Emerging middle class in Latin America has the same needs, problems and expectations as most European or American citizens. People who live in great Latin American cities want better prices, user-rated services, better ways to communicate or simply get to the office faster. Consequently, most U.S.-born business models are suitable to be implemented in Latin America.
At the same time, Latin America has almost twenty nations (so almost twenty different legislations), two main languages (Spanish and Portuguese), populous countries (as Brazil or Mexico) as well as little countries (as Panama or Uruguay). In this context, when a company arrives to any Latin American country it needs to make an important effort in order to adapt its operations and communications. In Spanish, we call this adaptation “tropicalización” (tropicalization).
This requisite of adaptation to local market leads to the fact that some American or European business models (even being perfectly proper to Latin America) have not been fully implemented yet in Latin American countries. There appears an opportunity to local startups.
Many successful Latin American startups are operating under the copycat model (replicating business plans and launching them in their own markets in rapid time to market.). There are three main advantages of being a copycat:
- Business models have already been tested elsewhere.
- Pitching the business to investors is easier (as they can explain their startup as the Argentinian Airbnb)
- They born with a potential exit strategy already set. If you are Mexican equivalent of BlaBlaCar, and market conditions are favorable, you can always approach to them for an acquisition (in fact BlaBlaCar bought its Mexican equivalent Aventones)
Some examples of Latin American startups based on already existing models:
– MercadoLibre was probably the first and the most successful copycat in Latin America. MercadoLibre was established in August 1999 in Argentina and rapidly expanded to Brazil, Mexico and other South American countries. MercadoLibre started working in the way as eBay did: customers bid for an item and the one with the highest bid (after a determined date) wins the item. Nowadays the main selling option is fixed price (80%). In very early stage MercadoLibre received funding from important international investors. In September 2001 eBay acquired 19.5% of MercadoLibre in exchange for Brazilian subsidiary of Ibazar.com.br (eBay’s recently acquired). In this transaction, MercadoLibre also became eBay’s exclusive partner for the Latin American region. MercadoLibre has evolved in response to the unique circumstances of Latin America, developing innovative services perfect for the Latin American context. Today, MercadoLibre is the third company in market value of Argentina (above US $6 Billion).
– Rocket Internet is a Berlin-based e-commerce incubator that builds online startups mainly replicating the business models of other established, successful companies. While Amazon is not fully implemented in Mexico yet (by the moment They only sell books), Rocket Internet launched Linio. This e-commerce site has a catalog of over 300,000 products across categories like technology, fashion, home goods, music and books, sourced and sold directly by Linio itself as well as via third-party merchants (following the “marketplace” model made popular by the likes of Amazon, eBay, and Alibaba). They claim to be the No. 1 online store in Mexico, with over 15 million monthly hits on its website and over 2 million fans on its Facebook page. Linio is now active in Mexico, Colombia, Venezuela and Peru, and soon in Panama.
– ClanDescuento was a startup founded in Chile by Oskar Hjertonsonn and Daniel Undurraga. In 2010 they studied Groupon success and decided to start working on replicating the model in Chile. ClanDescuento worked out very well. After only three months since his launch, 10 people were already working and they were generating significant revenue. Hjertonsonn and Undurraga decided to expand to the rest of Latin America and went to raise some money. In this fundraising process, Groupon acquired ClanDescuento by US $10 million, and renamed in Groupon Latin America. Groupon infused the cash necessary to grow quickly as long as tech skills to scale extremely fast. Oskar Hjertonsonn became CEO of Groupon Latin America and Daniel Undurraga Marketing Director.
– Eventioz is an online event registration startup (like Eventbrite) founded in Argentina in 2008. Eventioz was acquired by Eventbrite in 2013. Randy Befumo, VP of Strategy for Eventbrite declared: “We are buying Eventioz to get an experienced team in the Latin America region that has already been successful growing a business very much like our own. We think Eventioz gives Eventbrite a shot at being the market leader long term in what should be a very vibrant part of the world,”. Another successful ticket and event management startup is Sympla (from Brazil).
– Bixti was an Argetinian Startup created in 2010 and become the largest platform for buying and selling handicrafts (like Etsy) in Argentina. Founded in 2008, Elo7 is a craft marketplace (like Etsy) that aims to promote online sale of handicrafts. In 2012 Elo7 expanded its market into Latin America by acquiring Bixti. Nowadays the site has more than 75k registered craftsmen offering over 1.5m products. It has more than 40 million pageviews and 5 million visits per month.
Copyright protects artistic creations. Patents safeguard physical inventions. Ideas cannot be protected. In addition, everybody can have hundreds of ideas but what matters is execution. And another important fact: Ideas spread faster than companies.
So, if you have a startup, how to protect your business model to be copied by somebody else in Latin America? The answer is complex but it must include accelerating time to global market and putting focus over important countries in different continents, in order to tropicalize your company as you go.
Or maybe, you may prefer to buy your future copycats for a large sum of money…