Drug Cartels and Silicon Valley Startups: What Do They Have in Common?

Here are just a few examples of how Mexican and Central American criminal organizations smuggle drugs while evading law enforcement. But these examples also illustrate a kind of innovative, problem-solving behavior that, in the legal world (like in Silicon Valley), often leads to groundbreaking projects.

However, according to Dr. Rodrigo Nieto-Gomez, reductionist and neocolonial theories applied to Mexican cartels have long failed to properly understand these complex phenomena and to recognize their enormous potential. In essence, we still haven’t managed to study these organizations adequately.

Nieto-Gomez, a professor at the Center for Homeland Defense and Security and the Naval Postgraduate School, has spent the last few years reshaping our understanding of this mysterious world. He found that organized crime in Mexico operates much more like entrepreneurs and Silicon Valley startups than anything resembling The Godfather movie.

I had the chance to talk with Nieto-Gomez about the illegal business, the potential to borrow innovation skills from it, and how Mexican organized crime really works.

Motherboard: What are you working on right now?

Nieto-Gomez: My main research right now is focused on analyzing illegal business. As you can see, delivering drugs from Mexico to the U.S. is a kind of technological innovation similar to what we admire at Maker Faire in San Mateo, California. You take a compressor, attach it to a potato cannon, and start shooting cocaine or marijuana… across the border. It’s pretty damn impressive. It’s completely unregulated. If you want to see true libertarian capitalism in the spirit of Ayn Rand, don’t look at the U.S.—look at Mexico, especially the drug cartels.

What innovations do you expect from drug traffickers in the next few years?

The hottest trend in future drug smuggling will be the use of drones and unmanned semi-submersible boats. You can send them from Colombia or Venezuela and set coordinates for the entire route to the U.S. Even if only one out of ten makes it, you still make a huge profit.

We’re already seeing drones loaded with cocaine. Sorry, Amazon, but you weren’t the first to deliver goods by drone—the Gulf Cartel beat you to it. Cocaine is the perfect product for drone delivery: it’s compact, stable, and highly profitable.

Organized crime, especially in Mexico, is often portrayed as a hierarchical structure. What have you found in your research about these “cartels” or organizations?

It’s not like what Mario Puzo showed us in The Godfather, where one puppet master controls every string. I don’t think that’s an accurate picture of organized crime, and I doubt it ever was.

What we see in Mexico is more like Silicon Valley and the relationships between venture capital and startups. If you’re good at something, I’ll fund you. You get access to drugs, sell them for me, and get your cut. With your earnings, you hire someone else to help you. That’s how you start building your own small business. If one of these small-time players gets caught or killed, it’s just the loss of a single startup. Different organizations in Mexico have hundreds of these small units operating at the same time.

Do you see a lot of innovative potential in the kids who are either already absorbed by the cartels or on the social margins?

Honoré de Balzac once said, “Behind every great fortune lies a great crime.” Or if not a crime, then certainly some kind of rule-breaking act. If you do business the same way as everyone else, you’ll just be one of many. But look at Steve Jobs, Elon Musk, Bill Gates, Mark Zuckerberg—they came in and broke the rules, sometimes literally.

Napster was doing illegal things, and some people went to jail for it. The Justice Department shut it down. “Hackers, ooo, evil.” But Napster opened up business models for companies like Netflix and Spotify.

Kids break rules pretty easily, especially in tough neighborhoods in most countries. Among regular people, your job is usually to teach kids how to make money. The problem with kids involved in criminal structures is that they’re not taught business, but rather to follow rules to keep others in line. Maybe the next Steve Jobs is a girl from Oaxaca. The question is: will she get the chance to develop her abilities and create, or will she get stuck in a crappy job at a maquiladora because she was denied opportunities?

What about the wars between criminal groups in the U.S.? If two gangs had only one supplier, like the Sinaloa Cartel, wouldn’t the cartel unite them? Or would that create problems for the cartel?

Not necessarily. The supplier doesn’t need to worry as long as the gangs get their product across the border. Suppliers don’t care if the gangs are at war with each other. Time and again, we see Mexican cartels selling to competing gangs without any issues. And rival gangs buy from more than one supplier.

Think of it this way: the cartel isn’t delivering the product to customers—the cartel is funding the process. It’s almost like the internet. You send data packets from one computer to another. Honestly, I don’t care how they get there. All I need is for them to arrive. The same thing often happens in drug smuggling. The drug is here, and I send it somewhere else. What happens along the way doesn’t concern me.

So I’ll fund different supply chains. For example, there are organizations specializing in smuggling across the U.S. border. That’s all they do. Or I move drugs within Mexico from Chiapas to Guadalajara. These are the famous “plazas,” which are often misunderstood. A plaza is a space where Cartel X has armed forces to counter competition. We think of a plaza as territory, but it’s more like a supply chain. There aren’t marching armies here—there are delivery couriers, and it’s about maintaining access to the highway system. In reality, competitors’ supply chains often overlap.

So can we expect outbreaks of violence in Mexico?

When violence rises in Mexico, a significant part of the clashes mainly happens because one player crosses into another’s supply line. One explanation is that it’s not so much about someone trying to take over a plaza. The point is that someone finds another seller and starts using that supply chain, so now drugs from more than one seller are moving through it.

However, outbreaks of violence are usually complex phenomena and rarely happen for just one reason.

Don’t you think that if dealers really understood the chances of being caught or killed on the job, they’d reconsider their choice?

What are the chances of becoming the next Steve Jobs or Elon Musk? They’re tiny. But those odds fuel the dreams of more than 90 percent of Silicon Valley entrepreneurs, whose businesses might fail. That’s ambition. That tiny chance of success is highly rewarded. And that’s the kind of behavior we want to encourage. These are people who see a problem and don’t back down. They change everything.

One of the biggest losses we suffer in the War on Drugs is that we have no way to identify these high-risk, high-potential people. Organized crime takes them. We don’t give them any way out or a chance to use some of their skills in a way that’s both high-risk and high-reward, but also legal.