Tropical Gringo

When my friend, Jorge Pulido, from PriceWaterHouse invited me to a launch party, I never expected it to be such an impressive launch of an Internet company for the Colombian market. The company is called BrandsBag and it’s entering full speed ahead into the Colombian market with a flash sales site targeting women who love fashion.

What’s most interesting about this new endeavor is that it is a mix of impressive entrepreneurs from Brazil, Argentina and Colombia that have decided to start their Latin American strategy from Colombia.  As I mentioned previously in a NYTimes article, the Brazilian Internet market is on fire and more and more US VC’s are investing in that country.  Nevertheless, witnessing the impressive launch tonight of BrandsBag confirms our confidence in Colombia as a country from which to launch Latin American-wide Internet initiatives and funding these initiatives through our new Micro VC fund,  Tayrona Ventures.

I had the chance to meet the leaders of BrandsBag such as Diego Rodriguez and Delio Epaminondas (with me in the photo on the left).  These are sharp business people who are extremely serious about transforming the shopping experience in the region and see Colombia as an excellent lauchpad to achieve this objective throughout Latin America.  The country boasts a growing middle class, internet penetration and ecommerce increasing at above 40% and a market with overpriced fashion items (sometimes more than 100% markup above prices in other countries).

As Marc Andreessen mentioned in a previous WSJ article, software is indeed eating up industry after industry as digital innovation takes hold. In countries such as Colombia, the potential is even greater since competition in markets such as retail is much less ferocious allowing incumbents to charge an arm and a leg.  These types of companies are ripe for disruption and make Colombia an ideal market to provide new (digital) offerings that can be incredibly profitable and still undercut the established players.  BrandsBag is betting big on Colombia and in the process has a chance to showcase the potential of this country as a profitable gateway/launchpad to the rest of Latin America.

The other day, I had the distinct pleasure of addressing a capacity crowd at Social Media Week Bogota.  I had been working hard on, among other things, launching an seed fund called Tayrona Ventures as well as helping launch a new flash sales startup called SuperTrendi and didn’t expect to have such a good time presenting on Friday.

I really enjoyed the audience and found them incredibly receptive to my message about how social media (among other digital tools) is changing the way companies do business and the general business environment. This environment is great for startups and for accelerators such as the Founder Institute of which I am Director in Colombia. I call this whole phenomenon Digital Innovation and explained it at length during my presentation.

Today, I was gratified to read Diana Luque’s impressions of my speech and the message I was trying to get out there.  I also put my presentation slides on Slideshare and was amazed to see how popular the slide deck became.  It was great to see this because, as I wrote in a post on the day of the presentation, I had been working hard on that deck the night before and for the first time used my new corporate image and brand of TG Coach although the website is still under construction.  Among the points I made during the presentation, was the fact that the advertising agency industry is coming under attack as mentioned in an article yesterday in Adweek.  Finally, I was quite flabbergasted to get two separate emails from Slideshare informing me that my presentation was one of their hottest pieces of content on Twitter and Linkedin and am showing a shot of the homepage at that moment here.

Tengo muchos amigos que han estado yendo a Social Media Week acá en Bogotá y me da una lastima que no he podido asistir.  Como escribí anteriormente, tuve excelente viaje a Medellin y otras coas que no me han permitido sacar tiempo para asistir. Sin embargo, hoy voy a presentar a las 4pm sobre la transformación de los negocios, en parte, gracias al auge de los medios sociales, y atraves de lo que yo llamo innovación digital.

Mi impresión (de los tweets) es que Social Media Week al fin consigió una organización que ha podido sacarle provecho a esta iniciativa acá en Colombia: Zemoga.  Felicitaciones a ambas partes ya que conozco al creador de Social Media Week, Toby, y estoy seguro que debe estar muy feliz en este momento.

Fuera de todo, hoy tambien voy a regalar un cupo para el taller de Innovación Digital que se dictará el 4 de octubre.  Todavia no he pensado como voy a decidir quien es el ganador o la ganadora, pero algo se me ocurirá.  Van a estar muchos amigos ahí en la audiencia (lo cual es bueno porque luego hay cervezas!) y por primera vez va venir mi esposa a escuchar una de mis presentaciones.  Ella es instructora de yoga y le ayude a crear su blog llamada YogaMiel y su pagina en Facebook hace un año entonces ha tenido contacto con los medios sociales gracias a su espposo nerdo.

Hablando de la esposa. Ella acaba de llegar y vamos aprovechar para tomarnos un cafe.  Abajo dejo los slides que voy a presentar hoy en la tarde.  Estoy utilizando una nueva imagen para mi empresa llamada TG Coach.  Ya puedo escuchar los criticismos sobre el hecho que la pagina de TG Coach todavia está bajo contrucción pero yo soy de la filosofia de los startups (asi me considero) de lanzar temprano y mejorar continuamente.  Si entran a la pagina van a tener una idea leve de la direccion y me encantaría escuchar sugerencias sobre esto si pueden incluir esto en los comentarios abajo de este articulo (post).  Hagamos crowdsourcing de la pagina de TG Coach.

Finalmente, acá están los slides que los acabo de subir a slideshare:

It looks like I’ve been doing a lot of talking lately about Digital Innovation and Internet startups and the startup ecosystem.  Last night, I had the opportunity to talk at an event called eCommerce Day Bogota along with impressive entrepreneur, Oscar Giraldo, founder of Arcaris.  It was great to hear the interest from everyone in entrepreneurship and  what we’ve been accomplishing with the Founder Institute in Colombia.

Additionally, last week, I had the opportunity to address a group of bankers at an event sponsored by the Bankers’ Association.  I was able to give them a perspective on where the startup action is in terms of the financial services vertical and was happy with the feedback and the interest from the industry in these topics.  I was accompanied by my Founder Institute Colombia team member, Juan Manuel Lopez as well by a co-founder of one of the Founder Institute graduating companies that is firing on all cylinders, financial product comparator site: Comparamejor.

Last but not least, I had tremendous pleasure of staying in some swanky accommodations in Cartagena and took advantage of this by smoking 4 of my favorite cigars during that two day period.  I’m sure hardly anyone kicks back like that, but to each his own.

Today, I had the pleasure of meeting Ricardo Guerrero during his brief visit to Bogota, Colombia.  We’ll be seeing more of each other during South by Southwest (SxSW) next week, but it was great meeting in person.  We had an enjoyable breakfast and, afterwards, as I smoked my stogie and annoyed him with my cigar smoke, he talked about how he got into Social Media.  After creating a radio show in Texas and working at that for a while, among other things, he started working for Dell Computer.  Then, in 2007 after a visit to SxSW, he got introduced to Twiiter and found a way to use it to sell refurbished PCs for Dell Outlet. Now that’s digital innovation.

Ricardo has a new company called Stwittergy which is developing a tool to help businesses better use Twitter to achieve business objectives.  He also has his own agency aptly named Social Media Dynamo.  Nevertheless, he’s not completely disconnected from his Latin American roots and is working with colleague and friend Fernando LaBastida in setting up the first Americas IT Forum the day before SxSW (next week) in Austin.

I was able to record a small portion of our chat and here it is:

The other day, I was reading an interesting article in the Huffington Post about how well Latinos (Spanish-speakers residing in Latin America) and Hispanics (residents of the US) use social media. The article talks about a new book on this topic by Joe Kutchera entitled, Latino Link: Building Brands Online with Hispanic Communities and Content.

According to Kutchera, who has interviewed marketing executives from Ford, Best Buy and other companies, the Latino/Hispanic culture tends to be much more social and less individualistic than other cultures such as that in the states.  The article goes on to cite someone who mentions that Hispanics and Latinos are the fastest growing group on the Internet and will command $1.3 trillion in purchasing power by 2014.

How can Latin Americans take advantage of the understanding of social media and develop new digital innovations? Just as the chinese market has generated numerous home-grown startups that understand the nuances of that local market, I believe the same opportunity certainly exists in Latin America (albeit, taking different size markets into account).

Recently, Simon Olson, a partner at FIR Capital Partners in Brazil, during a recent talk at Standford University, spoke precisely about the available opportunities within that market.  Please click on his name (above) and subscribe to his blog as he’s certainly someone to follow.

In the video below, Simon also mentions how Brazilians, great social media adopters, are working to relay that into innovative startups that leverage social media.In Brazil, the growth in number and quality of startups is incredible.  This should make other countries in Latin America sit up and take notice as Chile, Argentina and Mexico have.

Below is the video from Simon’s talk. It’s excellent and eye-opening for investors unaware of the opportunities in Brazil.

According to research from TeleGeography, Skype added twice as many long distance minutes than all of the other long distance providers combined! Although long distance is now only a small part of telecommunications company revenues, Skype keeps on innovating by coming out with video chat for mobile and TV.  GigaOm analysts feel that video calls and video chat will make up 30 billion calls by 2015.

This is just one additional instance of established companies feeling competitive pressure from a relatively new comer.  The same has happened in music, video and other industries.  Competitive dynamics of business continues to be heavily impact by new technology tools making it imperative that all businesses “rethink” everything and focus on digital innovation.

Previously, I’ve written about companies such as Brazil’s Compra3 (in VentureBeat and the New York Times), which group people together to purchase goods and services with some additional value (such as deep discounts).  There’s much potential in this formula.

Now, there’s a new player called Ofermatic that utilizes a point system (accepting many varieties of credit cards) and gaming mechanics to increase the level of engagement for consumers.  According to the company, they provide between 10 and 100 times better repeat conversion rates than other sites.  During my last Digital Innovation Workshop, I spoke about this company and about the fact that, if companies were more focused on digital innovation, perhaps an established player could have developed this idea.

I was just reading the reports from the Consumer Electronics Show (CES) in Las Vegas about the new tablets that are coming out as well as BusinessWeek’s article on the future of tablets. In my opinion, the way to look at this is not the future of “tablets”, but the future of making the division between the virtual and physical worlds more transparent.
This could be a good thing or a bad thing, or both, but it’s definitely something that’s happening. In the business world, organizations that continually view the digital world as a quaint space where they inhabit by outsourcing specific activities (online marketing, etc.), increase their risk of being disrupted. The way to view the current state, IMHO, is to completely rethink how to deliver value to your customers taking into account the new posibilities enabled by the digital: Digital Innovation.

I’m not going to write a full-fledged predictions post, but have been thinking about what’s on the horizon in terms of big changes. First off, who knows what’s coming on the economic front, but when you have guys like GE CEO Jeff Immelt saying that we’re in a reset period, you know big things are happening on the digital innovation front.

In technology, it’s interesting to see the tablet movement as the virtual and physical worlds continue to meet (accessing digital information is becoming more transparent). Forrester just revised their tablet forecast and says that tablets should overtake laptops by 2015.

Finally, the whole cloud computing thing continues to accelerate. The disruptive power of this technology which levels the playing field for smaller companies that want to “act” biggger and bigger companies that want to “act” more agile, continues to play out. As BusinessWeek published a couple of days ago, the M&A activity in cloud computing will really heat up in the coming year as HP and others look to buy their way into innovation.

Finally, I’m pretty psyched about the kick-off of the Foundation Institute initiative here in Colombia and expect a good turn out of people attending the launch event.  Last night, I finished my next Kienyke article about  this launch and hope to get interesting feedback from it.

It’s been a wild ride this past year and, now, in 2011, I feel that a lot of things will come together. My mantra for the coming years is helping get Latin America, as a region, competing at the highest level. This means, working with startups (getting them off the ground, giving them visibility, etc.) and working with established technology companies, training traditional companies in Digital Innovation, evangelizing the need for all of this, and, finally, actually executing (hands-on) some amazing strategies for companies.
With respect to the first objective (getting world-class startups off the ground), I’ve been insinuating for a while that I’ll be launching something in Colombia, where I see a major need for this. I’m finally ready to pre-announce what it is I’ve been working on.
Here’s the pre-announcement: On February 25th, we’ll be executing the first program for Startup founders in Colombia connecting successful international founders (especially, from Silicon Valley) and successful local founders with promising future entrepreneur/founders here in Colombia. We won’t be reinventing the wheel since we’ll be bringing an established program called the Founder Institute (created by Adeo Ressi) for the first time to Latin America. I have a counterpart in Chile who will be executing it there also.
I’ve seen a lot of initiatives here in Colombia and many of them have merit, but I haven’t seen initiatives which, in my opinion, take startup space (specifically, startups that make use of technology to innovate) to level that’s really required to get Colombia more competitive (especially when compared with Chile, Argentina and Brazil). I’ve gotten some criticism down here for saying that Colombia isn’t on a par with the aforementioned countries, but none of this criticism was based on sufficient objective arguments to convince me otherwise.
I’ll be writing more about this initiative in the following weeks. If I’m able to get sponsors on board, they will help tremendously in making this initiative much less costly for entrepreneurs. Nevertheless, I’ve already met with quite a few people that represent large organizations (government, companies and universities), which would benefit greatly from co-sponsoring this type of initiative, but that doesn’t mean that they actually will do it.
Ok. That’s enough computer work today. Now it’s time to have some great wine with a great pal named Guido…

Last Wednesday, a group of 16 people and myself had an excellent time during the Digital Innovation Workshop that I directed at Microsoft’s offices in Bogota, Colombia.  For me, the best part was the interaction between the participants as well as between them and myself. It was a truly rewarding experience as I’m sure the next workshops will be also.

Each day, I’m astonished by the continual disruption happening in industry after industry where new competitors pop up from unexpected places in the same way that a computer company (Apple) disrupted the music business and the way that DVD rental-by-mail company (Netflix) disrupted the cable business.  We looked at these and many more examples and discussed the implications for each particpants’ businesses.  Participants came from companies such as Colmedica, Banco de Bogota, Belcorp, Legis, Intergrupo, Federacion de Cafeteros and others.

Finally, we ran through three interactive and stimulating exercises so that everyone would leave the workshop with the necessary tools to start rethinking their own businesses and collaborating with colleagues on how to proactively anticipate innovations in their own industry and innovate with new business models. It was truly a great group of people and I thank them for the stimulating discussions and the energy and passion that they put into this unique learning experience.

Digital Innovation Workshop from Tropical Gringo on Vimeo.

A point I’ve been harping on within my consulting engagements and during my workshops is the fact that, in my opinion, a deep transformation is taking place before our eyes.  The last few years have witnessed the toppling industries that, as a child, I took for granted as powerful and enduring.  Last year, more than 200 US newspapers went bankrupt, the music industry distribution channel has been reshaped and a good number of banks failed and others would have failed were it not for government help.

Now, before going to bed, I read that a number of high powered players in tech and the VC industry have created a US $250M fund to invest in companies focused on the “social web.”  Mark Zuckerberg, CEO of Facebook, one of the investors in the fund, states that “We think every industry is going to get fundamentally rethought and redesigned around people.”  Nothing like validation from the likes of Zuckerberg, Bezos and John Doerr for a guy in faraway Colombia.

Nevertheless, I actually think that the opportunities are even greater in emerging regions such as Latin America.  This is the reason that I’ve been giving workshops on what I call Digital Innovation in order to get people up to speed on the changes happening and to provide practice (through exercises) in the use of tools to reinvent their business models. If you’re in Colombia, register for the next workshop on December 15th.

Paipa is small, but beautiful city in Colombia, which is a nice place for companies to hold client events.  Intergrupo, one of the biggest technology firms in the country, invited me to their event here in Paipa to speak with some of their large customers about Digital Innovation.  I had the opportunity to speak to them about how I think one should think about the adoption of digital tools and about success stories of companies taking advantage of cloud computing, social media and other tools.  It was great to hear the audience’s comments and opinions.

Many in the audience mentioned many challenges here in Colombia (and Latin America) in order to adopt new digital tools in order to create new competitive advantages.  I saw much interest from all of the companies in investigating new ways to analyze, collaborate on and design new business models, the topic of my workshops.

My premise is that, first, a solid strategy needs to be in place for your company to develop or enhance its competitive position (differentiation).  This is by no means a trivial process (and it’s one that I’m passionate about). With this strategy mapped out, then, one can start selecting technology that will help you achieve your objectives.

This is the topic that I’ll be talking about during my speech on digital innovation during the B2B event that Legis is holding in a few weeks.  I hope to see some of you there!

On Thursday, I had the good fortune to sit down with a number of startups in a host of industries to analyze their successes up to that point and ascertain, along with five other judges, the viability of these businesses to scale. Each one of these businesses was innovative in its own right by any standards (e.g., global or otherwise).  Nevertheless, what really struck me was that the three business we chose in industries from fashion to education, digital innovation was an integral part of the company’s present and future strategy.

As I mentioned in a previous post about the workshops I am teaching on Digital Innovation, I believe that the time is ripe to evangelize business men and women from all industries on the possibilities for real differentiation through digital innovation.  The companies we analyzed on Thursday had done an amazing job of marketing, human capital management and bootstrapping, yet they saw even more opportunity ahead thanks to the strategies they were each developing for taking advantage of digital tools.

This was truly an excellent confirmation of my thinking up till this point.  I needed this “sanity check” because of my immersion in technology these past few years.  During my speeches I certainly exposed the opportunities that I felt were available for organizations willing to make use of these tools, but my experience on Thursday was the confirmation I needed.  Here we were hearing entrepreneurs who had come to that exact same conclusion all on their own.

During the next year, I will be executing many more digital innovation workshops and evangelizing these concepts even more.  Organizations that don’t take advantage of digital innovation will, more and more, find themselves at a clear disadvantage.

Last week, I finished one of my SaaS workshops.  Eight people registered (from four companies) to learn about SaaS models that have worked, different options of revenue streams and use new tools to get to a concrete set of actions to execute and develop a SaaS offering with much more chance of success.

Some of the quotes from the attendees: “The workshop confirmed to me that my understanding that continuous innovation in business is a reality”, “We now have tools to create a solid SaaS plan”, “We learned a ton!”, “The workshop allowed us to plan everything we need to plan,”the learnings from the workshop will allow us to convert our abstract ideas to concrete plans,”we now have new ideas for SaaS initiatives which we never had planned.”

In Latin America, Venture Capital is still scarce for startups, so there’s a big chance that the trailblazers will come from existing companies with profitable revenue streams.  Nevertheless, there are already startups (such as JoinCube) that are off and running with their initiatives.  This workshop is designed to get the group learning from each other and provides some conceptual models for team members to exchange ideas in order to, first, develop an original plan and, secondly, to iterate or “pivot” quickly as the project starts to take flight.

I will be giving this workshop in Colombia and then in other countries.  There are two versions of the workshop.  One is focused on developing SaaS offerings.  The other is for employees of large companies in Latin America interested in taking advantage of digital innovation and understanding how, as John Hagel espouses in his white paper on the “Shift Index”, digital technologies are transforming industries such as banking, retail, tourism and media.  Participants will make use of new tools to develop innovation initiatives for their companies while becoming literate on the “new world” that has come into being through digital technologies.

This Wednesday we had a great Tropical Gringo Show (in Spanish) with a super interactive audience and startup tips from Thomas, Brian and myself.  Also, we were transmitting a brand spank’n new higher resolution camera direct from the offices of VivaReal in Bogota.  We also touched on some news items as well as recommendations for marketing your startup.

Gabo Sarmiento asked a great question about Groupon, Compra3 and the whole group buying space in Latin America and we will be covering this in our next show.  Stop buy and watch us next Wednesday at 7:30pm (Colombia time).

Finally, if you’re interested in attending a great panel during SXSW in Austin on investing in Latin American startups, please vote for this by clicking on this sentence.

I’ve spent the last several months, exploring the state of Digital Innovation in Latin America.  Although I wouldn’t say that there are tons and tons of examples, what I would say is that there are some impressive companies.  The obvious examples are players such as Buscapé with their US $340 investment from Naspers and Mercado Libre, which had their IPO in the states a few years ago. As ComputerWorld recently published, Latin American Net Arena offers VC Opportunities.

Nevertheless, smaller companies such as VivaReal and Compra3 have achieved great success early on thanks to building world-class teams and executing very well.  Both of these companies, similar to Buscape and Mercado Libre, are focused primarily on Latin America though the potential to go global is being pursued by others.  Though I wouldn’t dissuade a company from targeting the global market, there is such a void at the moment in terms of interesting content and applications targeting the regions rapidly growing user base.

Indeed, Twitter just released some numbers, published also by TechCrunch, on user growth and Latin America is the fastest growing region.   Latin American culture is extremely social and this region has been shown to be heavy users of social media and mobile devices.  The end result is that the users exist for new applications and content, but, for the most part, they need to make due with a few local choices or hook up with the main players such as Facebook, Amazon, Twitter and others.

Also, in terms of taking advantage of the approximately 150 million Internet users in Latin America from a marketing perspective, it certainly seems as though most companies in the region are asleep at the wheel. There are certainly exceptions to this rule doing some pretty innovative things.  In fact, lately, Brazil has been in the news thanks to its growing economic leadership and even thanks to their recent interest in acquiring companies in the developed world.

Either way you cut it, there is a tremendous amount of opportunity in Latin America, which isn’t apparent yet to global investors and even people in the region.  There are some exceptions and these are growing.  Brazil, particularly, has been attracting angel investors such as New Yorker, Michael Nicklas, who has been quite active recently not only in terms of funding, but also, in promoting investment through speaking at conferences and his blog, Startupi.

As an example, I had the opportunity the other day to talk with another US investor interested in funding a company in Latin America in the digital space.  It was a great conversation as this investor is extremely sharp and am sure closes deals worth many millions every week.  Nevertheless, he was trying to rapidly come up to speed on the environment and the nuances of this market, which is not easy.  Some things don’t happen as quickly down here and some basic infrastructure (e.g., credit cards, e-commerce, etc.) are not well established, yet, the growth rates and early successes can not be denied.

I could quote many statistics showing that each country boasts growth rates in terms of users, time spent online, e-commerce and other areas of 40% and above.  Any of these statistics can quickly be found by doing a quick search.  However, this is more of a paradigm switch where more US and European investors need to wake up to the fact that they are ignoring a region with a dearth of content and applications, but with a user base that grows exponentially on a yearly basis.  Differentiating a company in Latin America is much, much easier and, for the most part, amounts to bringing world-class teams and execution to bear.

There’s no question that countries such as Brazil, Argentina, Chile and, to some degree, Mexico, are at a more advanced stage when it comes their start-up and investment ecosystems. Nevertheless, there are small pockets of world-class teams working away in countries such as Colombia and this will continue to grow.

It definitely feels like we’re at the beginning of something very big.  I am extremely confident that within three years Angel and VC investment in technology start-ups will have dramatically increased and two years after that Latin America will be home to at least ten powerhouses on a par with Buscape and Mercado Libre.

Last night, after knocking down a few too many glasses of wine (and some JD) with an old Argentine friend who was passing by, I got home and started chatting with someone I admire a lot, Yuri Gitahy.  Yuri created an excellent fund called Aceleradora in Brazil and he mentioned an article in TechCrunch about a study that found that VCs are looking for start-ups in emerging markets. As if that wasn’t enough, a few friends, like Andres Barreto, commented that one of these VCs, Dave McClure, was actually visiting Colombia at the moment (accompanied by writer Sarah Lacey).

This is, by no means, an isolated event.  As I mentioned in my previous post, the time is now to create quality start-ups in Latin America. In the next three years things are certainly going to accelerate.  That’s why , as I announced in another post, Thomas Floracks and I will be transmitting every Tuesday at 7:30pm the TropicalGringo Show.  Part of the show will include a segment where one or two start-ups will present to us (even an idea) and we will provide guidance about how develop it better.  I’ll leave you with this: more and more you’ll notice that there is no scarcity of resources (investment, etc.), but a scarcity of excellent teams hooking up and focusing on world-class digital innovation.