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CHAPTER 4

The Playbook

Tecnolatinas’ preferred playground is Latin America. Most of them are local (49%), but a significant and growing segment have either a regional (36%) or a global footprint (15%). Brazilian players focus on their local market (74%) while Tecnolatinas from Spanish-speaking countries choose regional (48%) or global plays (26%) because they face local subscale markets.

Both born-regional and born-global companies are radically leapfrogging the typical growth model of the Multilatinas, which used to start by building a local stronghold and then slowly moving onto  internationalization. This is an unprecedented opportunity for Latin American companies to tap into huge global value pools. In fact, some Tecnolatinas focus exclusively on international markets, just like Israeli startups do, and completely disregard their local markets because they are not relevant in the context of global opportunities.

Today Tecnolatinas can count on a powerful toolkit -facilitated by new technologies and services- that empowers them to create born-global startups from anywhere. Inventors and businesspeople from the region can instantly keep their finger on the pulse of market trends through online publications; watch inspiring talks from leading experts; share experiences with peers, experts and influencers in a wide variety of groups and networks; and even take courses from top universities on their mobile devices.

They access infinite on-demand computing and storage cloud services. They engage with clients and build communities using social media and create powerful sites and videos with minimal investment. They create holding companies in jurisdictions with reliable legal systems, like Delaware or the British Virgin Islands, within the day and for under US$1,000 thus providing a trustworthy destination for investors while retaining talent (and payroll) in their home countries. They test and validate concepts and access capital through crowdfunding sites like Indiegogo or Kickstarter. They communicate and collaborate seamlessly with global teams and business partners using free tools like Skype or Whatsapp. They can charge clients using Paypal or Mercadopago. All the elements of the value chain are being reinvented, becoming more global and demonetized.

Tecnolatinas are leveraging these tools to become exponential organizations. Salim Ismail, highlights in his book Exponential Organizations that Unicorns (i.e. startups worth over US$1B) and innovative incumbents are able to achieve a ten-fold performance improvement over their peers through a series of new techniques. Tecnolatinas are adopting many of their practices. They are leveraging some attributes of exponential organizations to manage growth, creativity and uncertainty:

On-demand staff:

Many Tecnolatinas actively resort to external people not only for simple or clerical work (like translating content, for instance) but also for mission-critical tasks (such as designing their apps or creating their communication materials), and quite often through online platforms such as Workana or Freelancer.

Communities:

Most startups in the region are actively building and leveraging online communities through social media like Facebook, LinkedIn and Twitter using tools like Google Ads. Etermax, for example, grows the library of questions of its TriviaCrack games by inviting users to share locally relevant questions and answers. Entrepreneurial ecosystem communities are also critical for their success. Trust and collaboration are common factors  in these networks.

Shared assets:

Latin entrepreneurs know they don’t need to acquire an asset to use it. They use shared assets for everything, from office space (coworking spaces), transportation (like Uber), accommodations (like Airbnb), coding (Github), cloud services (like Amazon Web Services), to logistics (Amazon Logistics) and manufacturing (by identifying suppliers through platforms like Alibaba).

Algorithms:

Some startups are already using artificial intelligence tools to create value in ways that would not be available otherwise. For example, Etermax constantly refreshes the contents of their localized games by screening and selecting millions of entries from their community using artificial intelligence. Others are using services such as Quantum from Socialmetrix to monitor social media activity.

Gamification:

Some Tecnolatinas are mobilizing their users through gamification, reputation systems and incentives. The reputation system of players such as MercadoLibre, Workana SegundoHogar are critical for their marketplace. Others are using badges to reward users when they try a new product or feature.

Tecnolatinas also develop other attributes focused on order, control and stability:

Experimentation:

Most Tecnolatinas are young companies in new, unexplored and highly dynamic market spaces where whoever learns faster wins so, they are constantly experimenting to improve their products and business models. They use new conceptual tools and frameworks, which are significantly different from those traditionally taught at business schools. They design  business model canvasses to think, work on and revisit their business models, and then conduct real-life experiments to test their hypothesis with Lean Startup methodologies. They apply design thinking to create products that matter to people. They quickly and cheaply prototype new products with A/B testing tools, 3D printers, laser cutters and Arduino boards. And, they do question their business model regularly, thus making evident a defining  trace of their profile.

In some cases, like Acamica, Tecnolatinas are born in Startup Weekends, where participants have to take an idea, connect with others and build teams, learn from mentors, so as to come up with a prototype, demo, or presentation for a new business. The exploratory mindset celebrates and embraces failure, a rather unusual approach in  traditional corporate culture. People get together in “fuck-up nights” to share their stories of failure to exorcise themselves and their communities from success mania. The code is “fail often, fail fast”. Even large Tecnolatinas are constantly experimenting and reinventing themselves. Marcos Galperin, founder and CEO of Mercadolibre, constantly keeps challenging his teams to look at the white space in front of them and to challenge the status quo.

Interfaces:

Most Tecnolatinas are digital startups and have applications that turn their offering scalable, and provide them with the capacity to bring in new customers at zero marginal cost. These interfaces also allow them to serve global markets, not a minor detail taking into account some startups have only 1% of their revenues coming from Latin America.

Control panels:

To monitor performance at a fast pace, most startups define customized key performance indicators (KPIs). They can track their business on a daily basis: initially with focus on user growth, traction (frequency of use, churn) and company’s cash burn-rate, later with a wider focus on monetization and profitability. Some focus deeply into the unit economics of specific segments and cohorts, thus evaluating their present value to ensure profitable growth. Others adopt more aggressive strategies and indicators focused on accelerated and preventive client acquisition. Whichever the approach, most of them pay little to no attention to accounting.

Autonomy:

The organizational models of Tecnolatinas are flatter and, provide more autonomy and opportunities for fast-paced learning than typical corporations.  They focus on results, use open spaces and informal clothing and provide equity incentives to their key staff. They have open cultures that look up to Silicon Valley for inspiration and provide a value proposition for talent that is much better tuned to Millennial expectations. Naturally, younger companies are much more open to experimentation on this front and roles tend to become better and more clearly defined as the business model becomes more stable.

Social:

Tecnolatinas are early adopters of social tools that are constantly testing and adopting the latest collaboration tools the world has to offer. In fact, Latin markets have high adoption rates for social tools, enabling some startups like Mural to create cutting-edge collaboration tools that are used by global clients like IBM and Ideo.

In sum, Tecnolatinas are early adopters of cutting-edge business tools  and practices that are redefining the way businesses operate and create value in Latin America. They can be powerful sources of insight and best-practices for more traditional companies and governments alike.

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