Tropical Gringo

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.

It’s been quite a week which, for myself and others such as Felipe DeConce (Chile) and Simon Olson (Brazil), marks an inflection point in the world of Latin American web start-ups. As I mentioned in the article published in VentureBeat and NYTimes.com, US web start-ups are starting to acquire Latin American web companies much earlier in their development process. For example, witness the recent actions by Groupon and Playdom in rapidly acquiring web companies in Latin America.

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.

This post has a lot of news in a tiny space.  The first one, as the title specifies, is that Thomas Floracks, VivReal CTO, and I will be transmitting live from Campus Party Colombia this Saturday at 7:30pm CST (in Spanish).  Thomas and I are judges for an initiative that Andres Barreto and Juan David Vargas are running for lean start-ups.  Andres actually quickly interviewed us and asked us to give some tips to entrepreneurs in Latin America.

So, I haven’t totally figured out the mechanics behind the whole streaming thing, but I’m sure we’ll figure it out.

Live Streaming by Ustream.TV

Today is a great day. An idea that popped into the heads of myself and Gabriel Amorocho a couple of months back is gathering steam and tonight is our first Meetup for an impressive group of online marketing professionals. During the past months, we’ve had some excellent discussions inside the Linkedin Group that Gabriel created and now has almost 200 members. One of the discussions was about what needs to be done in order to accelerate adoption of online marketing tools among Colombian organizations.

Among the suggestions related to market education or evangelization is the need for more events or activities where potential customers can learn and appreciate real life success stories.  This was an excellent validation of an idea I’ve had for quite some time and that I’ve been discussing with the founder of Social Media Week in New York.  The potential for an event like this is huge (attendees, sponsors and industry players)!

That particular event is a perfect fit for Bogota (and really a number of cities in Colombia).  Aside from the excellent content, the format is extremely open and collaborative.  For instance, many of the conferences (speeches) can be held at venues which can be used in return for “in kind” sponsorships.  This provides a new and more connected experience for the attendee while maintaining costs in check.

The momentum that’s been building during just the last month is quite exciting.  Aside from how things have been coming together with the impressive group of online marketers and the event, I’ll soon have some exciting news to report on my role within the Colombian online marketing market.  There are some impressive and great people hear and I’m, first of all, grateful to have met them and, secondly, looking forward to working more closely with them.

We’re still ironing out some details, but I’m confident that Social Media Week will be held in Bogota (and hopefully in other Colombian cities through streaming) in September.  Tonight, at the Meetup, we’ll be talking with a core group of industry members and sharing with them some general news about the impressive lineup of speakers and potential sponsors that are on deck for this event.

In keeping with the theme of the online media and the event (it’s social), I’m sure we’ll get excellent feedback there and through the Linkedin group channel.  If we work together as an industry we can accelerate adoption of these tools (e.g., social media, etc.), which will have a domino effect on digital innovation, productivity, competitiveness, profitability and, ultimately, development of the country (in economic, social and quality of living terms) in general.

Well, time to run to one more meeting and then it’s off the the Meetup.  I’ll post some pictures and a video tomorrow with more news.

Well, I finally finished a pending article I needed to write and it just got published yesterday by VentureBeat.  It was an interesting topic related to a Santa Monica, California start-up called Sency, which offers a real-time search engine.  It was cool talking the CEO, Evan Britton, and hearing that he also launched a Spanish version of the site especially for the Latin American market.

There’s no doubt about it, this region has two really neat things going for it, among others: 1) There’s so much more room for growth in so many areas with special mention for anything related to online and mobile. 2) It’s a vibrant and very sociable environment to be in.  It really does boggle the mind how much opportunity there is down here and it certainly is good to be off the corporate “teet” and make a play towards tapping into that potential.

It is so cool to meet amazing entrepreneurs and innovative people down here at this time in the region’s development.  Digital Innovation is just starting to take off and the next years will certainly be exciting ones. What’s so stimulating about this time is that there is so much market education to get done and it really feels like the online community is getting together to find ways to accomplish this (educating the market).

Well, those are my thoughts. What are yours?

Innovación Digital en América Latina from Bogotech on Vimeo.

I’ve been so busy contributing to other publications that I’ve been falling behind in posting to my own blog.  Lately, I’ve been writing articles about companies such as Vivareal in Colombia and Compra3 in Brazil each with excellent prospects for the future. I’ve been psyched to see these articles published in the NYTimes and in Venturebeat.  There is such a tremendous opportunity in this region for setting up dev centers, targeting the region for products and services or both.

I just got back from a night of Salsa and Sushi with the Mrs. and, after waking up at 2:30am this morning should be hitting the sack.  Nevertheless, as if the day hasn’t been good enough, I just read Chris Brogan’s post on Colombia.  By now, I’m used to seeing fellow “Gringos” wowed by the life down here, but it’s so great to see someone who appreciates that aspect, but, more importantly, objectively, sees the tremendous potential down here.

That was just the cap to a truly amazing day where, aside from happy family times, I had some great meetings with top executives at two major multinationals down here, a financial services company and a friend who works at Twitter that I finally met in person (she’s down here).  Aside from all of this, Compra3 (amazing founders) had their production launch of their social commerce site, which I was able to write about to get the word out.

I should really back all of this up with more numbers and statistics, but I’m too tired tonight.  I’ll leave that for another post.

Conclusion:  there’s no doubt in my mind that Latin America is going through a transformation and that, within the next 5 years, the number of US VC/angel backed digital innovators with either dev centers or target market (or both) down here will explode.

It’s been a busy start of the year.  I’ve been contributing articles to a number of blogs and it’s been an extremely satisfiying experience.  Aside from meeting new people, it helps improve my writing (in English and in Spanish).  Among my posts is one dedicated to my thesis that a Twitter-Amazon alliance makes sense as well as a profile of a new social software startup in Argentina called JoinCube.  In Spanish, I wrote a number of posts for my friend, Jesus Hoyos’ blog and for PulsoSocial, a Latin American technology blog founded by the impressive Andres Barreto.

Unfortunately, this has effected the number of posts that I’ve uploaded to my own blog, but I plan on rectifying this.  Although I have been writing a lot (and working a lot), it hasn’t showed as much because of these endeavors.  Nevertheless, I am committed to posting more on this blog and alerting you on my Facebook fan page.

The coming year will certainly be interesting.  I believe that the economic environment will be even more challenging (and for an extended period of time); social media will continue to penetrate further into the web’s fabric and the mobile web will have a profound effect on the total web experience.  Basically, it’s a perfect storm of factors that will drive a lot of change not only into the web, but into our lives.  It’s a great time to be writing about digital innovation!

My conversation with Jeffrey Eisenberg, co-author of the book, Call to Action

When I spoke with Jeff Eisenberg several days ago, I was prepared to get some valuable insights into how to effectively use the Internet to increase conversions and sales.   I was, nonetheless, incredibly impressed by how succinctly he was able to break down key concepts (nothing impresses me more than the ability to simplify the seemingly complex).  Nevertheless, I was completely flabbergasted by the fact that he had been to Latin America many times (20 times to Colombia), his Latin American heritage (his parents are from Argentina) and his fluency in Spanish.

Jeff and his brother, Brian, are well-known experts, speakers, consultants and authors within the online sales/marketing industry and from my conversation with Jeff, it’s obvious that they intimately understand Latin America (more on this a little later).   Given the fact that Latin America is at an inflection point in terms of growth in online marketing and ecommerce, having access to world-renowned experts in the field who not only know the language, but also, the culture, should be viewed as a gift from the heavens.  Forgive the hyperbole, but Latin America is one of the fastest growing regions in the world (in some cases, the fastest) in terms of Internet adoption with over 100M users and a growth of over 30% and it’s time that companies in the region seek out the top experts in the field to take advantage of the fact that most of their customers are active online.

The reason that Jeff is so knowledgeable about the region is that his previous job within the financial industry brought him many times to Latin America on business.  Also, his parents immigrated to the states from Buenos Aires in 1962 and since Spanish was spoken at home (as in my case), he and his brother are completely fluent.  Given this fact and the business context described above, I’m surprised that Latin American firms haven’t contacted him for consulting and speaking engagements in order to leverage the knowledge and experience that he brings after working with clients such as NBC Universal, Overstock.com, Dell and Volvo.

Talking  about Colombia, I mentioned that, though this country is a leading technology adopter with more users on Facebook than any other Latin American country, I’ve only seen organizations with some exceptions take initial steps at developing and executing online strategies.  I also mentioned that eCommerce still has quite a ways to go.  Jeff’s answered this observation with a question: “Are we [Colombian companies] waiting for countries such as Argentina, Mexico or the US to take our market?”  In my view, that is most definitely the question to ask and this scenario will, indeed, occur if local companies don’t awaken to the opportunity.

With respect to eCommerce, Jeff mentioned that the key catalyst for increasing activity in this area will most probably come from new mobile initiatives down the road.  Nevertheless, regardless of what happens on the eCommerce front, there is a plethora of options that Latin American organizations have available to them to interact with their customers.  Basic websites were fine to start off with, but, as Jeff mentioned, when a customer clicks on a hyperlink, that customer is asking a question such as “How much does this cost?”  If a company’s website answers that question with something like “We’re great,” the conversation has little chance of going further and a key conversion opportunity has been lost.  In the current economic environment, wasting these types of opportunities is becoming an unaffordable luxury.

More than anything, according to Jeff, digital technologies are forcing more and more transparency on all types of organizations and this new environment can be scary.  In order to succeed, organizations need to be authentic and offer real and tangible differentiators.  Initiatives such as reputation management, online reviews and participating in online conversations with prospects and customers can yield substantial results.

Either way you look at it, Latin America is at a crossroads.  Everyday companies are feeling more competitive pressures from outside their country’s borders, their prospective customers are flocking to digital media and differentiating themselves is getting harder.  Sticking to traditional techniques of marketing their wares at the expense of newer, more cost effective channels (where their customers are congregating), is a paradigm that will be less and less effective.  Experts such as Jeff have been working with growing stable of companies in other regions with compelling results.  The time has arrived for Latin America to begin amassing its long list of regional success stories before others do it for them.

My conversation with Jeffrey Eisenberg, co-author of the book, Call to Action

When I spoke with Jeff Eisenberg several days ago, I was prepared to get some valuable insights into how to effectively use the Internet to increase conversions and sales.   I was, nonetheless, incredibly impressed by how succinctly he was able to break down key concepts (nothing impresses me more than the ability to simplify the seemingly complicated).  Nevertheless, the I was completely flabbergasted by the fact that he had been to Latin America many times (20 times to Colombia), his Latin American heritage (his parents are from Argentina) and his fluency in Spanish.

Jeff and his brother, Brian, are well-known experts, speakers, consultants and authors within the online sales/marketing industry and from my conversation with Jeff, it’s obvious that they intimately understand Latin America (more on this a little later).   Given the fact that Latin America is at an inflection point in terms of growth in online marketing and ecommerce, having access to world-renowned experts in the field who not only know the language, but also, the culture, should be viewed as a gift from the heavens.  Forgive the hyperbole, but Latin America is one of the fastest growing regions in the world (in some cases, the fastest) in terms of Internet adoption with over 100M users and a growth of over 30% and it’s time that companies in the region seek out the top experts in the field to take advantage of the fact that most of their customers are active online.

The reason that Jeff is so knowledgeable about the region is that his previous job within the financial industry brought him many times to Latin America on business.  Also, his parents immigrated to the states from Buenos Aires in 1962 and since Spanish was spoken at home (as in my case), he and his brother are completely fluent.  Given this fact and the business context described above, I’m surprised that Latin American firms haven’t contacted him for consulting and speaking engagements in order to leverage the knowledge and experience that he brings after working with clients such as NBC Universal, Overstock.com, Dell and Volvo.

Talking  about Colombia, I mentioned that, though this country is a leading technology adopter with more users on Facebook than any other Latin American country, I’ve only seen organizations with some exceptions take initial steps at developing and executing online strategies.  I also mentioned that eCommerce still has quite a ways to go.  Jeff’s answered this observation with a question: “Are we [Colombian companies] waiting for countries such as Argentina, Mexico or the US to take our market?”  In my view, that is most definitely the question to ask and this scenario will, indeed, occur if local companies don’t awaken to the opportunity.

With respect to eCommerce, Jeff mentioned that the key catalyst for increasing activity in this area will most probably come from new mobile initiatives down the road.  Nevertheless, regardless of what happens on the eCommerce front, there is a plethora of options that Latin American organizations have available to them to interact with their customers.  Basic websites were fine to start off with, but, asJeff mentioned, when a customer clicks on a hyperlink, that customer is asking a question such as “How much does this cost?”  If a company’s website answers that question with something like “We’re great,” the conversation has little chance of going further and a key conversion opportunity has been lost.  In the current economic environment, wasting these types of opportunities is becoming an unaffordable luxury.

More than anything, according to Jeff, digital technologies are forcing more and more transparency on all types of organizations and this new environment can be scary.  In order to succeed, organizations need to be authentic and offer real and tangible differentiators. Initiatives such as reputation management, online reviews and participating in online conversations with prospects and customers can yield substantial results.

Either way you look at it, Latin America is at a cross roads.  Everyday companies are feeling more competitive pressures from outside their country’s borders, their prospective customers are flocking to digital media and differentiating themselves is getting harder. Sticking to traditional techniques of marketing their wares at the expense of newer, more cost effective channels (where their customers are congregating), is a paradigm that will be less and less effective.  Experts such as Jeff have been working with growing stable of companies in other regions with compelling results.  The time has arrived for Latin America to begin amassing its long list of regional success stories before others do it for them.

A Conversation with Emiliano Kargieman, Argentinian, digital innovator and founder of Core Security Technologies

When you start a blog, everyone tells ya, it’s important to choose a topic that you’re passionate about.  I’ve got a number of hobbies (none, very healthy) such as smoking stogies, watching movies and laying on the beach.  However, I’m passionate about digital innovation in Latin America and that’s what I want to write about.  Part of the reason may be because I like thinking out of the box or I just like the underdog storyline and believe that something like creating world-class hi-tech firms in Latin America is possible.

This theory is all well and good, but there’s nothing like feeling of talking with and/or meeting someone who’s actually accomplished it.  That’s the sensation I got while talking with Emiliano Kargieman the other day.  Emiliano, a mathematician by training, wanted to focus on big challenges to flex his math and programming skills so, in 1996, he decided, at the age of 19, to get together with his buddies and build a security software company focused on the international market.  Though that age might seem young to some, Emiliano had already run three companies by this time and had been programming for nine years.

Emiliano’s self-deprecating humor belies a passion for competing in the global marketplace and half-jokingly adds that, thanks to the fact that none of the founders had an MBA, enabled them to break existing paradigms in Latin America and build a global software firm from Argentina.  I didn’t delve too deeply into this experience during my conversation with Emliano, but suffice it to say that Core Security Technologies today is a company with sales headquarters in Boston, millions of dollars in revenue, hundreds of customers around the globe and millions of dollars in Venture Capital investment.

The focus of my discussion with the Argentinean entrepreneur was more on the future.    As a result of his success with Core Security Technologies, he decided to create an early-stage VC firm, Aconcagua Ventures, with some of his colleagues.  One of the ventures that have come out of this initiative is Popego, Inc. a 12-person company focused on filtering the information on the web through the use of Artificial Intelligence and other technologies.   The company was recently named one of the most innovative start-ups of 2008 by Techcrunch.

Though Popego certainly has some challenges ahead of it particularly in the realm of customer acquisition, it has a lot of sharp minds behind it as well as a backer with demonstrated success in the marketplace.  The pain point that Emiliano is attacking is a real one (accelerating clutter and noise on the web) and quite ambitious.  Basically, its all part of a realization that is more obvious today than it was in 1996 when Emiliano started: emerging markets such as Latin America have a role to play in terms of global digital innovation.  It’s no longer a question of access to the global stage, but more a matter of whether Latin American entrepreneurs decide to participate.

As he mentions, in a world where cloud computing is placing enormous processing resources at the disposal of start-ups and the internet at as medium permits global access in an instant, the old paradigms in Latin America (and other markets) of focusing exclusively on local markets are obsolete.   Indeed, I believe that, although he represents an exception today in Latin America, as he and other entrepreneurs in emerging markets continue to prove themselves, they will provide validity to the thesis that the distinction is not so much one of geographic location, but more, as Emiliano explains, risk adversity.

As a mathematician, Emiliano sees no reason to expend the same effort for little return.  He admires entrepreneurs such as Jeff Bezos who didn’t just focus his efforts in offering a percentage more books than his competitors, but thought in terms of orders of magnitude of improvement.   Along these lines, he believes in organizing Latin American talent around solutions that offer orders of magnitude more value.

True to his philosophy, he is focusing on a big, challenging problems.  As he elucidates, IBM won the hardware wars, Microsoft the software wars and Google the information wars.  The next space up for grabs is what he calls, “Information Contextualization” or making the web more meaningful for each user and this is where Popego is making every effort to clear a space for itself.

Similar to the opinions expressed by the CEO of Zoho, Emiliano sees definite advantages to creating start-ups in Latin America and particularly in countries such as Argentina.  In these countries, risk is part of daily life and the vicissitudes of that countries economy only increased the ranks of entrepreneurs looking to create new value.  Also, he, as well as myself, is a fan of the initiatives that Chile is implementing to drive entrepreneurism.  The specific programs were recently detailed by UC-Berkely professor Vivek Wadhwa.

In the end, with entrepreneurs such as Emiliano in Latin America’s ranks, I’m assured to be writing about Digital Innovation in Latin America for quite a while.

Today, I had an interesting experience at two prospect meetings.  I was meeting with organizations who are just starting to employ digital innovation strategies in Colombia (one of them is farther along than the other one).  In general, I am truly amazed at the disconnect between the user population in these countries and the companies who actually leverage digital tools to join the conversation with their customers.

One of the most exciting recent developments within the Internet space has been the rapid uptake of social media tools and, even more interesting, the adoption of these tools on mobile platforms.  Just was with their record-breaking mobile adoption growth rates several years back, Latin Americans are also breaking records for adopting social networking platforms.  For instance, Colombia is number six in the world in terms of the total number of facebook users.

I just read a post by Shane Gibson, who is currently in Colombia talking precisely about social networks. Incredibly, companies in the region who take advantage of the fact that their customers and prospects are having conversations using these digital tools are few and far between.  What are they waiting for? Instead of spending beaucoup sums of money on traditional media spends, they could be “mixing it up” and including solidly planned online iniciatives to promote their brand, products, services, etc. through direct advertising, community building, word of mouth enabling or other strategies.  An added benefit is the fact that, by doing this in virgin territory, any well thought out strategy strongly executed will be seen as digital innovation by the market place.

Anyhow, this will all play out as it always does in the region.  The market will await some solid successes and then a mass of followers will dive in head first trying to imitate their models. When this will actually happen is the big question.

In terms of gaining entry into the minds of Twitter’s management team, the last couple of weeks have been quite unique.  From the subset of confidential internal documents that Techcrunch recently published to the recent launch of the company’s Twitter 101 site, the company’s vision and a bit of what its leadership thinks about its future have become less murky.  For armchair CEOs, this is an opportunity time to speculate on how they would steward the company, but more importantly, on the direction of the social media space in general.

(more…)

I’m extremely exciting to launch my new blog, Tropical Gringo.  I’ve gotten a lot of feedback on the name some positive a few not so positive, but it’s too late.  I love the name.  I think it comes closest to expressing (in a name) what I am.

I moved to Latin America about 15 years ago. At the time, I was living in Cupertino, California and muddling through life working for a number of Silicon Valley companies such as SCO, NetManage and Madge Networks, but no really headed in any particular connection.  My personal life also wasn’t really where I thought it should be. (more…)