Startups: Charge US prices, with Latin American Costs

A version of this post originally appeared in Spanish as a column in El Mercurio, with the title Startups: vender a precios de Estados Unidos con costos chilenos.

The internet’s magic is that you can connect anywhere with any part of the world from where ever you are. We notice it when we talk with friends living in other countries, connect on social media, look at photos from around the world and keep up to date with the latest news from all corners of the world. We’re really living in a global world.

Tech startups are also global. A startup’s market can be the entire world from day one. But many Chileans only think about technology businesses from the US and Europe that have gotten to the Chilean market.

We’ve all heard about foreign startups that sell into the chilean market and many chileans have made purchases from sites like Amazon, Asos, Book Depository, Aliexpress and more. But the vast majority think it’s impossible to do the opposite: sell in the US from Chile.

“It’s all already done in the US”, they say. “We can’t compete there”, they say. But the truth is that if you have a good product, you can take advantage of a huge opportunity by putting your tech and sales team in Latin America, while selling into the US. With clients paying you US prices, but with Latam costs.

A good Chilean computer engineer might make up to $35,000 a year, while their US peer might make 4-8 times that. You can setup a call center made up of skilled native english speaking expats making $15,000 to $25,000 a year, while the US equivalent sales team would cost 2-4 times.

Startups with a Latin American back offices that sell in the US and Europe have an advantage compared to California and New York startups. They can start with much less money, be more lean and when they get to the US, they’ll be able to raise money, even in a down environment, because their valuations are more reasonable.

Funds like SocialAtom in Colombia and Magma Partners in Chile with companies like Property Simple, Authy, Auctio, Bluesmart, Keteka and Amberads are leading the way, showing entrepreneurs that they shouldn’t be scare to think big and compete worldwide from Latin American.