Inside Medellín

If there is one thing that the people of Medellín can pride themselves on, it is that they are good at business.

Colombia’s second city – and the hometown of Pablo Escobar, the biggest drug lord in history – is a dynamic place, home to 2.5 million people living in a wide Andean valley, where the pleasant subtropical climate has earned it the title ‘City of the Eternal Spring.’ It bustles with innovation, drive, and ingenuity.

“But sometimes,” admits Aníbal Gaviria, the mayor of Medellín, “we’ve been business leaders in the wrong sense.”

At the height of what is referred to as ‘the dark days,’ Medellín was the centre of an illicit empire that supplied 80% of all America’s cocaine – making Escobar, until he was shot dead by the city’s police in 1993, the second-richest man in the world, with an estimated fortune of $30 billion.

The vast global business carried an equally huge human cost. At the peak of Escobar’s reign, in 1991, the murder rate was 381 per 100,000 people. To put that into context, the most violent city on the planet today, San Pedro Sula, in Honduras, has a murder rate half of that – 187 per 100,000 inhabitants. Simply stepping outside your front door was an enormous risk – children were not allowed to play outside, and when your relations left home for work in the morning you never knew if they would return that evening.

People were being shot dead in daylight across the city in a terrifying settling of scores that almost wiped out a generation of young men, and saw thousands of innocent people murdered by mistake.

And yet from the ashes of that hellish concrete jungle a new city is rising.

“We hit absolute rock bottom,” admits Juan Esteban Sosa Posada, a consultant at the city’s investment promotion agency. “So we were able to start again from scratch.”

Medellín is restyling itself as ‘South America’s Silicon Valley’ – a tech hub, and a centre for innovation and science.

The city has initiated a series of incentives to bring start-ups to a cluster of new hubs along the Medellín River, with a programme of tax incentives, logistical support, and government pledges. And it appears to be paying off. Hewlett-Packard has based their entire Latin America services centre here, while Kimberly-Clark and Pipeline Studios – a Canadian animation company – are among the big names to have moved in.

The centre provides a ‘landing programme’ for companies wishing to base themselves in the city – a ready office space with internet connections and electricity included, for a monthly rent of $23 per square metre, plus a 100% tax break for the first 10 years. Initially the scheme was aimed at foreign start-ups, with the idea being that companies can settle in Medellín, then leave the Ruta N nest to locate themselves in their own offices

In March, Medellín was named ‘Innovation City of the Year’ by a group of organisations led by investment bank Citigroup – beating off competition from fellow finalists New York and Tel Aviv.

“Now we’re combating the cancer,” said Gaviria, whose brother was murdered by criminal gangs. “We’re still fighting for the reputation of Medellín. Because today it’s not the most violent city in the world. It’s the most innovative.”

As the security situation in the country improves, Colombia has seen investment flood in. The country predicts a 5.1% growth rate in 2014, with its economy based largely on oil, coal, coffee, tourism, and flowers.

The United States remains the largest single foreign investor, but Britain is second and has set a bilateral trade and investment target of $6.8 billion by 2020. The 2015 target of $3 billion has already been met, one year early.

In Medellín, the heart of this transformation is the Ruta N complex in the north of the city – a cluster of offices which, when completed, will occupy 150 hectares and become the largest tech hub in Latin America.

Such zones, says Paulina Villa, director of the Medellín Innovation District, either emerge naturally – as with Silicon Valley – or are created, as with those in Barcelona and Singapore.

Medellín’s hub is the latter – an ultra-modern series of glass buildings, close to the city’s botanical gardens, and surrounded by tropical flowers.

Outside, beyond the parasols and café tables, sit rows of bicycles, the city’s equivalent of London’s so-called ‘Boris Bikes,’ a recent innovation. Inside the brushed concrete building, the open plan office with its exposed pipework and lime green chairs is framed by climbing tropical vines on the windows.

At the height of what is referred to as ‘the dark days,’ Medellín was the centre of an illicit empire that supplied 80% of all America’s cocaine – making Escobar, until he was shot dead by the city’s police in 1993, the second-richest man in the world, with an estimated fortune of $30 billion

Quotes from Steve Jobs are inscribed on the walls, as a focused army of 20-something designers lounge on beanbags, working on their MacBooks with headphones firmly plugged in.

“Ruta N is like the first mammal in the land of the dinosaurs,” says Villa. “The dinosaurs do not yet know their time is over.”

The centre has been funded by the local government, which imposes a levy of between 30% to 50% on profits of Empresas Públicas de Medellín – the state-run company that owns the city’s water, energy, communications, and waste processing facilities.

Of that charge, 7% will be used to finance ‘innovation’ – which means that this year $20 million is to be spent on such schemes.

Directors of the centre point out that business running costs are 38% cheaper than in the Colombian capital, Bogotá, and that they are able to draw on an educated, youthful workforce.

The regional government has set up initiatives such as an inter-school ‘programming marathon’ contest and the ‘Vivero del Software,’ a software ‘Greenhouse,’ which aims to nurture blossoming tech talent, offering free programming lessons for 14 to 18-year-old students.

“We realised we had to do something to combat unemployment,” said Villa. “So for the past few years, we have been training our next generation. And now we’re providing the work.

“Textile manufacturing and food production were traditionally big industries here – but they weren’t scaleable. So we had to make the quantum leap – and that’s Ruta N.”

The centre provides a ‘landing programme’ for companies wishing to base themselves in the city – a ready office space with internet connections and electricity included, for a monthly rent of $23 per square metre, plus a 100% tax break for the first 10 years.

Initially the scheme was aimed at foreign start-ups, with the idea being that companies can settle in Medellín, then leave the Ruta N nest to locate themselves in their own offices.

The office was filled in the first six months – “there were so many in there we were jumping out of the windows!” said Villa – and currently houses 32 companies, with 803 employees.

So far the scheme has attracted businesses from as far afield as Spain, Chile, Brazil, and the United States.

Irish firm Pitch Bull, which connects entrepreneurs with investors, arrived in the city seven months ago.

“Medellín has the environment we need, and networking opportunities that don’t exist in Bogotá,” said Jose Yances, chief technical officer for Pitch Bull. “The foreign companies improve the professionalism of the existing start-ups, while they benefit from lower operating costs and easy links to government and universities. Mexico is our biggest market, but Colombia had the best offer, and the best young talent pool.”

Esteban Elejaide Jaramillo, 22, is one such recruit.

“If you’d have told me two years ago I’d be able to work as an app designer in Medellín, I’d have laughed,” said the graphic design graduate. “I thought my work here would be limited to business cards and fliers.”

A year ago he started work with a 13-man team at Blokwise, which specialises in video games and apps, and has won contracts from the Cartoon Network and Turner Group, among others.

He was part of a team that recently designed television network TNT’s app for the Oscars.

“I’m really proud that I’m now able to do this in my own country. We do feel like pioneers. But there’s a lot of improvisation – there’s no guidebook for this.”

Villa speaks about the need for ‘magnets and anchors’ at Ruta N – to draw companies to the hub, and then to keep them there.

“It has been difficult, and it will continue to be difficult,” she admits. “It’s a generational change; we are starting at the bottom, with the youngest learning about technology.

“We are encouraging incubators, bringing in lawyers specialised in intellectual property, and encouraging seed capital. But we’re getting there.

“This is Latin America’s decade,” she said. “The future is ours.”

But in Medellín, the past is never far away.

The murder rate may have fallen 80% from its peak, but there were still 920 violent deaths in the city last year – a rate of 38 per 100,000 people. In the UK, the figure was 1.2.

And the poverty and inequality that provide such fertile ground for criminal minds remains stubbornly attached to the slums on the hillsides.

As The Sunday Telegraph drove up to the shining glass and steel Ruta N complex, the road was blocked by protesters – with one man hoisting himself on to a cross, ‘crucifying’ himself while wearing a sign round his neck reading: “I’m dying for a house.”

The celebrity drug lords may have gone, but the trade continues, with turf wars being fought in the slums between rival gangs.

And up in the ‘comunas’ – the hillside shanty towns – amid the rough red brick dwellings was a string of graffitied slogans: “Medellín Innovation: Misery and fear.”

High up in his skyscraper office, with spectacular views of the sprawling city and the Andes Mountains, Gaviria, the 48-year-old mayor of the city, has heard these criticisms before.

But he insists he is proud of his city’s transformation from murder capital to start-up magnet.

“We’re not innovating for innovation’s sake,” he said. “We’re not talking about exploring the sea bed or going to Antarctica. We’re using technology to attract business and create jobs, and thus to improve the lives of the people who live here.

“We’re trying to end the vicious circle.”

Gaviria’s government, he says, is investing more in IT than any other city in Colombia – 0.4% of their budget, rising to 1% by 2017. “That’s a lot higher than the Latin American average.”

And he claims that innovations such as the building of a library in the midst of one of the worst comunas, connecting poor communities to the internet and the creation of cable car services into the most impoverished areas – to enable the poor to come into the city for work – are reducing inequality and restoring hope.

Does it bother him that Medellín is yet to shake off the association with Pablo Escobar?

“It’s more important to you on the outside than us living here,” he said. “I’ve never paid much attention to it. And anyway, the morbid fascination will always be there. People still go to Chicago for Al Capone tours.”

But what about the legacy of violence? Gaviria’s brother Guillermo, then regional governor, was kidnapped by the left-wing militant group FARC during a peace march in 2002, and held hostage in the mountains for a year. He was killed in a botched rescue attempt.

Has his brother’s death changed his political priorities? “Unfortunately, I am not alone in having lost someone,” he said slowly.

“I’m not anything special. He was special. He is my inspiration.

“There is still violence, still inequality here – no one can deny that,” he said.

“But now there is light at the end of the tunnel. We do it for them.”