It was only six months ago that I wrote that article for VentureBeat and the NYTimes.com about the fact that US web companies are starting to look at Latin America for strategic acquisitions. Now, VC’s are looking at countries such as Brazil, Chile and Argentina, but Brazil is, by far, the big blip on their radar screens.
It’s all part of a global trend whereby new players are disrupting established companies in industry after industry by incorporating the ever present web (mobile and otherwise) into their unique value proposition. These new players enter markets with more competitive business models and start to take share away from traditional companies in industries such as retail, commerce, media, financial services, entertainment and more.
There are a number of reasons why Brazil is in the lead including the size of the country, the investments in infrastructure and the growing importance of that economy on the world stage. Nevertheless, another reason is the Brazilians themselves (professionalism, creativity, world view, and ability to execute) and, here, other countries in Latin America can learn a thing or two (although, I think Chileans and Argentineans are keeping step nicely).
This Tuesday it was announced that Google CEO, Eric Schmidt’s, investment vehicle, Tomorrow Ventures, invested in a Chilean web event management company called Welcu. The company has already gartnered an impressive list of corporate clients from Coca-cola to BBDO. The fact that Schmidt’s investment company chose a company in Latin America for it’s 22nd investment attests to the fact that this region should be on the radar screen of more and more investors.
It’s important to note that Welcu is not simply a clone of established companies such as Eventbrite and others, but provides some innovation by more thoroughly integrating a social layer throughout its event management platform. The company has an impressive list of previous investors including Oskar Hjertonsson who recently sold his company (along with his cofounders) to Groupon.
I had a great conversation yesterday with someone, like me, who isn’t originally from the region (Latin America), but who has found a new home here. He was visiting Colombia and has been an entrepreneur in Latin America for more than four years and had some really tough going, but like any excellent entrepreneur, he stuck it through. The result is that, today, both he and his original angel investors experienced a nice exit as his company was sold to a much larger one.
This is a great story, but it’s just great to sit down and talk with people who are super sharp and, at the same time, down-to-earth and open. Within this journey through the start-up scene in Latin America, it’s been incredibly heartening to discover a core group of amazing individuals, who are also great people to be around. Some are originally from outside the region, but not all and all.
A common thread is that we all see amazing opportunities for creating start-ups in Latin America as well as the potential for developing a new seed fund to nurture more and more of these start-ups. He, correctly, mentioned that we should somehow coordinate our activities more among different countries in Latin America. It definitely makes sense to think about building a core group of sharp individuals in Latin America interested in, among other things, funding and developing new start-ups. We’ll see how this develops.
Additionally, yesterday, I had great video conference with a smart and funny colleague in Argentina about his interest in expanding his company footprint throughout Latin America. Also, I chatted with some buddies in Austin about an upcoming panel over there on the start-up environment in Colombia (I’m rounding up some interesting panelists). Well, gotta cut this short, because I’m off to Barranquilla this morning to visit another interesting company.
As I wrote in my last post, the Founder Institute will come to Colombia (and Chile). To kick things off, Adeo Ressi, CEO of the Founder Institute, will be in Colombia in February to launch the 12 week program. This initiative is important because it connects Silicon Valley with the best Colombian entrepreneurs the country has to offer. Additionally, successful US entrepreneurs and investors will hook up with these entrepreneurs/founders. To kick off the event, Adeo Ressi will be in town to on the 8th of Februrary.
Adeo Ressi of the Founder Institute will speak on Feb 8 in Bogotá, Colombia:
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.
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.
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:
Them there is pretty big words and it’s great validation of my own beliefs. Specifically, I just feel that all the talk about social media and these new digital tools at our disposal have so much more potential beyond the becoming the province of sharp marketers. Within a business context, I see much opportunity for, what I call, digital innovation. Nevertheless, I like Rushkoff’s broader interest in seeing social media as offering the potential to connect with peers without the oversight of “controlling interests.”
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.
As I mentioned a few weeks ago, I’m developing an interesting project to provide programming talent to web startups in the states and perhaps other regions such as Europe. The concept continues to evolve with the focus now being on finding superstar programmers instead of the typical software factory with a variety of skill levels.
I really think that companies such as Globant have proven that, if done correctly, one can build a successful business by offering top-notch programming talent to interesting web companies. Realizing the potential of such an endeavor has as much to do with creating a vibrant company culture in tune with the needs of the programmers and the company’s potential customers. Here, in Colombia, I think a company such as Koombea, which has won international coding competitions, is further proof that the potential certainly exists.
Eventhough I’ve been looking forward to building my own web app (and a company around it), there are so many things pulling me in this direction, that I just can’t ignore it any longer. I’ve had qualms about going full force into a services business (like outsourced development), but, after further reflection, it’s finally clear to me that this path has a lot of positives.
Like I said, building a vibrant company culture is a big part of doing this successfully, but I’ve had great experiences doing this for others. Fifteen years ago, when I moved to Colombia from the states, I got the chance to build a services organization from 2 engineers to more than 20 at Compaq Computer and we achieved such a level of excellence that our country (Colombia) had the best customer satisfaction levels (our measure of success) in the whole world.
The incredible thing is that when I established that BHG (Big Hairy Goal) three years prior, I got a ton of snickers from the team and I’m sure they were convinced that they were dealing with one “gringo loco” (that part was true). Nevertheless, after five years in the valley (Silicon Valley) and a little flexibility in my adjustment to the Latin American culture, I saw that amazing things were possible.
I’m continuing to develop this project and will, firstly, make sure that I start locating top-notch talent before offering anything to potential customers (startups and other SaaS and web companies). I’d really like to get some young raw talent that can absorb a ton of high performance culture and values from Silicon Valley type companies instead of going whole hog for senior developers who might have acquired a few too many stodgy bad habits along the way.
What are your thoughts on what I’m embarking upon?
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.
Mi 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!
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.
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.
At the conferences where I speak, when I talk about Cloud Computing and the Software-as-a-Service (SaaS) model, one of my premises is that this new paradigm requires new competencies. More than ever, companies offering Software-as-a-Service need to be true to the “service” component and be responsive to customer requests.
Upon hearing this, many companies immediately think of customer service, which is indeed important. Nonetheless, many customers and non-customers offer suggestions that could or could not be of value to such organizations. Companies that hear their customers are also open so something called “open innovation” whereby innovations can come (in part or in whole) from outside the company’s boundaries.
In terms of suggestions, one example revolves around the team at Zoho, a SaaS provider. As can be seen by the image at the top of this post the company made a slight change to its headline statement at the top of its web site between September 4th and the 13th of this year. About a year ago, I had the pleasure of interviewing the company’s founder and CEO, Sridhar Vembu and must admit I was quite impressed by his vision and intelligence. At that time, the company web site was little more than a listing of all their applications.
I asked Sridhar if they were thinking of revamping their messaging to focus on customer benefits and improve the general design of the site. He said they were and a couple of weeks ago, I stumbled upon the new site, which, in my mind, is an improvement. Nonetheless, in my email congratulating them on the new site, I did mention that it might be a good idea to include two messages: 1) Who Zoho makes companies more productive and 2) the millions of users they have. See my email below.
It says a lot that a few days later, they had taken action on these suggestions (from outside of their company) and implemented them. It was certainly possible that the suggestion would not have been implemented, but it is apparent that they take these suggestions seriously and are open to anything that helps them improve. This is a great lesson in whatever name you’d want to put on this (e.g., open collaboration, open innovation, etc.) for other SaaS providers and highlights the type of open company culture that such companies would do well to embrace.
I just got back from a great meeting with a fellow entrepreneur. He’s been working on building a dream team of partners to launch a top notch software development firm focused on cutting edge development that includes gaming, social networks and mobile (each project needs to include one or more of these). He has already built and sold a software development firm and has since learned a lot more do’s and don’ts and we will be launching in a couple of months.
We already have a team of more than ten engineers assembled and are close to negotiating a seed investment to get off to a running start. One of my jobs is to find interesting projects in the states and/or Europe. I will be reaching out to my contacts to find these. Many operations down here focus on small traditional projects in the local market, but we are focused on working on top tier projects with innovative companies (large and small).
The initial software development center will be based here in Colombia with the possibility of setting up additional centers in the most appropriate places (e.g., Asia, eastern Europe, etc.). We have some pretty impressive technical people (including architects). Nevertheless, I mentioned that we should look for a superstar CTO anywhere in the world and periodically fly that person down here to guide the technical team and develop the company vision. My friend was surprised by the suggestion, but he immediately saw the logic.
Thus, if you are superstar CTO material or know someone who is, please contact me. This position is for you if you’re into leading a team of eager learners and workers down here in Bogota, Colombia and are interested in fun international travel (reach out to anyone at the local embassy and they’ll tell you how much fun Colombia is – really, beyond what you’d expect). Obviously, the idea is for our new CTO to be a partner in the business and this would include becoming vested in the company.
Google just launched Google Instant to stream search results as you type. The idea is to try to predict the results you are looking for as well as speed up the search process. In the process, the company hopes that the user experience will be much improved as users need not click even once to obtain results.
In terms of user interface design, I really like the whole simplified design (with larger search box) and instant results. This is most definitely a win for the company in terms of maintaining its dominance of the search market. Nevertheless, it will be interesting to look at what they launch in the social networking/gaming space when they unveil the Google Me project. Though search will continue to be important, social media continues to pick up steam and could conceivably be a more important part of the user equation.
Brazilian startup and investment activity just continues to heat up. It’s not enough that, at the end of last year, Tiger Management and Accel partners invested US $30M in Vostu and Insight Venture Partners invested an undisclosed amount in Mentez, two Brazilian social gaming companies. Now, comes news that none other than premier VC firm, Benchmark Capital, just invested in Brazilian social buying company Peixe Urbano. Conclusion: Brazil is hot, hot, hot!
