All of this about Brazilian entrepreneurship and ecosystem is only a reflection of the real problem. Brazil's problem is corruption and extremely concentration of wealth, granted by a corrupt government, the same since always. We still have regions that are ruled by families that received lands in the 1600s. Everybody that has money in Brazil have tons of ways to get richer without risk, because the brazilian government prioritizes and secures this kind of development, hiring their companies to do infrastructure projects, for example. And that is why our tax system is complex, or bank system "secure" and we have full employment (with low skill jobs) for a long time. It's enough to keep people occupied and the system running.
The irony is that only startups could save Brazil from this doomed scenario. And that is the reason why, until now, the ecosystem hadn't developed. But someday, this will be hacked.
Disclosure: I'm Brazilian and had my startup broken by Brazilian corrupcy.
I am a firm believer Brazilian start ups should focus internally, but be able to be scalable abroad. By being tied to the US market I think we fail to reach the potential our country has.
Instead of simply copying US businesses Brazilians should innovate in markets that make sense for Brazil. Focus on local customers in services that can be expanded worldwide.
To me, simply trying to tie with U.S. businesses will cause Brazil to never develop a strong startup ecosystem as it is seem in countries like India and China.
I agree with you that startups in Brazil should focus on the internal market first. But Rudi also has a point that for many of the startups here, very few look past Brazil's borders, loosing relevance and being exposed to external competitors once they consolidated their markets outside.
Brazil is rather expensive and an extremely bureaucratic place to start a company in, so there is less competition when starting up. That is the only advantage of starting a business here, so doing one but focusing on the outside market before you validate a business model isn't optimal, you would be better off starting in the US instead.
> Instead of simply copying US businesses Brazilians should innovate in markets that make sense for Brazil. Focus on local customers in services that can be expanded worldwide.
Interesting point of view. Do you have any example about that in mind?
Yet, brazilians have little money to spend, and are amost completely unable to invest (because of too hight cost of life, insecurity, and a thousand other factors).
It's quite hard to get sucessful selling for people that can't buy.
All the comments here could apply to the situation in Colombia, and probably other countries in the region (and maybe Spain, for what I hear from devs from there).
A lot of the money committed to help startups is lost in the incubators. I "win" a competition where the 90% of the money was labeled as "consulting & support" and the cash left was to buy things they say I could buy.
I participate in others programs, where I move to the very last stages and drop because the situation is not that better. In this point, I consider a waste of time trying for any incubator here (for example: You need to sign a contract that say you MUST give 50% of all your time doing "incubator activities" as helpful as hear somebody explaining about internet marketing. Even for the king of support that could be nice, reduce the startup capacity to work by half is not great. And for 6 months or more?).
I try several routes, programs and contest. A lot of "yeah your idea is amazing! (not that much, but..)" but honestly look like without having US 100.000/Sales at the start none of the terms are a advantage for a starting startup.
Here are the challenges, similar to the ones other say in this thread and other:
- Not great tech education. However, good talent here but:
- The talent available is spread in shitty jobs or is almost invisible. Like I say in https://news.ycombinator.com/item?id=7875627 some people are paid very badly, even for companies that could do better, and some people are insulated from the tech scene
- The community was huge around MS, when it was strong here. Now, is very disjoint, or that is my impression
- Not enough money liquity to hang around 3-8 months hacking. For example, I have my own apps but I need to stop working on them, do jobs for pay rent, and resume when I can. Because I'm independent at least I could try. People in full time jobs are out of luck if wanna build side projects
This is far harder that people in USA and other countries have, not impossible but this lead to:
- Get a cofounder is damm hard. I have a friend that I wish to have at my side, but he never get the nerve to drop from job (not that bad of a job). Others can't survive for more than 3 months. I have be independent this years mainly because my close family and myself is very relaxed & patient about money, and could live with less with not problem. But not everyone have the circumstances.
Probably some will say: Why not setup a nice side-project with monthly payments?
I have for more than 2 years looking how solve the problem of get money. Fastspring.com is the only that barely work for me, and Apple. In colombia, we are hit hard for all the drug traffic stuff (and some early crash about a pyramid scheme), so anything that could fly in seconds in USA is a wall here. For example, doing bitcoin here is like trying to buy radioactivity material. Is like banks hate anything that could help a startup..
Not even paypal work! You can't get money to the bank, you don't have stripe-like processors, the ones here are bizantine (and don't answer your mails or don't care for you). So the option is create a company in USA. And this is just one of several problems to overcome.
About investors:
Anyone that give you money, small or big, is your Boss. For live.
About get a loan:
We have https://www.datacredito.com.co, the "you have not pay bills, wall of shame". Who are there? Almost everyone!. For how long? How cares! So if a person is wealthy probably is ok, but the rest of us are toxic for get a loan (and must consider carefully wich one to get, so for example, with the intention of get a house is not good idea to default because your are dreaming of build a game!).
However at the bright side, I think the momentum is building. The situation is screaming of somebody smart enough to take advantage of the hunger of people in latin-america for build great things. I hope not miss this!
Brazil needs a change in culture in order for the startup ecosystem to succeed.
Most of the people don't have the "I want to be an entrepreneur" mentality. They are looking for well paid careers when choosing the field they want to graduate in. Creating a startup does not even cross their minds because they are not aware that it is a possibility.
They want stability... like working for the government.
For the ones that want to be entrepreneurs, the mentality is either the mom and pop shop, where they will spend their lives on and never really make real money or the ones that happen to create big companies but stay in there forever as well.
VC's, Angels, investment, exit... a very low % of college students know what these are about.
I dare to say that Brazilians are not used to take risks... even the ones that are creating these copycats. Why do you think they are doing it this way? Less risk.
Disclosure: I am Brazilian and during my college days starting a company was not even talked about.
Mom and pop shops are a huge source of job creation everywhere, and there is nothing wrong with opening up a bakery or a gadget shop. I'm always impressed by the number of nail salons and 'padarias' opening up. Brazil has a lot of entrepreneurs. The franchise market grows at double digits.
We you (and Rudi) are talking about is, specifically, tech companies. There you have a point.. college graduates are not familiar with the VC world and few talk about starting their own software company.
Taking risk in the US is different than in Brazil. The US has the LLC and bankruptcy laws, which shields the founders if it goes under. Brazil makes the people responsible for every financial commitment, and the bankruptcy laws are impossible to understand. If your company tanks, you personally go under too.
Disclosure: I'm also Brazilian and currently a co-founder at a São Paulo-based tech startup.
fully agree this is the single largest cultural problem I have seen as a gringo running a brazil only startup. Hiring is a pain despite amazing packages, great benefits and working with cool people in a SF style setup.
I think no large deal ever hapening outside of buscape and the second fact that most VC's got Nailed in the past 3 years paying high prices inthe ecommerce boom and are also writing off many of the investments is cooling the non existing startup scene.
That being said MSFT is opening an incubator in Rio.
Technical talent is there but the startup culture is not. And as you said most importantly an appetite for Risk.
We (www.lalina.com.br) are a Brazil only startup and have had some success with a different model. Our head office is in NYC (better access to talent) and we just opened our office in SP. We are beauty only and a traditional business model. We discovered early on many of the points this article highlights and confirm confirm most of them. Talent is a huge problem in brazil and the startup culture is only in some small circles. Not to mention vc's are very unsophisticated and do not offer much value except for cash and what they read off investment blogs, granted there are a few exceptions.
That's interesting, thanks. Why do you think the talent pool is a huge problem? Is it about cost? Lacking of skills (if so, which ones are these, for instance)? The best people are already taken or...?
In Brazil we have a lot of ways to make money without risk, so this is one of the problems we are facing to get funding and when we pass through this obstacle we have to give a lot of equity for the investors.
This kind of relationship between founders and investors is very harmful and it is contributing to failure of brazilian startup scene.
Another point your post made very clear is the lack of entrepreneurs that already had success in tech startups. We have a lot of people pretending to be mentors, but none of them have any skills to do that. They never grown a business, or got to millions of users from zero. They just are assuming that they are mentors and are supported by the specialized media. Just impostors gaining money from lectures and classes.
And, unfortunately, I believe another problem we are facing is the culture. People are not open to use something new. Just few people are early adopter and it is a real problem for companies that need to achieve a critical mass to start running.
[+] [-] meira|11 years ago|reply
The irony is that only startups could save Brazil from this doomed scenario. And that is the reason why, until now, the ecosystem hadn't developed. But someday, this will be hacked.
Disclosure: I'm Brazilian and had my startup broken by Brazilian corrupcy.
[+] [-] seanflyon|11 years ago|reply
[+] [-] evli|11 years ago|reply
Instead of simply copying US businesses Brazilians should innovate in markets that make sense for Brazil. Focus on local customers in services that can be expanded worldwide.
To me, simply trying to tie with U.S. businesses will cause Brazil to never develop a strong startup ecosystem as it is seem in countries like India and China.
[+] [-] rcamera|11 years ago|reply
Brazil is rather expensive and an extremely bureaucratic place to start a company in, so there is less competition when starting up. That is the only advantage of starting a business here, so doing one but focusing on the outside market before you validate a business model isn't optimal, you would be better off starting in the US instead.
[+] [-] rl12345|11 years ago|reply
Interesting point of view. Do you have any example about that in mind?
[+] [-] marcosdumay|11 years ago|reply
It's quite hard to get sucessful selling for people that can't buy.
[+] [-] mamcx|11 years ago|reply
A lot of the money committed to help startups is lost in the incubators. I "win" a competition where the 90% of the money was labeled as "consulting & support" and the cash left was to buy things they say I could buy.
I participate in others programs, where I move to the very last stages and drop because the situation is not that better. In this point, I consider a waste of time trying for any incubator here (for example: You need to sign a contract that say you MUST give 50% of all your time doing "incubator activities" as helpful as hear somebody explaining about internet marketing. Even for the king of support that could be nice, reduce the startup capacity to work by half is not great. And for 6 months or more?).
I try several routes, programs and contest. A lot of "yeah your idea is amazing! (not that much, but..)" but honestly look like without having US 100.000/Sales at the start none of the terms are a advantage for a starting startup.
Here are the challenges, similar to the ones other say in this thread and other:
- Not great tech education. However, good talent here but: - The talent available is spread in shitty jobs or is almost invisible. Like I say in https://news.ycombinator.com/item?id=7875627 some people are paid very badly, even for companies that could do better, and some people are insulated from the tech scene - The community was huge around MS, when it was strong here. Now, is very disjoint, or that is my impression - Not enough money liquity to hang around 3-8 months hacking. For example, I have my own apps but I need to stop working on them, do jobs for pay rent, and resume when I can. Because I'm independent at least I could try. People in full time jobs are out of luck if wanna build side projects
This is far harder that people in USA and other countries have, not impossible but this lead to:
- Get a cofounder is damm hard. I have a friend that I wish to have at my side, but he never get the nerve to drop from job (not that bad of a job). Others can't survive for more than 3 months. I have be independent this years mainly because my close family and myself is very relaxed & patient about money, and could live with less with not problem. But not everyone have the circumstances.
Probably some will say: Why not setup a nice side-project with monthly payments?
I have for more than 2 years looking how solve the problem of get money. Fastspring.com is the only that barely work for me, and Apple. In colombia, we are hit hard for all the drug traffic stuff (and some early crash about a pyramid scheme), so anything that could fly in seconds in USA is a wall here. For example, doing bitcoin here is like trying to buy radioactivity material. Is like banks hate anything that could help a startup..
Not even paypal work! You can't get money to the bank, you don't have stripe-like processors, the ones here are bizantine (and don't answer your mails or don't care for you). So the option is create a company in USA. And this is just one of several problems to overcome.
About investors:
Anyone that give you money, small or big, is your Boss. For live.
About get a loan:
We have https://www.datacredito.com.co, the "you have not pay bills, wall of shame". Who are there? Almost everyone!. For how long? How cares! So if a person is wealthy probably is ok, but the rest of us are toxic for get a loan (and must consider carefully wich one to get, so for example, with the intention of get a house is not good idea to default because your are dreaming of build a game!).
However at the bright side, I think the momentum is building. The situation is screaming of somebody smart enough to take advantage of the hunger of people in latin-america for build great things. I hope not miss this!
[+] [-] goshx|11 years ago|reply
Most of the people don't have the "I want to be an entrepreneur" mentality. They are looking for well paid careers when choosing the field they want to graduate in. Creating a startup does not even cross their minds because they are not aware that it is a possibility.
They want stability... like working for the government. For the ones that want to be entrepreneurs, the mentality is either the mom and pop shop, where they will spend their lives on and never really make real money or the ones that happen to create big companies but stay in there forever as well.
VC's, Angels, investment, exit... a very low % of college students know what these are about.
I dare to say that Brazilians are not used to take risks... even the ones that are creating these copycats. Why do you think they are doing it this way? Less risk.
Disclosure: I am Brazilian and during my college days starting a company was not even talked about.
[+] [-] tmcz26|11 years ago|reply
We you (and Rudi) are talking about is, specifically, tech companies. There you have a point.. college graduates are not familiar with the VC world and few talk about starting their own software company.
Taking risk in the US is different than in Brazil. The US has the LLC and bankruptcy laws, which shields the founders if it goes under. Brazil makes the people responsible for every financial commitment, and the bankruptcy laws are impossible to understand. If your company tanks, you personally go under too.
Disclosure: I'm also Brazilian and currently a co-founder at a São Paulo-based tech startup.
[+] [-] 3327|11 years ago|reply
I think no large deal ever hapening outside of buscape and the second fact that most VC's got Nailed in the past 3 years paying high prices inthe ecommerce boom and are also writing off many of the investments is cooling the non existing startup scene.
That being said MSFT is opening an incubator in Rio.
Technical talent is there but the startup culture is not. And as you said most importantly an appetite for Risk.
[+] [-] swah|11 years ago|reply
[+] [-] 3327|11 years ago|reply
[+] [-] caio1982|11 years ago|reply
[+] [-] ffreitasalves|11 years ago|reply
This kind of relationship between founders and investors is very harmful and it is contributing to failure of brazilian startup scene.
Another point your post made very clear is the lack of entrepreneurs that already had success in tech startups. We have a lot of people pretending to be mentors, but none of them have any skills to do that. They never grown a business, or got to millions of users from zero. They just are assuming that they are mentors and are supported by the specialized media. Just impostors gaining money from lectures and classes.
And, unfortunately, I believe another problem we are facing is the culture. People are not open to use something new. Just few people are early adopter and it is a real problem for companies that need to achieve a critical mass to start running.