REPORT

Reset Madrid
STARTING
AGAIN
-Madrid
Preface
Spain's economic woes are
creating a spirited entrepre-
neurial culture in its capital.
We meet the people turning
their fortunes around and
revitalising neighbourhoods
in the process, and speak
to the mayor about the new
business initiatives.
WRITER
l.iam Aldous
PHOTOGRAPHER
Gianfranco Tripodo
At the end of Madrid's Gran Via, the
25-storey Edificio Espana is a stark
reminder of the tough economic times
facing Spain. Once a symbol of opulence
and prosperity, the nee-baroque high-
rise is now boarded up. Plans to convert
the building into luxury apartments have
ground to a halt. With derelict edifices
like these and the violent protests seen in
recent months, it is no wonder that out-
siders are quick to draw gloomy conclu-
sions about the city's economy.
A walk through Madrid's weaving
labyrinth of smaller streets tells a differ-
ent story. If the past decade was char-
acterised by grandiose infrastructure
projects, the city is now undergoing a dif-
ferent type of makeover and the sound of
construction now echoes from countless
new shops, bars and restaurants spring-
ing up across the inner city.
Today the activity is largely grass roots.
After losing their jobs and facing a
dismal job market, many young, edu-
cated and increasingly frustrated
Madrileiios are looking elsewhere. With
unemployment at a staggering 25.I per
cent, some job seekers are opting to open
small businesses to survive.
Buoyed by reduced rental prices and
often backed with finance from family,
this new generation of business owners is
inadvertently transforming Madrid. City
I06- ISSUE 59
01
council figures reveal that I I,262 busi-
nesses were created in 20I I, with 2012
numbers showing a gradual upward
trend toward pre-crisis levels. Madrid
mayor Ana Botella is resolute. "Entre-
preneurs hold the key and the Madrid
city council will therefore do all it can to
advocate their central role in both society
and on the political agenda," she says.
Many of these entrepreneurs have
flocked to the hospitality sector. An-
tonio Santiago, 30, opened his bar and
restaurant Circo de las Tapas two years
ago. With a background in advertising,
he is new to the industry but judging by
the constant crowds here, his risk seems
to have paid off. Antonio inspected 6o
venues before settling on the run-down
street and since opening has witnessed
the area flourish, with at least five simi-
lar new businesses opening. "There has
been an explosion of creativity from
young Spanish people since the crisis
and small theatre spaces, modern restau-
rants and clothing stores are regenerating
entire neighbourhoods," he says.
Silvana Cordobes, also from the
advertising world, opened cafe-delica-
tessen Motha, together with her partner
and Argentine chef Daniel Golinelli.
With a focus on organic food, the couple
run a thriving catering wing and eco-
friendly cooking workshops. Cordobes
exemplifies a growing trend in the city
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- Madrileiios who once enjoyed stable
salaries have been cut loose and pro-
pelled to go solo. With them they are
revitalising outdated ideas about
customer service and opening hours.
Cordobes is quick to highlight the dif-
ficulties though, with bureaucratic delays
and local government regulations. A pro-
visional licence has been hanging on the
wall since June and she has no indication
of when it will become permanent. The
city council introduced temporary "ex-
press" licences this year in an attempt to
streamline the tedious bureaucracy. Pri-
vatising the registration process has also
reduced waiting periods from one year to
about three months but further improve-
ment is needed.
Madrid's municipal leaders have
sought to reset the business culture in
the city. One of their first moves was to
create Madrid Emprende - the city's
network of small business incubators.
Designed and built with public money,
they are managed by private compa-
nies and business schools. With strained
public budgets, government subsidies
ISSUE 59 - 107
REPORT
Reset Madrid
01
are receiving heightened scrutiny and
Madrid Emprende is under pressure to
perform. Their principle challenge:
striking the right balance between public
and private.
" The government wants to see
results - namely job creation. They have
the resources but don't necessarily have
the knowledge," says Katelyn Melan
from Tetuan Valley Startup School,
which works with Madrid Emprende.
"One of the positive sides of the crisis
is that they have been forced to become
leaner, more transparent, and more open
to new ideas."
The government is slowly taking a
step back. Madrid Emprende's centres
have been allowed to evolve organically
with a renewed focus on shared work-
spaces and providing services such as
marketing advice and access points for
local government services. "You can have
an idea or a model in the beginning but
you have to allow it to adapt to the real-
ity," says Miguel Angel Villanueva, Ma-
drid's deputy mayor. "Our role as a city
council has also changed and we need
to respond to the job-creation challenge
with horizontal collaboration rather than
implementing a top-down approach."
uSpeak has created a smartphone
app that provides custom-made language
classes and now boasts a team of 14. They
reside in the city council's International
108 -ISSUE 59
Lab, and founder Andres Burden is quick
to tout the centre's strengths. "The best
thing is that their content is not politi-
cised," he says. "Investors have complete
freedom to move their money around
and there's a real effort to optimise the
system, creating the right framework for
budding entrepreneurs."
After 23m of initial public invest-
ment, the centres now generate two euros
for every public euro spent, and neigh-
bouring cities such as Lisbon and Bar-
celona are looking at creating their own
networks based on the Madrid model.
Back on the streets, there are also glim-
mers of hope in a fledgling manufacturing
base. "Spain had always been a country
of artisans but it lost this during the get-
rich-quick property boom in the 1980s
and 1990s," laments Pablo del Barrio, a
former economist turned leather goods
maker. "With so much disenfranchised
youth, people have begun doing things
with their hands again."
Sharing his workshop with a me-
chanic of recycled bicycles and former
lawyer David Iglesias Resina, both men
saw their professional careers end during
the downturn. However, their shop Dale
Pedales has doubled in size since it
reopened a year and a half ago, and is
looking to expand even further. Rising
public transport prices and cost pressures
have energised a nascent cycling culture.
Resina claims the principal problem
facing young Spanish entrepreneurs lies
in the banks' unwillingness to grant loans.
However, with 5,000 of personal liquid-
ity and no debt, he was able to expand
once more. "We don't want to get too big
04
01 !?eputy mayor Miguel
Angel Villanueva
02 International Lab
03 Andres Burdett (back),
founder of uSpeak
04 uSpeak language app
05 Pablo del Barrio at
work in Dale Pedales
06 David Iglesias Resina
and Pablo del Barrio
07 Recycled bike with bag
08 Rocio Munoz of Real
Fabrica Espanola
09 Her food products
10 Spanish books

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Real
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Yladrid Emprende
CEO, Ifiaki Ortega
our role has been to facili-
tate partnerships between
e public and private
sector. We have estab-
hed university outreach
programmes and coordi-
nated a 'one-stop-shop' for
business registration which
as seen 100,000 new ones
regi stered in just four years.
Thi s new model has sought
unify the city's business
strategy with a budding
entrepreneurial culture and
as a result we've seen the
survival rates of businesses
rise from 50 per cent to 90
per cent within five years.
Eight years ago there
were no jointly financed
public-private projects. The
downturn spurred change
and the involvement of
companies such as Hewlett
Packard, Telefonica, and
independent investors have
all demonstrated that col-
laboration can be win-win. "
09 10
though. The desire to get rich is what cre-
ated this mess in the first place," he says,
shaking his head.
This desire to survive and succeed is
also echoed by Rocio Munoz. Her online
retail venture Real Flibrica Espanola is
throwing a lifeline to a struggling man-
ufacturing sector by offering Spanish
crafts, food and cosmetics. She happily
discusses her growing customer base in
the UK and Japan but turns serious when
talking about Spain's economy.
"There's a general sense of pes-
simism undermining the morale of the
young. Even people with jobs are being
affected," she says. "People worry when
they see the EU asking Greece to adopt
a six-day working week but I've been
working seven days a week for two years
now, and in tough economic times more
people need to do the same."
David Castro agrees. His artisan beer
label La Cibeles is already exporting to
Japan, the US, Sweden and Norway after
just a year and a half. "We're the back-
bone of the economic recovery in Spain,"
he says. The small brewery now sells over
ISSUE 59- 109
REPORT
Reset Madrid
rso,ooo litres a year, giving the brand a
potent voice in local corridors of power.
"My voice was hoarse from asking for
government help but because of the crisis
the local administration is finally begin-
ning to listen."
Madrid's city council is starting to
acknowledge the potential of small busi-
nesses. Mayor Botella recently unveiled
the Zona Franca ICC initiative, which will
waive local government taxes for new
creative businesses. "This is our way of
telling the world that Madrid is open to
talent and we want to welcome artistic
people to establish their projects here,"
she says.
The policy is the culmination of
a public and private collaboration be-
tween the local government and the
neighbourhood association in El Barrio
de Las Letras (BDLL) . Andres Cule-
bras started the association in 2004,
believing that the area needed a voice
based on co-operation rather than
confrontation. In the years since -
despite the crisis - the Las Letras dis-
trict has rapidly transformed itself into
IIO- ISSUE 59
Across the border
The threatened hike in tax
on capital gains combined
with a planned top tax rate
of 75 per cent could push
some businessmen out of
France, which invented the
word "entrepreneur". The
alternative is to stay behind
in Paris and protest like
the group "Les Pigeons"
(meaning, roughly, "the
sitting ducks"), who predict
that Hollands's 2013 bud-
get would be "a death sen-
tence" for entrepreneurship.
The "Pigeons" organised
themselves online and
grabbed headlines. Within
days of their movement,
the finance minister called a
meeting with some of them
and the government has
01 02
a dynamic area, with more businesses
opening than closing this year. Similar
neighbourhood organisations in the city
are beginning to emulate the BDLL ex-
ample; with businesses banding together
to lobby the city council more effectively.
"We have managed to establish a direct
line to the city council and we often bring
politicians here to show them what's
working and, more importantly, what
isn't," says Andres.
Despite the pain and social strife cre-
ated by austerity measures and the fiscal
crisis, Madrid may be on the cusp of real
change - the government is stepping
back, creating space for a new partner-
ship between the authorities, businesses
and residents. Prescriptive policies are
being replaced by flexible ideas based
on dialogue. Efforts to eliminate red tape
and cultivate new industries will take
time but a new generation of forward-
thinking business owners already seem
to be rising to the challenge. In the pro-
cess, they are not just altering their own
fortunes but transforming their city from
the ground up.- (M)
03
since dampened down the
planned tax increases.
A victory for the "Pi-
geons" but with this climate
of frustration it's going to
be harder to lure new enter-
prise to the French capital.
One proposal - "Paris
Capital Start-up"- aimed
to dedicate an entire district
of the city to young inves-
tors but commentators say
this entire capital gains tax
debate will have scared off
would-be start-ups.
President Hollands,
who once said, "I don't
like the rich," may increas-
ingly find that they do not
particularly like his fiscal
policies, and as a result
entrepreneurial traffic will
flow to Belgium, Switzer-
land and the UK. - TBW
01 David Castro (bottom
of the stairs) and
his team at their
Madrid brewery
02 La Cibeles beer
03 Mayor Ana Botella
in her office
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