Anytime you have an item that you need to send from here to there you enter the world of transport logistics. It may seem as simple as calling UPS or FedEx, but there’s a lot more that goes into it for the companies that provide the service, not to mention freight companies delivering all around the country. In Latin America, things get even more complicated.
In Brazil, for example, 40% the trucks that are on the road delivering packages and freight are not full. That’s a terrible use of the transport logistics resources that are available. When my guest today, Federico Vega, realized that, he saw an incredible opportunity to solve a problem and create a dynamic company. Through patience, perseverance, and iterations, Federico has built CargoX from the ground up – it’s the Uber for trucking in Brazil.
When you solve a problem you have the potential for a business.
Every entrepreneur has their own journey to discover exactly what kind of company they want to build. But as with every company that lasts, the needs of the consumer come to the forefront. It’s the problems, the needs the customers have, that drive the direction of the business.
Federico Vega discovered that any company that regularly ships items across Brazil needs to do so reliably and as inexpensively as possible. His initial belief was that if he makes use of trucks that are already scheduled to embark on deliveries, he’ll be able to provide more income to the driver and deliver a less expensive way for companies that utilize transport logistics to do so. His idea has worked beautifully. On this episode, you’ll hear his story.
From bathroom stall to a “Starbucks office,” to a fully formed company and team.
CargoX didn’t start with its business approach and existing structure fully formed. No company does. In fact, Federico Vega started the company part time while he was still working a full-time job. He found himself more and more often visiting the bathroom stall with his iPad to take care of issues with his new company and decided it was time to quit his good paying job and launch the company for real.
That’s when he moved to what he calls his “Starbucks office.” He and some hired help did their work from Starbucks every day for a long time as the company changed. At one point they even shut down and reopened with a new model and approach. Through funding rounds and iterations, CargoX has truly become the Uber of the trucking industry in Brazil.
Advice for startups: Develop a network within your industry. Don’t waste time on irrelevant events.
When I asked Federico what he’d say to others who are starting a company in Latin America he said that they should become laser focused on the niche or industry that they are serving and begin making connections. It’s not worth your time to go to broad conferences and events – including generalized networking events. You need to develop the contacts and connections within your industry that make it easier for you to build your company wisely.
Advice for startups: Look for traditional industries that already work and use tech to make them better.
Another piece of advice from my guest on this episode of Crossing Borders, Federico Vega, is that rather than trying to create a new market (like Twitter or Uber) you should invest your time and energy in investigating the needs that exist in traditional, established industries. Once you locate the pain points, look at the possible tech solutions and see if there’s a way you can meet the need at a reasonable cost to the end-user and still make a profit. If you can, you’ve likely got a good business idea on your hands.
Federico and I had a great time talking about how he’s changing the transport logistics industry in Brazil. My hope is that as his company grows, he’ll become like one of his favorite examples – Alibaba – and find ways to expand his influence worldwide. Enjoy listening.
Outline of This Episode
- [1:24] Federico’s background and current business – CargoX: Uber for trucks.
- [4:03] How did a guy from a small town in Patagonia build this kind of business?
- [8:12] The response of family and friends when Federico decided to leave his cushy job.
- [11:07] Running his startup from a toilet stall – breaking into his own.
- [14:39] How Federico shut down his startup, regrouped, and started with a new USP.
- [15:51] Starting over: raise funds or find clients?
- [19:55] The turning point that made the business take off.
- [23:57] Advice to founders about raising money.
- [28:28] Why silicon valley investors should consider Latin American companies.
- [30:14] What would Federico tell himself if he could advise himself from the start.
- [34:58] The next steps for CargoX.
Resources & People Mentioned
- CargoX – Federico’s company
- Valor Capital – US/Brazil investment fund
- NXTP Labs – Latin American early stage investment fund
- Goldman Sachs