The startup ecosystem in Brazil has been booming since 2009. Figures vary on the number of online businesses –between 6,000 and 10,000 – but the trend is undoubtedly positive, says Brazilian startup federation the Associação Brasileira de Startups. However, of every 100 fledgling firms that take their first steps, 50 expire before their second birthday and this is the norm across all business sectors in the country.
Of the first generation, which emerged before the boom, three startups – Samba Tech, Fashion.me and boo-box – have survived and achieved explosive growth. They have moreover managed to expand their businesses internationally. How have they done this? Here are a few ideas on how to succeed in Brazil. Basically all three of these companies share the same basic three ingredients: an excellent team, fast time-to-market, and focus.
In Brazil, bringing an excellent team together and retaining it is a real feat – particularly if you are a small company that cannot offer the same staff benefits as a big corporation, and especially in the fast-growing new ICTs sector. Lack of qualified staff is a major problem, so if a startup wants to differentiate itself in a jobs market which is still very closed and attract the best people, it will need to highlight the prospects of doing business on the international scene. This is what happened at Samba Tech, the leading online video platform in Latin America for content management and distribution. The company was set up in 2007 by Gustavo Caetano, originally from Belo Horizonte in the famous San Pedro Valley, who is currently President of ABStartups. Eight out of the ten major national media groups use Samba Tech technology. With over 200 sizeable client companies and a billion videos distributed annually, Samba Tech is now diversifying its activities. With Samba Ads, created in 2012 from a company spin-off, it is investing in the online video advertising market. Since March it has enjoyed international venture capital backing from Initial Capital and Rhodium Capital, and also obtained seed funding from Silicon Valley’s ’500 Startups’ accelerator programme. In May, Gustavo Caetano established a holding company, the Samba Group, to provide an incubator and funding in Brazil for innovative projects in the fields of video, Cloud and Big Data.
Moving from concept to finished product poses problems
Brazilian entrepreneurs are creative and have some very good ideas, but nevertheless many startups close down before managing even to launch their first product. Things often start to go off the rails when it is time to move from concept to finished product: administrative hurdles, logistics bottlenecks, poor organisation, lack of discipline, and so on. Our three startups seem to be the ‘exceptions that prove the rule’, having excelled in fast time-to-market coupled with close response to precise customer needs. In particular, Fashion.me, the top fashion social network in Brazil, has ceaselessly continued to update its offering, following its founders’ cherished principles of ceaseless innovation and a ‘lean startup’ approach. Founded by Renato Steinberg and Flávio Pripas in 2009, the site enables the user to create a ‘look’ and then use virtual models to try on clothes and accessories. Fashion.me was a winner in the Best Design category at the 2012 Brazil Startups Awards, the site now has over a million users in Brazil and 50,000 in the United States. Around 60% of its users are women over the age of twenty. Intel Capital injected funds into the company in December 2011 and early in the new year an office was opened on 7th Avenue in New York City. The next challenge for the two founders is to export their business model to Asia and Europe.
Project focus essential
Brazil seems to work on a different timescale to many other places. Time spans are much shorter, everyone is always in a hurry, expending a seemingly alarming amount of energy. And because there are huge opportunities, especially in online business, once a business model has gained market approval, the owners often pile on the ideas and products, getting into niche markets, forging partnerships, and sometimes even expanding into rather peripheral activities. The remedy for such temptations is focus, focus, focus. This is of course not enough to explain the success of our three chosen startups, but strong focus increases the likelihood of longer-term survival and continued appeal for investors. Leading Brazilian social media advertising company boo-box is a good example of this. Founded in 2007 by a young programmer from Brasilia, the company provides advertising companies both large and small with innovative tools for web advertising. Among its clients are Google, Fiat, Microsoft and Unilever. The company’s USP, aside from the technology, is an inventory of 430,000 blogs and sites, 22,000 profiles on Twitter, and a network of 60,000 affiliated publishers who create content on a daily basis. Using accurate targeting and ground-breaking advertising formats, the company puts out a billion ads per month, which reach 60 million Internet users in Brazil. On the capital side, two major investors, Monashees and Intel, came on board in 2007 and 2010 respectively. In 2012 US business magazine Fast Company named boo-box one of the most innovative companies in the world and a Forbes poll found it to be one of the ten most creative companies in Brazil, alongside such stars as energy giant Petrobras and aerospace conglomerate Embraer.