Tag: walmart

An Overview of Latin America’s Food Delivery Industry

Category : Latin America Startups and Investing
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In the startup world, success always attracts copycats and competitors. As a result of past successes, Latin America’s food delivery industry is one of the most competitive in the world. Brazil’s iFood, a subsidiary of tech giant Movile, became one of the biggest players in the Latin American startup ecosystem, raising US$500M from Naspers and other international investors, in what many consider to be the largest round in Latin American startup history. iFood is growing incredibly quickly, registering 390,000 daily deliveries, a 109% increase from 2017. iFood’s CEO, Carlos Moyses, recently appeared on my Crossing Borders podcast to talk about the growth of Brazil’s biggest delivery company.

Rewinding back to the early 2010s, food delivery in Latin America had its first peak long before the region truly went digital. Latin America’s food delivery hit the news because Delivery Hero, a German food delivery conglomerate, secured international reach through a spate of acquisitions in the region.

In many ways, these deals spurred the next generation of entrepreneurs in the food delivery space and created many of the most popular apps Latin Americans use today.

Food delivery fits into a trend that is shifting Latin American shopping patterns online. When PedidosYa was founded in 2009 in Uruguay by Alvaro Garcia, Ariel Burschtin, and Ruben Sosenke, just 27% of Latin America’s population had Internet access.

Today, 66% of Latin Americans have Internet access, and in Argentina, Chile, Brazil, Ecuador, Paraguay, and Uruguay, more than 70% of people are Internet users.

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Why Magma Partners Loves Corfo But Doesn’t Take Its Money

Category : Chile, Latin America Startups and Investing
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Walmart’s acquisition of Cornershop for $225M set off a firestorm in Chile. Everyone from politicians to investors, columnists to entrepreneurs has thrown in their two cents.

Why didn’t any Chilean VCs invest, when 2 of the founders were Chilean? The debate got hotter when Oskar and Dani, two of Cornershop’s founders, shared their perspectives on Twitter and in interviews, and a prominent reporter used the acquisition to bash wealthy Chileans.

Some have turned Cornershop into a referendum on wealthy Chilean businesspeople. I’ve written about the Chilean extraction vs. value creation mentality. That’s a part of it. Others have seized on Chile’s conservatism. That’s also a part of it. Others have blamed CORFO, the Chilean government agency that supports new businesses and venture capital. Others blamed Chilean VCs for missing the boat. They also deserve some blame, although a Chilean fund did invest $500k into the Cornershop founders’ previous startup Seahorse, and multiple Chilean angel investors invested in Cornershop.

I got multiple requests for my perspective from entrepreneurs, investors and family offices from around the region. What happened? They also asked why have Magma Partners been the only VC fund in Chile that hasn’t taken CORFO money? And why we haven’t taken any government money from anywhere, whether its the US, China or Latin America.

I love CORFO. CORFO created and supported Start-Up Chile, the world-changing program that brought me to Chile back in 2010. It indirectly showed me the opportunity to create Magma Partners in Latin America.

I also love CORFO because it’s made up of well-meaning, smart, dedicated people who are doing their best to change Chile for the better. Thanks to everyone involved. You’ve truly changed my life.

I also love CORFO because CORFO backed funds are blocked from investing in many of the best deals in Latin America. Since 2014, Magma Partners has invested in 42 startups across Latin America. And we found that CORFO blocks much of Magma’s Chilean from at least 40 of our best investments.

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Why Have Job Killing Tech Startups Gotten a Pass From Public Outrage?

Category : Entrepreneurship
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As I was reading The Everything Store, a book that chronicles Jeff Bezos’ and Amazon’s rise to its current status as retail giant, I was struck by how similar Amazon and WalMart are, but how different their public reputations are.

Walmart is consistently one of the most hated companies in the US. Some people even call them evil. Amazon is consistently one of the most loved. But when you really peel away the layers, both companies are nearly identical. Walmart employs 20x more employees than Amazon and Amazon cloaks itself in startupy, technology marketing, but 0ther than that, they’re pretty much the same.

They both have used advanced technology and inventory management systems to outclass their rivals. They’ve both used extremely low margins for extended periods of time to put their rivals out of business. They’ve used the same bully tactics to punish rivals.

Both exploit their non executive/technology workers by working them to the bone and paying them low wages. Both put their rivals out of business, killing local and online commerce and eliminating choice in the market. And up until this year, Amazon didn’t even pay sales tax, giving it an unfair advantage over brick and mortar stores. (See Amazon infographic)  Yet Amazon is rated as one of the most trusted and Walmart among the most hated.

This dichotomy plays itself out in nearly all tech startups. Although I’d contend that the majority of new startups are net job killers that make huge amounts of money for a small number of people, a bit of money for another larger group and give non monetary benefits to the rest, startups have been able to successfully wrap themselves in the all protecting shroud of being job creators and the engine of our economy. Almost nobody questions it.

The public thinks startups are the way out of slow job growth. So do politicians on both sides of the aisle. Startups are the job creators. They’re completely meritocratic. They’ve (or in this case, we’ve) been almost deified by the adoring public, press and politicians. This deification has brought with it an insidious self righteousness and self aggrandizement that’s reaching social darwinist proportions that we haven’t seen since the gilded age.

Too many founders and the general public have bought the narrative that founders are rugged individualists that succeed all on their own. That they deserve massive rewards because everyone else who hasn’t done it is lazy or stupid. And the most sacred of all, that startups create jobs. Startups and entrepreneurs have wrapped themselves in a narrative of technology and progress that allows people like Jeff Bezos to say things like “were not putting people out of business, the future is happening to them,” and say it with a straight face and a sense of self riotousness. If you want insight into this new phenomenon, look to Peter Theil, who’s best advice for prospective founders is to “find monopolies” where you can take the entire market.

So in our new world Walmart is hated and Amazon loved. It’s bizarre. From my point of view they’re pretty much the same. One just happens to be wrapped in better marketing. I wonder how much longer this tech inoculation will last?

I’d love to get a discussion going, so please leave comments or email me directly.

Black Friday: Advertising Thoughts

Category : Business & Advertising
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It’s been awhile since I wrote about advertising, so seeing as it’s Black Friday and millions of Americans woke up early (or stayed up all night) to go shopping at ungodly hours, I thought I’d write a little about some of the current campaigns that motivated Americans to shop.  First, the bad.

AT&T has been in a battle with Verizon for mobile phone dominance for the past few years.  Verizon still has more subscribers and a bigger network, although AT&T has closed the gap and even taken the lead in some areas.  AT&T’s launch of the iPhone has been a huge boost for AT&T, but lately Verizon has been hitting back.  They launched a commercial that shows two maps of the US, one showing Verizon’s 3G coverage and the other showing AT&T’s 3G coverage.

ATT&T wrote an open letter trying to explain the situation, but they also created their own commercial to show that they too offer service in most of America.  It sounds like a good idea, but for me, the commercial fails.  It opens with Luke Wilson standing on a map of America saying that he got postcards from people all over the US who are able to use AT&T’s network.  Wilson reads off tons of cities and tosses the postcards where the cities are on the map.  Pretty soon, the entire map is covered in postcards.  It might be a cool idea, but they picked Luke Wilson.  As the viewer, I immediately think, “why couldn’t you get Owen Wilson?”  Is AT&T really the second most famous Wilson brother and Verizon is Owen, the big movie star?  It’s almost too perfect since AT&T is playing second fiddle to Verizon and had enough of an inferiority complex to respond to Verizon’s national 3G coverage map with an open letter to consumers.  At least they didn’t pick Andrew Wilson to be their spokespan.  Then people would think they were US Cellular.

http://www.youtube.com/watch?v=wjwBHqa6lZI

Sears has always had fairly tame advertisements around the holidays an this year isn’t any different.  Their ads are actually fairly good until the end, when they show their 2009 Christmas slogan.  Their slogan is “More Values, More Christmas.”  It hardly seems right to equate buying more things with more Christmas.  Wal-Mart does the same thing with their slogan “Christmas Costs Less at Wal-Mart.”  It seems wrong to me to equate being able to buy more things with “more Christmas.”  I’m not even going at this from religious perspective, simply a materialistic one.  Both stores are equating buying more things with being happier.  It’s a good message for the stores’ bottom line, but not for everyone else.

Finally, the last of the bad.  Kopps Custard, a local institution in the Milwaukee area used to have a billboard on I43 that showed the flavor of the day.  It let you know if you should take a right turn when you got off the highway or continue to your destination.  If it was a good flavor, you got off and got custard.  If it was bad, you continued on.  I can’t count the number of times I’ve stopped because the billboard showed Tiramisu, Chocolate Peanut Butter Chocolate or Grasshopper Fudge.  It was a great ad because it motivated people to change behavior and buy.  You can now follow Kopps on Twitter, but it’s just not the same.

Now, onto the good.  This year, Best Buy sent out their Black Friday circular in newspapers around the country, just like they did in other years.  The only difference was that in heavily Muslim areas, they included a bubble at the top that said “Happy Eid Al Ahda.” Eid Al Ahda is a holiday celebrated by Muslims that runs from Friday until Sunday.  Predictably, Best Buy’s decision has drawn criticism from some right wing Christians, including some who want to boycott the store.  I think this is yet another manufactured issue and commend Best Buy for using some innovative marketing to try to tap into an underrepresented market.  As an aside, I also laugh at companies that refuse to mention Christmas in their holiday ads.

Happy Thanksgiving and if you are shopping today, good luck finding those deals.  Remember, door busters don’t mean that you should literally bust the door down.

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