How Drug Cartels Operate Like Silicon Valley Startups
"Maybe the next Steve Jobs is a girl in Oaxaca."
Agents raid a sophisticated cross-border drug smuggling tunnel near San Diego in 2011. Photo: US Immigration and Customs Enforcement
These are just a few examples of smuggling tactics used by Mexican and Central American organized crime groups to move illegal drugs and people across borders and past law enforcement. But they also exemplify the kinds of innovative behavior and problem-solving prowess that in other, legal contexts, such as Silicon Valley, often result in groundbreaking businesses.
However, reductionist and neocolonial theories of Mexican cartels have for too long hamstrung efforts to properly understand these complex entities and capture the vast potential therein, according to Dr. Rodrigo Nieto-Gomez. We, in essence, have failed to study these organizations within the right framework.
Nieto-Gomez, a research professor at the Center for Homeland Defense and Security and at the National Security Affairs Department of the Naval Postgraduate School, has spent much of his time over the last few years reconceptualizing our notion of this mysterious world. He has found that far from anything resembling The Godfather, the behavior of organized crime in Mexico more closely resembles the entrepreneurs and startups of Silicon Valley.
I caught up with Nieto-Gomez to talk about criminal entrepreneurship, the potential for capturing these innovation skills, and how organized crime in Mexico really works.
Motherboard: What are you currently working on?
Nieto-Gomez: My key research agenda right now is based on analyzing criminal entrepreneurship. When you see what it takes to smuggle drugs from Mexico to the US, those are the kinds of skill sets we go and admire at a maker's faire in San Mateo [California]. You take a compressor and mix it with a potato gun and you start shooting cocaine or marijuana ... over the border. It's freaking amazing. It's completely unhindered by regulation. If you want to see what true libertarian, Ayn Rand capitalism looks like, don't look at the US, but Mexico, and specifically the drug cartels.
"Sorry Amazon, you aren't the first to deliver products via drone."
What kind of innovations are you expecting to see from drug traffickers in the next few years?
If you want to get funky and think about the future of drug smuggling: UAVs [unmanned aerial vehicles] or unmanned semi-submersibles. You can send them from Colombia or Venezuela and program the coordinates all the way to the US. If you send 10 of them and only one makes it, you are still making a hefty profit.
What we are actually seeing are off-the-shelf drones bringing payloads of cocaine. Sorry Amazon, you aren't the first to deliver products via drone; the Gulf Cartel did it first. Cocaine is the perfect product for a drone payload. It's compact, stable, and highly profitable.
Organized crime, and organized crime in Mexico especially, is often portrayed as a top-down enterprise. What have you found through your research regarding these "cartels" or organizations?
It's not the one that Mario Puzo sold to us in TheGodfather, with the puppeteer's hand controlling every puppet. I don't think that's a good representation of organized crime and I don't think it ever was.
What we see in Mexico is more akin to Silicon Valley, and the relationship with venture capitalists and startups. You're good at what you do so I'll fund you. I'll give you access to the narcotics, you sell them for me, and you make some money. Out of that money you hire somebody else to help. You start to create your small little enterprise. If one day one part of the operation is captured or killed it's just one start-up. The different organizations in Mexico will have hundreds of operations like that operating at the same time and in the same chain.
So I imagine you see a lot of innovative potential in many of the kids who have already been absorbed into organized crime or exist on the peripheries of society?
Honoré de Balzac had this great saying that "behind every fortune there is a great crime". Now, I don't know about a great crime but certainly an act of deviance. If you do business like everyone else is doing business you will only be one more. Then we see the Steve Jobs, the Elon Musks, the Bill Gates, and Mark Zuckerbergs that come and break the rules, sometimes literally.
Napster was a criminal activity, people went to prison for it. It was shut down by the Department of Justice. Hackers, ooooo, evil. Yeah, except that it opened up the business model to companies such as Netflix and Spotify.
Maybe the next Steve Jobs is a girl in Oaxaca.
Kids are fairly comfortable breaking the rules, especially in the tougher areas of most countries. Normally your challenge in the general population is to teach them entrepreneurship. The problem with the kids involved in organized crime isn't teaching them entrepreneurship but rule-following, to come back from where they went when they went too far. But that's a good place to be.
Maybe the next Steve Jobs is a girl in Oaxaca. Will she have the chance to expand and create or will she be trapped in a shitty job in a maquiladora because she didn't have the opportunities and became stuck?
And what about the fighting of local gangs in the US? If there was one drug supplier—let's take the Sinaloa Cartel as an example—to two gangs in the US, wouldn't this single supplier bond them? Or at least inconvenience the Sinaloa Cartel?
Not necessarily. The one supplier doesn't necessarily care as long as they are getting their drugs across the border. They don't care if these gangs are killing each other. What we've seen time and time again in Mexico is that cartels will sell to rival gangs without a problem. You'll have rival gangs buying from more than one supplier.
One way of thinking of that is that it isn't the cartel that is selling it to them, it's the cartel that is funding operations. It's almost like the internet. You have packages that go from this computer to that computer. Frankly, I don't care how it gets there. I just need it to get there. A lot of drug smuggling happens like that. I have a drug here and I'll send it there. What happens in between, well, I really don't care, at least not that much.
Read more: The One-Stop Smuggling Town
So I'll be funding different chains. For example you have operations that specialize in smuggling on the US border. That's all they do. Or I move drugs within Mexico, from Chiapas to Guadalajara; these are the famous plazas that are terribly misunderstood. A plaza is an area where X cartel has enforcement forces to limit mobility to competition. We think of them as territories and they are more like supply chains. These are not marching armies; these are UPS carriers. It's about maintaining access to the highway system, for example. The reality though is that supply chains of competitors do overlap.
And is this when we can expect waves of violence in Mexico?
A lot of these fights we get, when the levels of violence spike in Mexico, it's mostly because one member of one chain crossed the supply line of another member. One of the explanations of increases in violence becomes then not so much a matter of someone trying to take a plaza. It's that somebody found another supplier and started piggybacking on the supply chain—they start moving drugs for more than one supplier.
But waves of violence tend to be complex phenomena and as such, they rarely have a single point of origin.
Don't you think if people really knew the odds of being captured or killed while working as a drug dealer they might reassess their career choice?
But what are the odds of becoming the next Steve Jobs or Elon Musk? They are tiny. But they fuel the dreams of 90 something percent of entrepreneurs in Silicon Valley that will probably fail. It's ambition. These are low probability high reward kinds of environments. And that is highly ambitious behavior that you want to encourage. Those are the people that see a problem and don't get deterred. They change everything.
One of the biggest missed opportunities on the War on Drugs is that we haven't identified a way of filtering out these high-risk tolerant people that we are losing to organized crime. We aren't providing any alternatives for them to take the exit and leverage some of the skill sets they acquired in a way that would be both high-risk and high-reward and also legal.
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