For the past eight years, Lisbon has become a magnet for talented startup entrepreneurs, technology professionals, digital nomads and relocators from all over the world.
Thanks partly to generous tax breaks offered by different visa schemes, it has resulted in a boom in Portugal’s property and tourism markets, which have changed the face of the capital from a small and rundown peripheral city in the early to mid-1990s to a thriving, trendy and bustling metropolis that is firmly on the international map of bucket-list capitals.
But trends come and go, and investment inevitably can go elsewhere once the initial easy money has been made.
Despite Lisbon’s current success internationally, economic, academic, political, municipal and community stakeholders in Portugal need to get around the table and hammer out a more durable blueprint for the future, one that focuses on attracting sector company ecosystems and providing well-paid jobs and decent, affordable housing to retain talent in order for Lisbon’s success to not end up another flash-in-the-pan.
At a debate in September organised by the cross-border Lisbon-San Francisco community RedBridge and moderated by co-founder Jonathan Littman, three experts in their fields, Future Point Global CEO Ahmad Mansur, business curator and politician Rita Vilas-Boas, and Managing Director of Endeavour Portugal, Ricardo Mesquita, discussed the problems, challenges and opportunities facing Lisbon in building on its current success to create a durable, viable, sustainable and successful business ecosystem in strategically defined sectors whereby the city can become an international hub and centre of excellence.
Lisbon’s “good bones”
Future Point Global CEO Ahmad Mansur is of the opinion that Lisbon has “good bones”, to coin an American expression. This is partly why the capital, and Portugal in general, is attracting entrepreneurs and digital nomads.
“Generally speaking, it has all the assets, the sea and waterways, the climate, the hospitable people … and this alone makes it an attractive place,” he said.
From the perspective of companies, Lisbon is a great place to be in terms of proximity, he continued. It is not so peripheral and that makes it an attractive place to relocate or set up in terms of cost.
“Companies want to come here and can attract employees to move because it’s such an attractive place to live, but also because they can get the talent in Lisbon, particularly IT engineers,” he said.
“When you look at digital nomads, they usually go to places that are inexpensive, cool and have good (travel and internet) connections, and where there is a community. I think Lisbon currently provides that,” he added.
Ahmad Mansur explains that when you create a talent ecosystem — and most city regions are interested in creating a creative class — it means creating an environment that attracts and retains people who are skilled and knowledgeable. That can mean cities reinventing themselves or building on what they have.
Mansur says that most cities have shifted from an industrial to a knowledge economy. One successful example is Pittsburgh, Pennsylvania, which was one of the most industrial cities in the US and made a conscious choice to move from an industrial state to a knowledge state.
One of the first challenges facing the city was to stop the ‘brain drain’ from the State’s universities like Carnegie Mellon and the University of Pittsburgh, whereby the State educated its talent only to see them move elsewhere, like Silicon Valley, in search of better and higher-paid opportunities.
“These graduates were moving to Silicon Valley and so the leadership in Pittsburgh devised a plan to retain the talent through the ‘Pittsburgh Promise’* by creating the right kind of venues and environments and bringing in investors that all create the right type of ecosystems.
The Pittsburgh Promise promotes high educational aspirations among urban youth, funds scholarships for post-secondary access, and fuels a prepared and diverse regional workforce.
Inward investment: good for some, bad for others
Rita Vilas-Boas, a business curator and advisor to AgroGrIN Tech*, pointed to one of the drawbacks of Lisbon’s recent success in attracting overseas entrepreneurs, talent and relocators, particularly for the local population which suffered rising accommodation prices now exacerbated by the cost-of-living crisis.
“The whole of Portugal is ‘hot right now, with this new vibe that everyone is enjoying, but could be so much more. I love digital nomads and that is great for Lisbon but, from the perspective of the local people who have to make a living, it’s very imbalanced, particularly with the problem of real estate (the lack of affordable housing as property prices have soared due to demand).
“Lisbon is a very constricted area geographically and in terms of the river, as opposed to Porto or Braga, so it’s very hard to grow and still feel part of and live in the city.
“Creativity is the key for the challenge we face here, to create an entrepreneurial ecosystem — and that is absolutely the right way to go — and the key is knowledge, such as AI. It’s even more important to have critical thinking and to be creative. However, what we’re seeing right now is young Portuguese talent leave in search of higher wages, better career opportunities and prospects, and affordable housing.”
Lisbon’s success: is it transient?
Ricardo Mesquita, Managing Director of Endeavour Portugal, emphasised the importance of building on the current inward momentum, from entrepreneurs, talent and investment, to create long-lasting success.
“I like Lisbon, but we have to ask if this is a transient movement with people then moving on elsewhere?
“What I see that is different from other cities is that people are bringing their families and children and putting them through school in Portugal. There is a concern that the new residents should stay and make a positive contribution that will spillover to society and beyond,” he said.
“There is a concern now in terms of creating the right infrastructure (for an ecosystem). It’s fundamental that Lisbon raises its game in order to continue to be welcoming to the number of people moving here, while also building a bridge between the locals and incomers — which I think RedBridge is doing — and learning and nurturing the language and the culture of the city.
“I have seen a similar phenomenon in Miami, but beyond building the postcard image of Lisbon, it also has to be about building the community and understanding what the city is, not just to the newcomers, but also the people who have grown up here,” he stressed.
Diversifying the economy
Among the other challenges Lisbon faces, beyond sky-high housing costs, is diversifying the economy and moving beyond one or two markets (European Union and United States).
Ahmad Mansur says it is important for the local residents to be able to participate in the growth of Lisbon. “In a lot of cities that have grown and attracted talent, the missing piece was no growth of the local community.
“You have to look at those sectors that you can grow and which are very unique to Lisbon, put a digitalisation layer on that, and find ways to connect to your education system. There are a lot of cool education enterprises in Lisbon that can potentially turn out young talent to get those certificates that are part of creating a pipeline,” he said.
Rita Vilas-Boas said it was important not to compare California with Lisbon, or even Portugal, since the whole country has challenges as the middle class becomes smaller. “Unfortunately, we are just talking to a bubble. Even the Portuguese unicorns aren’t really Portuguese because they are not based here. But they could represent the top 20 companies (C-20) in Portugal.”
She says bringing opportunities that can use local talent would represent a big change, and of the top seven technology companies in Portugal, only one is from Lisbon. Both Porto and Braga have great engineering schools and are much cheaper to live in, while having a great lifestyle quality.
“The whole country, and not just Lisbon, provides a huge opportunity.”
Rita Vilas-Boas gave the example of methadone which was devised in Portugal as a heroin substitute to help heroin addicts recover from their addiction. “In the 1980s and 1990s, we had a big heroin problem. It started in Galiza and was brought in by fishermen. Programmes of that nature could help in places like San Francisco where they have a big drug problem,” she remarked.
Role models and unicorns
Ricardo Mesquita pointed out that some unicorns are headquartered in Portugal such as Outsystems (Oeiras, near Lisbon) and Feedzai (Coimbra). “I seriously believe that entrepreneurship can contribute to economic change and has a tremendous impact, and they (the unicorns) are on the forefront of that transformation.
“These companies are important, not just because of the hype, but the economic incentives they generate and the multiplier effect, which means they become role models and show what is possible. When I grew up in Portugal in the 1980s and 1990s, we had fewer role models. I love Cristiano Ronaldo, but we need other ones.”
Ahmad Mansur agreed that unicorns are great. “We should all grow up and believe in unicorns”, but what is more important is that we look at ways to develop and promote a creative entrepreneurial mindset. “Everyone is not born to create a unicorn, however, if you have those type of skills that you can turn into a company and become a sole entrepreneur, take your own path and use you skills to the best of your ability; then those are qualities and companies that bring in growth and multiply economies in regions and cities.”
But what is Portugal doing well to attract talent, and how could it become more strategic in doing so?
Ricardo Mesquita says that while Portugal is already successfully doing that (it offers a range of startup, entrepreneur and tech visas with attractive tax rates), fundamentally it’s about the people and the Portuguese are “open and curious”. “Some of us were privileged to live elsewhere and returned to Portugal to grow the national economy. But the lifestyle of the country and the sense of possibility exists,” he said.
“We all know about the emergence of global cities, like Miami and Dubai, and I don’t think Lisbon is anywhere near that level of growth, but it is a place where people can meet, grow their families and businesses; and Lisbon can become a very pleasant and idyllic place to live, if not on a scale of these global cities,” he opined.
Rita Vilas-Boas pointed out that tax incentives are “only exciting” for foreigners. “If you are a local, you have to pay the full taxes.”
Speaking before the Portuguese government took the decision to scrap the NHR tax scheme, she admitted that when she returned to Portugal after many years, she benefitted from the 20% flat tax rate under the scheme. “I use it, but it is not really fair.
“But if fully qualified engineers stay here, they’re only going to make €1,000 or €2,000, whereas overseas they’ll start on €5,000.”
Rita Vila-Boas pointed out that Portugal was in debt, inflation and interest rates had been rising, and it couldn’t deflate the currency. “What you can do is to create competitive advantages (which I did through the visas). However, you can’t ask families in Lisbon to pay all these taxes and high rents when they only earn €1,000 a month – it doesn’t make sense.”
Getting around the table
To solve these problems means bringing a lot of different stakeholders to the table, according to Ahmad Mansur.
“In the successful cities I’ve worked in, they have been able to do this and we call this an ecosystem now, but it’s about how you can create a narrative and build a future, possibilities that take you beyond your traditional thought narrative,” he said.
An example of this can be seen in the East Bay of San Francisco where a lot of leaders came together to examine the economy and see how they could grow it.
“We partnered with McKinsey that did a study to see which were the key growing sectors of that (San Francisco) region. The study became a roadmap for all the stakeholders. One of the sectors was biotech and bio-manufacturing, but graduates would work for a year and then leave.”
The companies had problems retaining qualified staff. The solution was to bring in four big biotech companies, develop a certification programme that became a pipeline for the pharma industry, and hire the graduates. The result: today, South San Francisco alone is home to the largest biotech cluster in the world, boasting over 200 companies and a life sciences workforce drawn from 17 nearby academic institutions while bringing real-time knowledge in a two-way relationship.
But what of the future? Can Portugal bring its stakeholders (government, NGOs, municipal councils, community groups, companies and universities) together and pull off similar kinds of success stories as the San Francisco biotech boom?
Rita Vila-Boas pointed to Portugal’s biotech experience in the 1990s in Porto and why it ultimately ran out of steam.
“We had a lot of market demand and we still have some food tech companies that joined forces in the 1980s, but then it stopped and didn’t grow. Today, it is still in the same position. The oceans are another area we could do well in, here in Portugal.
“We were studying that in the 1990s and now it’s become cool, but we lack equity and private investment. Everyone is dependent on money from Europe and grants. We need that kind of cashflow that they have in California. More private investment, more people willing to risk in these areas and more entrepreneurship,” she said.
Ricardo Mesquita said that his hope for the future was to build the Lisbon that “we want to see”. “I am not from Lisbon and I don’t live in the city, but I want to see the city flourish. We often talk about cities in terms of size and tiers, and Lisbon is probably the smallest capital in Western Europe with an estimated 100,000 foreigners living in the city. If we are all able to take the multiplier effect and build those bridges, which RedBridge is already doing, I think we will see a different city in the future”.
Ahmad Mansur agreed. “Many different stakeholders need to come to the table and think about what they want Lisbon to be. So often we default to a certain type of future, and here’s a chance for you to look at a future that is big, plausible and possible, and mobilise around that to include government, not-for-profit organisations, community, and entrepreneurs to make it happen.”
About the speakers:
Future Point Global CEO Ahmad Mansur, an edtech entrepreneur and futurist, educator, speaker and entrepreneur. He is the managing partner of a global education, consulting and venture company Future Point that develops a portfolio of brands for lifelong learners to access leadership, talent and personal development training through online courses, workshops, catalyst events, media channels, learning journeys and change labs.
Rita Vilas-Boas, a business curator and advisor to AgroGrIN Tech*, who for 25 years has been working as a global marketer and operator, having held several leadership roles in 7 countries across 3 continents. Rita is also a founding partner of the first classical liberal party in Portugal ‘Iniciativa Liberal’.
Ricardo Mesquita, entrepreneur and founding Managing Director of Endeavour Portugal, part of a community of high-impact entrepreneurs in 40+ markets whose mission is to help build a strong, supportive and globally connected entrepreneurial ecosystem in Portugal by selecting and servicing high-growth entrepreneurs. Ricardo also co-founded BETA I, a collaborative innovation consultancy with global reach and experts in managing corporate open innovation, pilot-oriented projects in Lisbon and further afield.
Jonathan Littman: Debate moderator and co-founder of RedBridge (Redbridgelisbon.com), a cross-border CA-Portugal community that he has been building with his co-founders Hugo Antonelo, Paulo Gaspar, Nathan Hadlock, Filipa Pinto Da Carvalho at a ‘palácio’ in Lisbon. RedBridge launched in 2022 with 10 events, including “Why Californians Love Portugal” at its sister San Francisco club, Shack15 which was visited by Portugal’s President, Marcelo Rebelo de Sousa.
Jonathan’s professional focus: Collaborating with Portuguese, Brazilian and Europe entrepreneurs and companies, helping startups and companies scale with capital and clients in California.
*1. The Pittsburgh Promise promotes high educational aspirations among urban youth, funds scholarships for post-secondary access, and fuels a prepared and diverse regional workforce. It provides “last dollar” scholarship, meaning The Promise pays for eligible expenses after all other grants and scholarships and institutional grants have been deducted. Loans and work-study are not included in the calculation.
RedBridge is a not-for-profit organisation that became a club earlier this year and currently has 100 members and growing.
Benefits of membership includes access to Red Bridge’s monthly events and private events including mentorship masterminds. First circle membership closed at the end of September.
By CHRIS GRAEME