Center for Social Innovation

The Problem

When Federico Lozano was traveling in rural Mexico in 2002, he came upon a funeral procession with three coffins proclaiming a sign “Llagaron al otro lado,” “They made it to the other side.” The deceased were three young Mexican men who had perished due to exposure in the Arizona desert after crossing the border illegally in search of work. “The sign meant they had made it not just to the United States, but also to heaven,” says Lozano, founder of Puentes Global, the international recruitment agency for the poor. “I never got that sign out of my mind.”

Each year, hundreds of Mexicans die while clandestinely attempting to enter the United States in an effort to ease their economic desperation. Many semi-skilled laborers in Latin America more broadly are unemployed or underemployed, at best working for wages between $8 and $18 a day. Those who go elsewhere in search of a viable livelihood are frequently the victim of drug rings that charge exorbitant fees for the promise of safe passage and lucrative jobs –– many of which never materialize. Sometimes these individuals end up in the sex slave trade. Those who do make it over to the “other side” often must leave behind spouses and children. While their families suffer their absence, the immigrants themselves face language and other cultural barriers in their new homes.

Semi-skilled workers, those stuck between the poor and the middle class, comprise some 70 percent of the Latin American population. They are willing and able to do the dangerous, difficult, and dirty jobs that most people in developed countries no longer want. Such jobs thus provide a valuable ticket out of the cycle of poverty.

The Novel Idea

Puentes Global is a nonprofit that aims to alleviate poverty by empowering poor, semi-skilled workers in the developing world with the freedom to work in the developed world. In today’s era of global competition, it also offers labor-intensive firms in the industrialized world an alternative to delocalization.

“Puentes Global is taking an underground industry –– the transportation and recruitment of semi-skilled labor –– and is making it legitimate while lending dignity to the individuals involved,” says founder and CEO Federico Lozano. “It’s when no official solution is available that the worst of human trafficking and exploitation is to be feared. It’s about making the best of a difficult situation.”

The organization is focusing its initial efforts on connecting the vast pool of Mexican workers with jobs in Spain. This European country is in many ways the ideal destination for such workers, as the demand for their services there is great and the government is anxious to increase the nation’s labor base amidst increasing demographic and cost pressures. Spain’s laws allow Mexicans to enter the country for work and to bring in their families to establish legal residency within a year, thus minimizing the trauma of dislocation for such immigrants. The similarities in culture and language between the two countries allow for a fairly smooth transnational transition.

Lozano sees opportunities for such workers as industrial machine operators, welders, elevator repairmen, sheet metal laborers, and electrical linemen. Even with the present economic downturn, Spain still has a keen need for labor in areas such as the maritime industry, where machinists, cooks, and other workers are in high demand. Meanwhile, Mexico has a surplus of trained individuals who have been employed in their three large ports. This industry will thus likely be Lozano’s first area of concentration.

Lozano has chosen to establish Puentes Global as a nonprofit organization to help develop the necessary relationships with governments and nongovernmental organizations, as well as the other kinds of partners, that Puentes is looking for. “Establishing deeply rooted trust with workers, companies, and governments is absolutely essential. This industry has been marred by unscrupulous actors,” explains Lozano. “Our nonprofit status will help us reach out and collaborate across many sectors effectively.”

At the same time, the organization is being managed with the rigor of a business. The model requires few assets and infrastructure, the main investment up front being transportation and housing costs for the workers, which they will eventually pay back. Puentes’ main income in the form of commissions from hiring companies will allow it to be self-sustaining.

Lozano explains: “We’re essentially a non-dividend company, since the only differentiating factor between us and a for-profit firm is that we re-channel our profits back into the organization. This will help Puentes grow and offer more and better services to an increasing number of workers and hiring firms going forward.” Puentes has plans to expand its model to several countries once it is successful in the Mexico-Spain corridor.

Puentes Global promises to bring wealth creation to developing and developed nations alike. According to the World Bank, a mere 3 percent influx of workers to developed countries would make the world $356 billion richer. Much of this would accrue to poorer countries, but $139 billion would occur in the developed world, as well. By legitimizing an activity that has traditionally exploited those who are already suffering, and by addressing a real business need, Puentes Global therefore promises to create wins all around.

The Innovator

Since he was a child, Federico Lozano has been haunted by the suffering of Mexican immigrants all around him. “Growing up in San Diego as an immigrant myself, I saw the conflicts, tensions, and tragedies that come with economic disadvantage and forced immigration,” he recalls. “However, unlike the vast majority of migrants, I was fortunate enough to have been born into a family that offered me a great education,” he explains. The specter of police raiding his elementary school and dragging an illegally harbored Mexican family of five, drenched, out of the sewage drain, was one particularly painful moment for him. “I knew that someday I would address this terrible social and economic problem,” he says.

Lozano, whose father is Mexican and whose mother is Spanish, became a sophisticated world traveler and business person in his own right through international education and a five-year stint as vice president of his family’s own Mexico-city based import firm. He carried out undergraduate work in international relations, economics, and business in Boston and Barcelona, earning full tuition and serving as valedictorian of his class at LaSalle-Universitat Ramon Llull in Barcelona. During college, Lozano wrote his thesis on the link between international migration and development, which won a prize for the best thesis in the school’s history.

When he entered the Stanford MBA program in 2007, he shared the idea for an organization that would pair disadvantaged workers with jobs among classmates and professors, garnering significant support in the form of contacts, information, and other resources. A summer serving as a strategic business development intern with D.light Design, a global social enterprise run by Stanford graduates, further provided the knowledge and exposure he needed to launch his own venture. Lozano, who has been building the business plan for Puentes Global for the last two years, is now launching the effort with the help of the first Stanford Social Innovation Fellowship.

[An Interview with Federico Lozano]