With an army of offshore talent, Shokworks seeks to de-risk tech startups – and take them to the next level
When most people think of offshoring – including the new buzzword of nearshoring – they are talking about manufacturing, and the trend to relocate factories and workers from Asia to the Americas. For the founders of Shokworks, a Miami-based tech consultancy and early-stage investor, offshoring means something else. It means a constellation of some 200 computer engineers and programmers scattered across South America, primarily in Colombia, Venezuela, and Argentina.
“Because the costs are so high here, at the end of the day [offshoring talent] can allow you to use hybridized tech teams, and restructure your costs to become much more attractive,” says Daniel Laplana, who co-founded Shokworks with his brother Alejandro. “All the top companies, even Microsoft, are doing it. The business models don’t make sense when you’re paying a guy 300 to 400 thousand [a year] in San Francisco when you could hire, you know, a team of
20 or 30 at Shokworks.” Adds Alejandro: “We said, ‘Something’s broken here.’ And now everyone’s [seeing] nearshoring as a solution to restructure your cost model and actually become profitable, unlike 90-plus percent of tech companies that are unprofitable.”
The offshoring of tech talent is just one of the strategies the Laplana brothers have used in their own scrappy struggle to survive and ultimately thrive. Today their firm has a roster of clients that would make any rival jealous, from Procter & Gamble and Bitcoin pioneer Compass Mining to Fox Sports and Pitbull’s social music platform Unitea. Defining themselves as a “premier ROI-focused product development & design firm,” they specialize in accelerating the growth of young, scalable companies or leveraging established brands into cutting-edge technologies like AI and web3.
With new-to-market startups, Shokworks supplies everything from capital to operational advice, often taking a stake in exchange for either cash or services provided. “So, if you want to raise money, that’s where we engage,” says Alejandro. “And if we find we have a solid working relationship where we add value to each other far beyond [the] product, that’s where Kevlar, our venture capital fund, gets invested… We’re an engine of growth, a bespoke solution for startup and growth.” According to its founders, Shokworks in the last five years has generated over $1 billion in cost savings, revenue, and direct investment for its roster of 40+ clients, at the same time building a portfolio of private equity investments worth between $30 million and $40 million.
How Shokworks got to where it is today is as intriguing as the panoply of services the firm offers, and the marketing campaigns that won its principals recognition and acclaim in Miami’s tech ecosystem.
STARTING SHOKWORKS
When Alejandro and Daniel first tried their hand at the business of designing mobile apps for small U.S. companies, they worked with software engineers in Europe. Having immigrated to Miami from Venezuela as teenagers, they had attended college in New York and Washington, DC, before returning to South Florida to start an app-building company in 2015. “We were two businessmen with MBAs, but technology and engineering were not our forte,” says Daniel. When their overseas partners embezzled company funds, their Miami-based company folded, sending the brothers back to Venezuela in search of a less expensive base of operations. “We had to lick our wounds and start from scratch,” he says.
In Caracas, the Laplanas’ first client was the Colombian National Soccer Team, for which they created a mobile app. It was a huge success and taught them that the future was not about apps, per se, but about client engagement. “We were creating very engaging social media apps, or super apps, where fans could interact, have chat walls, and a bunch of cool stuff,” says Daniel. Within a year, their team of five had established a foothold in the Latin American sports market, setting the stage for their return to Miami in 2018 to form Shokworks. It is a name that sounds like it’s all about disruptive technologies – which it is – but is actually a play on the words Skunkworks, a secret high-tech laboratories originally developed by Lockheed Martin, and Shokunin, a Japanese concept that alludes to generational master artisans.
Developing a growing network of Latin American programmers, the new company went beyond mobile apps, looking for young firms with significant IP potential that could scale into meaningful enterprises. “We became a company builder working for early-stage companies,” says Alejandro, “an engine of growth for companies looking for a product-focused strategy that could address the areas of opportunity and constraints in their businesses.” If that meant helping raise capital, so be it. But far more likely, especially in the early days, was Shokworks involvement in planning and providing engineering and programming talent in lieu of cash, frequently leading to equity positions in client companies.
“We’re in the trenches with these founders on day-to-day product strategy, product enhancement, customer acquisition, scaling – you know, understanding where the necessary burn and the dollars invested need to go toward product development,” says Daniel. “And that allows us to have meaningful stakes in these companies – to have actual skin in the game and be a little bit more in control of our own destiny than traditional VCs.”
In terms of industry verticals, “we’re industry agnostic,” says Alejandro. Among their clients, “you’ll find a wide array, anything from artificial intelligence to geospatial computing, to blockchain, fintech, web3 and so forth.”
Some projects are less esoteric and harken to their early success with social engagement. One of the first Miami clients was Unitea, a social media “music community platform” that had been launched by EDM icon Claude VonStroke and backed up by Pitbull and others in the music industry. After a bad experience with another consulting firm, Unitea turned to Shokworks. Between cash and in-kind services (engineering) Shokworks ended up investing more than $2 million into Unitea before turning the company around by providing “a better fan experience for artists and fans.”
Among other strategies, that meant dramatically increasing fan engagement before, during, and after music concerts – offering rewards and points for those who engage for longer periods, with digital tokens that could provide greater access for fans, like putting them in a raffle to win a hot air balloon ride with Drake or Bad Bunny.
“Let’s use a local event, like the Ultra Music Festival, as an example,” says Daniel. “We know it’s coming up, so we share information with you on the app, like the entire itinerary. And then we say, ‘Hey, what are we going to wear guys?’ So, they start creating shots within the app, like ‘I’m think we’re going to wear this neon thing,’ or ‘Let’s go together, let’s bring our files and start listening to music’… At the end of the day fans can engage with artists, and artists with their fans, like never before.”
Shokworks also delivers engage-to-learn campaigns for customers before, during, and after each event, in partnership with big brands like Proctor & Gamble or experiential agencies like Dentsu. Beyond just marketing, they follow up with charitable programs that ultimately endear consumers to a brand. With P&G, for example, they are helping create a program for less fortunate Hispanic Americans called “Vibes for Smiles.”
“It ranges from teaching kids about dental hygiene, kids from lower-income families that may not know, to walking them through the pillars of a great education, doing a lot of scholarship work through programming,” says Daniel. “You start gamifying experience by doing, like, quizzes – short games that can capture their attention, so you can retain them for as long as possible. You entertain them, and then while they’re in the entertainment, you educate them.”
For their work with community music platform Unitea, Shokworks took an equity position, just as they did in Compass Mining, commonly referred to in media as “the Airbnb of bitcoin mining.” Alejandro describes it as “the new standard in bitcoin mining as a service, with the power to allow anyone on the planet to mine bitcoin, removing a number of barriers to entry.” When Shokworks started working with Compass three years ago, the firm had just raised a seed round and 18 months later generated more than $750 million in revenue. “Shokworks brought in a team of 35 engineers to revamp the whole front end and back end of the website, to make
it more user-friendly. Compass is now the second largest private Bitcoin marketing company in the world.” During this time, Kevlar invested over $1 million in Compass Mining, and Alejandro sits on both the company’s board of advisors and their compensation committee.
For another client, Internxt, Shokworks has also become more than just technology advisors, investing over $2 million with Kevlar in this promising Spanish startup. Kevlar joins other notable investors like Telefonica, Angels Capital (from Juan Roig, president of supermarket chain Mercadona), Balaji Srinivasan (a16z and Coinbase, and Banco Santander. “With Internxt we are developing the next generation suite for privacy-centered cloud services. So far they have onboarded over 1 million users and generated over $3 million in revenue.”
“One thing I’ll say about Shokworks is that they’ve been an incredible partner to us the last few years,” says Josh Pendrick, CEO of client Rypplzz. “On the product development side, we’ve been able to save a ton of money and actually get to certain stages of the product and to get to market faster – particularly with the spatial browser product that we’ve built, which is called Lightplay.”
THE NEXT BIG THING
Now Shokworks is entering the life cycle of startups with their latest product, the Idea Stress Test Simulator (ISTS), which performs a deep dive into the validity of a new idea. It does this through a 9-step process that begins with market research and competitive analysis, then moves through a series of tests that include user empathy (translation: is there a market?), user stories (translation: focus groups), cost analysis, wireframes (translation: product flow charts), UX/UI (user experience and user interface), and experimental product design and testing. In layman’s terms, it guides the client through idea development in 75 days – to test whether the idea has a chance of success, based on the sobering statistic that nine out of ten startups fail, a third of them because there is no market for the product.
“We focus test these ideas to see if they have legs or not. This is all about de-risking the entrepreneurial journey,” says Alejandro. “Everything a normal person would do in a year or a year and a half, we compress through our know-how to 75 days. After the program, you decide whether to double down, to pivot or just terminate. And companies that pass the test, so to speak, use that distinction to raise capital.”
Some of the companies that have used ISTS are EPX, a non-fungible token (NFT) company that then raised $4.5 million in seed capital; alfred pay, an app that converts cryptocurrency to cash which then raised $1.5 million in seed capital; and troop, an investment stewardship app that raised $4.3 million in seed capital and now had more than 10,000 active users.
The next step for Shokworks is to transition into an AI-first technology company, adapting what they have delivered to startups for enterprise customers and leveraging their domain expertise to help them complete exciting digital transformations. By opening a new center of excellence in Medellin, Colombia, and securing partnerships with ServiceNow, AWS (Bedrock), Google Cloud (Gemini), and Microsoft (Azure), Shokworks continues to boldly move forward with technology and industry demands.
