TechCrunch hasta publicó una tabla mostrando de donde vienen los ingresos de la compañia y me sorprendió la cifra de $75 millones de dolares como “run rate” de objetos virtuales porque yo pensaba que la cifra era aún mayor. Mientras tanto, es interesante que, mientras Facebook sigue sin estar en la bolsa, se rumora que Linkedin saldrá a bolsa este año.

Hay una citacion interesante al final del articulo de GigaOm de un analista de Piper Jaffray quien dice que Facebook sigue quitandole ingresos de publicidad a Google.  Hay muchos que piensan que Google tiene que hacer algo para contrarestar la creciente importancia de Facebook incluyendo a un analista que, interesantemente, piensa que  Google debería comprar a Amazon!

Finalmente, no sólo es Facebook, sitios como Quora para preguntas y respuestas y Groupon en compras grupales para establecimientos locales, están creciendo mucho gracias al compoenente social.  Muchos se preguntan si Google cedió este espacio a Facebook y otros o si su producto Googleme va posicionarlos mejor dentro de este espacio.

Abajo hay una version mas grande del Infographic de VisualEconomics sobre la economia de Facebook:

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TechCrunch even published a table showing their different revenue line items. I was actually surprised by the $75M run rate for virtual goods that, although substantial, was lower than I had thought it would be.  It’s interesting to note, also, that while Facebook stays private, Linkedin is rumored to soon go public.

There’s an interesting quote at the end of the GigaOm article from a Piper Jaffray analyst stating that Facebook continues to take advertising revenue away from Google.  There’s definitely a lot of conjecture about what Google should be doing in regards to social media.  One of their own VPs actually made a statement to the effect that they’re letting Facebook take over that space.  Talking more about Google, I found a recent article by David Linthicum quite interesting.  In that article, he talks about why Google should acquire Amazon!

Finally, it’s not only about Facebook, other sites like Quora and Groupon are growing rapidly thanks to their social component.  Many ask if Google has ceded this space to Facebook and others or whether their GoogleMe product might better position them in this space.  What do you think? Will “social” increase or decrease Google’s relevance over time or is that the wrong question to ask?

Below is a larger version of the Facebook Economy Infographic from VisualEconomics:

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Por mi parte, voy a hablar sobre un evento donde me desempeñe de nuevo como juez de una competencia.  Esta vez, junto con otros jueces, calificamos unos proyectos de directivos de Universidades para crear iniciativas de fomento de startups.  Daré mis impresiones sobre lo que vi.  Tambien hablare de unos articulos que escribi en VentureBeat sobre una empresa impresionante Isrealita que tiene un software para manejar campañas de Google, sobre una adquisicion por parte de Adobe y, finalmente, otro sobre una reunion que sostuvo Microsoft con analistas de inversion.

Estoy seguro que Thomas tendrá unos temas interesantes y, mejor que eso, estoy seguro que tendremos un buen debate sobre cualquier punto o tema que la audiencia nos manda.  Así que piensan en algun tema sobre el cual tienen mucho interes y/o una opinion fuerte.  Vamos a intentar poner a funcionar Skype (usando el ID tropicalgringo) por si acaso le pedimos a alguien que nos llame para dialogar entonces por favor tengan su Skype listo.

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Also, I wanted to write said article because I’ve been observing the funding process of a few Latin American start-ups looking for funding in the states and I wanted to get something published on the Latin America web investment opportunities which start-ups could reference with international investors.  Although I wasn’t able to go too much into detail, I highlighted the fact that I feel Latin America offers what Warren Buffett looks for in investments which are defensible “moats” around great profit margins and growing competitive advantage.

Aditionally, VentureBeat published an article I wrote about Netactica, an Argentine web company offering end-to-end solutions to the online travel industry in Latin America.  Incredibly, yesterday, Google acquired ITA Software (relatively similar to Netactica in Latin America) in a demonstration that there is much value in these types of end-to-end solution providers in online travel.  According to a number of analysts, this acquisition changes the dynamics of the online travel booking and search market. Personally, I think that a player like Netactica has much to gain with this turn of events and, with the increasing interest on the part of international investors in Latin America, the company should benefit quite a bit.

As if this weren’t enough, I spoke last week with Fernando LaBastida and Ricardo Guerrero who have an excellent initiative with the organizers of SXSW in Austin (they live there) to include a panel on Latin America during  the next event in 2011.  Nevertheless, in order to make sure there is interest on the part of audience members, it’s important for people to suggest ideas for the panel.

I’m completely serious when I say that this week was a critical moment for the development of Latin American web start-ups.  You can be certain that investor interest will now start to accelerate at an amazingly fast pace.  Now, we need to find the most talented technical and non-technical people in the region so that these can focus on digital innovation.

In order to accelerate this, Thomas Floracks and myself are launching a weekly show (we haven’t decided the day and time, yet) so that, among other things, we can analyze one or two interesting initiatives during the show.  Note: for now, we’ll do it in Spanish, but will do a shorter recap show in English if there is interest. More details on this are coming soon.  It’s a good moment to launch this show because we need to elevate the conversation beyond comments like “look at my neat website” or “I’m going to sell xyz on the internet.”  It’s time for clear paths to profitability and solving real customer problems.

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Tambien, queria escribir dicho articulo porque he observado de cerca algunos procesos de start-ups en America Latina en buscar inversion de EEUU y queria publicar algo que estos start-ups pudieran referenciar sobre porque alguien en este pais deberia pensar en start-ups de America Latina.  Aunque no entré mucho en detalle, el parafo que hace referencia a la estrategia de “moats” de Warren Buffett con un link a la explicacion de dicha estrategia es un argumento poderoso.  Posicionarse como lider en la web en America Latina tiene mucho beneficios ya que la probabilidad de que alguien te va desbancar no es tan grande.

Adiconalmente, VentureBeat publico un articulo sobre Netactica que tambien escribí. Donde hablé sobre lo estrategico de la posicion de esta empresa y la comparé a ITA Software en EEUU.  Increiblemente, Google ayer compró a ITA Software en una demuestra que estas empresas que se encargan del duro trabajo de integrar a diferente sitios y manejar mucha data sobre la industria tienen mucho valor.  Segun varios analisis, este deal cambia la dinamica de competencia en el mercado de booking y busqueda de online travel.  Personalmente, pienso que un jugador como Netactica tiene mucho que ganar con este cambio y, con el creciente conocimiento de inversionistas internacionales sobre las oportunidades en America Latina, las cosas se van a mover mas rapidamente.

Como si todo esto fuera poco, hable esta semana con Fernando LaBastida y Ricardo Guerrero quienes tienen una excelente iniciativa con los organizadores de SXSW en Austin (ellos viven ahi) para tener un panel sobre el ambiente web en America Latin.  Sin embargo, es importante que mas personas de America Latina sugieren ideas para el panel para que este se de.

Hablo completamente en serio cuando digo esta semana ha sido un momento critico en el desarrollo del web en America Latina al igual que la inversiones.  Esten completamente seguros que habra más y más interés por parte de inversionistas extranjeros. Ahora lo que hay que hacer es buscar las personas (técnicos y no técnicos) mas talentosos de la region para que estos crean innovacion digitales y guiarlos.

Para accelerar esto, Tomas Floracks y yo tendremos un show semanal (no hemos escogido el día todavia) para, entre otras cosas, escoger uno o dos iniciativas o ideas interesantes para analizar durante el show.  Pronto les doy mas detalles sobre esto.  Es un buen momento para este show en este momento de cambio porque hay que elevar la conversacion mas allá de “mire el website tan bonito que tengo” o “voy a vender X por internet.”  El momento de modelos de ingresos claros con ofertas realmente que solucionan problemas de clientes.  Sin esto, se desperdiciará el momento que estamos viviendo.

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In my last post, I spoke about my conversation with Sridhar Vembu, CEO of Zoho Corporation, an innovative software company headquartered in the US, but with most of their employees based in India and China.   I wrote mostly about the ingredients of the company’s success.  In this post, I’d like to delve a bit further into Sridhar’s vision and philosophy and its applicability to Latin America.

While I was speaking with Sridhar, I was reminded of John Hagel’s book, The Only Sustainable Edge.  In it, Hagel mentions two important areas touched upon by the Zoho CEO. The first one has to do with Zoho’s ability to offer customers value at an affordable cost which is in synch with Hagel’s assertion that technology innovations are opportunities to “create more value at less cost.”  Zoho’s location, recruiting, training and company culture paired with its bet on cloud computing make are certainly aligned to a goal of creating more value at less cost for their customers.  Additionally, Hagel points out in his book that managing across two cultures “can create new opportunities to enhance performance by drawing on the best of both cultures.”  Certainly, this is not news to Sridhar who lives and breathes it every day.

In Latin America, many discussions on entrepreneurship center upon the disadvantages of the region when compared to the U.S. This runs the gamut from lamenting the scarcity of investment capital; the lack of the right human capital and other ecosystem and infrastructure components that are missing. As an aside, the same day of our talk, Sridhar actually wrote a post on his blog about the VC issue. However, anyone from Latin America who could listen to Sridhar speak about his particular voyage, would actually start to feel as though companies coming out of emerging regions such as Asia or Latin America are at a distinct advantage when compared to US companies. What a great perspective!

While players such as Salesforce.com, Microsoft and Google have solid and focused SaaS offerings, Zoho has been adding applications to its suite at a blistering pace.  Though the company’s user base also continues to grow, it’s only a fraction of Google’s user base.  Sridhar has heard this observation before and I’m sure can read between the lines of the sometimes veiled (sometimes not) insinuation that this means that they will eat Zoho’s lunch some day.  Nevertheless, I believe Sridhar is correct (at least for the time being) in asserting that Google’s rising tide can lift all boats floating in the SaaS “sea” since they are helping to educate customers on the value of these new SaaS offerings.

The company is profitable and is free to follow its long term strategy.  While the Google threat (and others) will probably get more palpable as time goes by, I agree with Sridhar’s view that companies don’t get killed by competition; they commit suicide. Nevertheless, one area where I believe that the company needs to improve is in its customer messaging or marketing in general.  For instance, instead of a list of applications on the homepage, it would make more sense to quickly set up customers depending on their specific vertical or business process.  Fortunately, this is precisely one of the areas for improvement that the company has targeted and openly acknowledges that it could do better on the marketing front.

Final Thoughts

I think it’s obvious that I truly enjoyed my conversation with Sridhar on a number of levels.  He mentioned that he is quite passionate about the topic of how emerging market companies can compete with companies based in developed markets, which is also a strong passion of mine.  During our talk, I got the sense that Sridhar has a firm conviction that companies from emerging countries can truly compete on equal footing with “marquee companies” and actually possess advantages that they need to leverage.    Hopefully, at a later time, I can speak a bit more in depth with Sridhar about the topic of digital innovation in emerging markets.

As a VC in my previous life, I had the opportunity to speak with extremely intelligent and capable entrepreneurs and investors.   After my conversation with Sridhar, I’m as impressed with him as with any other person I’ve met.   Different people are remarkable for different reasons.   For instance, Google’s founders had the insight to understand the need for organizing the world’s information with the oncoming, accelerated adoption of the Internet. Even more importantly, before they fully saw how big and successful they could become as a company with an actual business model, they jumped in and started solving the problem.

Solving such grandiose and ambitious problems is something that is handsomely rewarded and rightly so.  Nevertheless, there are a number of dynamics, which are creating the need for new types of companies:  ones that offer digital innovation at a lower cost.  New technologies such as cloud computing, virtualization and SaaS delivery provide the digital foundation.  Also, as it turns out, emerging markets such as Asia and Latin America, actually offer advantages that astute entrepreneurs can leverage.  As Zoho’s trajectory points out, to execute this correctly takes a number of competencies such as a clear vision, competent leadership, focused development of human capital and above all…patience.

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A couple of days ago, I had the opportunity to talk with Sridhar Vembu, CEO of Zoho Corp, a strong player in the SaaS software market. The company’s corporate headquarters are in Pleasanton, California and the majority of it’s about 1000 employees are based out of India and China.  These and other characteristics make Zoho and Sridhar, who has spent half his life in India and half (presently) in the states, an excellent model for digital innovation in Latin America.

First off, what really struck me about Sridhar after our chat was the balance of three key characteristics of his personality that came across:   1) His passion for the “people aspect” of building a business, 2) his practicality and incisive thoughtfulness and, finally, 3) an underlying, intense pride (in his people, what they’ve accomplished, etc.) and competitiveness.   Incidentally, my own opinion is that this type of open personality, high level of intelligence, balanced outlook and strong personal drive will be key leadership traits for achieving success in the coming years, but that’s a topic for another post.

I won’t go into a ton of detail about the company because there’s a wealth of information on their site and in other articles. If you want to delve deeper into the company’s history and Sridhar’s unique (and, in my mind, spot on) thinking about digital innovation in today’s context, check out Sramana Mitra’s excellent interview. In a nutshell, Zoho bet on cloud computing and the SaaS delivery model early and are just now really hitting their stride in the market with about 2M users.  Also, as a recent article in BusinessWeek Magazine states, Zoho competes with behemoths such as Google, Microsoft and Salesforce.com.  All this from a point in 1999 when, as Sridhar mentioned, they had one key goal: survival.  Now that’s a goal many small business people can identify with, but particularly, those in emerging countries such as in Latin America where capital is in even shorter supply.

So what happened after 1999 to garner them so much success?  It had nothing to do with getting Venture Capital (VC) funding since they’re a private company which has bootstrapped itself since the beginning.  Sridhar mentioned that their strategy has focused on depth of functionality, breadth of offerings, integration and support.  The integration focus is a boon to usability because they are able to integrate key functionality from their applications into the work processes of their customers.  Through “contextual information integration” things like email (even Gmail) are integrated with the CRM product so that customers can get their work done faster.

In terms of support, at least one person I referred Zoho to here in Latin America, has had an incredible experience in this regard.  Sridhar mentioned that part of their engineers’ training entails alternating time on the support lines as well as monitoring the support database helping them into the customer mindset from the outset.  In order to execute such a strategy, Sridhar mentions a trait that the company must possess: patience.  Patience to develop employees straight out of high school into productive professionals, patience to solve what Sridhar describes as the small business “IT problem” and patience to build an organization for the future.

What a terrific model for Latin American companies to follow.  There’s a ton of talent down here and, Sridhar and Zoho’s journey can be a lesson for many.   As he mentioned, Sridhar himself looked to a number of Japanese companies such as Honda as models to follow.  After WWII, Japan was a developing country (like India or all of Latin America) and through patience and dedication, they were able to achieve the economic and technological feats we take for granted today.  It’s important to note that modeling yourself after someone doesn’t mean cloning them and Sridhar has certainly adopted some characteristics of the Japanese model, but not all.

This last point is an important one.  Just this week I was in a meeting with some entrepreneurs when someone asked me if Colombia’s path to success was, among other things, in finding an instantiation of a Stanford University (the context of the conversation was the lack of an ecosystem in these countries such as exists in Silicon Valley).  I feel that Zoho’s example shows that you don’t need a carbon copy of another country’s ecosystem, you need to build on the strengths you have and, in Zoho’s case, that was patiently sticking to their strategy and building their organization.

Sridhar made a great point about the fact that in Silicon Valley there’s quite a bit of talent to choose from no matter what expertise you need.  It seems to me, Sridhar has taken a disadvantage in emerging markets (scarce talent pool with world-class expertise) and converted it into an advantage. By giving young people without a college degree a chance to successfully prove their mettle and compete with international powerhouses such as Google and Salesforce, Zoho benefits from the resulting highly committed, passionate and dedicated group of employees it is nurturing.  Aside from this, such a highly motivated group of collaborators injects much energy into the company and, according to him, “keeps [him] young”

In tomorrow’s post, I’ll delve further into Sridhar’s vision and philosophy and its applicability to Latin America.

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En el articulo hablo sobre como han cambiado los habitos de las personas en cuanto a recibir sus noticias.  Minutos despues de la tragedia de MJ, TMZ.com, twitter y otros sitios fueron los lugares donde millones comenzaron a congregar para obtener sus noticias sobre este suceso. Esto sin hablar del hecho que Google.com penso que estaba bajo un ataque cibernetico por la cantidad de busquedas de MJ.

El punto que trato de comunicar a la audiencia de america latina (especialmente dentro de Colombia) es que ya deben de mirar esta plataforma como una que esta dominando la vida cotidiana de las personas por todo el mundo.

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