexico — Amid a barrage of coverage of drug-war violence, Felipe Calderon, Mexico’s president, recently traveled to the city of Guadalajara, a six-hour drive north of Mexico City.

Guadalajara is Mexico’s Silicon Valley. Over the last decade, the little city has emerged as a hub of Mexico’s growing IT industry. In the past few years, however, Calderon’s administration has been focused on battling a network of drug cartels vying for control of major drug routes through the country.

Now, though, Calderon was turning his attention back to business, crowning Guadalajara as a “Creative Digital City.”  

Companies in Guadalajara, he told the crowd, would attract more than $10 billion in investment and help the city become the capital of high-tech media production in Latin America. Start-ups in the city already have plenty of momentum, and are producing content, developing software, and handling tech support for major global companies.

The attempt to turn the conversation away from the drug war didn’t last long.

“How many more deaths?” a young man in the audience called out, interrupting Calderon’s speech. 

Only a few days before, 30 people had been killed in Guadalajara and the surrounding state of Jalisco — a shocking tally but only a fraction of the 47,000 people that have been killed since 2006, according to government data.

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“When is the war going to end?” the young man continued.

“Where are you going to go to live when your [term in] government finishes?” he yelled.

“Without a doubt, Guadalajara,” Calderon said, not skipping a beat.

“Let me tell you something; the killings there are in this country are caused by criminal organizations [that] recruit young people like you to kill young people,” Calderon added.

Still, incidents like the case a few weeks ago where two dozen headless bodies were dumped in the center of the city are part of the reason why a Google search for “Guadalajara IT” turns up the auto-responses not only of expected results like “Guadalajara IT jobs” and “Guadalajara IT industry,” but also “Guadalajara is it safe.”

Overall, in terms of street crime, the city, Mexico’s second largest, is considered to be one of the safest parts of the country, one factor that has led to Guadalajara’s emergence as the capital of Mexico’s burgeoning IT sector.

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Chip-maker Intel, for instance, already has 600 employees in Guadalajara. Companies in Guadalajara are producing 3D special effects for movies and developing videogames for companies such as Gameloft, the producer of popular mobile apps like Assassins Creed, Real Soccer and Asphalt Racing.

Faced with a never-ending onslaught of bad press related to the cartel killings, the city’s tech businesses are working with the government to promote a more positive image. In his office in Guadalajara, Enrique Cortes, the Director of Dell Services for Latin America said that Guadalajara is a “collaborative ecosystem.”

“I see my peers from HP and IBM every week,” he said. The businesses, he said, “compete in the market but collaborate to promote the sector.”

In Guadalajara, the private sector works with government economic-development specialists and local universities to analyze emerging technologies, investigate new opportunities for the region, and develop curriculums in advanced programming and other area of information technology and new media.

All three groups work together to promote the sector and try to reverse the international perception that Mexico has become a cartel war zone.

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“It’s nothing like Monterrey,” the city in northern Mexico that has been plagued by attacks and threats from Los Zetas, Mexico’s most militarized cartel, said Kurt

Rodriguez, a representative from one of the city’s economic development offices.

“It’s nothing like Juarez,” he added, referring to the border city that sits south of El Paso, Mexico’s most violent municipality, where 2,000 police officers have been forced to bunker down in a protected hotel after a cartel leader threatened to kill one officer each day until the police chief resigns.

Still, Rodriguez said the government has invested in public security patrols, and even a Blackhawk helicopter. At night, military personnel stand guard in the city streets.

Historically, Guadalajara has enjoyed relative calm because it served as a quiet home base for Mexican drug traffickers like Miguel Ángel Félix Gallardo and El Chapo Guzman, Mexico’s most famous drug boss, who ran the Guadalajara cartel in the 1980s and now heads the powerful Sinaloa cartel.

Security analyst Sylvia Longmire, author of a recent book on Mexico’s cartels, said Guadalajara “was always viewed by the old school capos as off-limits — kind of like Mexico City.”

In the last few weeks however, the appearance of tranquility has been shattered by a number of grisly incidents. The recent dumping of 26 headless bodies, for instance, has been attributed to Los Zetas, the main rival of El Chapo’s cartel.

“Los Zetas care nothing for old-school, unwritten rules, and they want in on Guadalajara,” Longmire said.

It’s unlikely, however, that Guadalajara would see the kind of turf battles that other cities, like Juarez, have seen because the Sinaloa cartel remains in firm control of the city’s smuggling routes. That allows a sense of law and order to pervade.

Unlike their counterparts in Monterrey and Juarez, businesses in Guadalajara are seen as being less vulnerable to attack or extortion by criminal groups. And while a few smaller-scale businesses have been hit, Longmire said, those that have are alleged to have ties to cartels.

So far, the Sinaloa cartel hasn’t seemed to be branching out into extorting tech companies or kidnapping executives, as criminal groups in other parts in the country have done. That perception of calm is reinforced by the sight of well-dressed young professionals packing into the open-air patios of the trendy bars and restaurants that line the main street in the city’s hippest neighborhood.

And Guadalajara’s IT sector continues to grow. Several businesses have already graduated from the Centro de Software “incubator,” a converted mall that houses a cluster of separate tech start-ups — and moved out to bigger offices. One of the more advanced new businesses in the city, Unosquare, a company that was founded two and a half years ago, doubled its staff from twenty to forty last year.

A year ago Unosquare moved to a new office in a modern, mirrored-glass tower.

Mario Di Vece, the company’s chief technology officer and co-founder, said he has no plans to leave this tech hotspot.

“These are horrible killings,” he said, “but I don’t feel threatened.”