293. Viva Latam Startups, Losing Talent to the U.S., and Building the Zillow of Brazil (Brian Requarth)

Brian Requarth of Latitud joins Nick to discuss Viva Latam Startups, Losing Talent to the U.S., and Building the Zillow of Brazil. In this episode we cover:

• What’s the thesis at Latitud?
• Could you tell us a little about the company you started, Viva Real?
• What was your goal in writing the book… Viva the Entrepreneur?
• You get quite vulnerable w/ regard to your experience building Viva Real. What was the hardest part of your founder journey?
• You have a large focus on helping entrepreneurs navigate building and scaling venture backable businesses in LatAm. Both Latitud and the book are in service of that mission. What are some of the unique headwinds that LatAm startups face?
• You recently had Henrique Dubugras, co founder of Brex, on the podcast. Notably, he is a founder that left south america, after some modest starutp success, to launch his large and fast growing company here in the states.   How do you keep from losing the most ambitious and creative tech talent to the U.S.?
• Rappi coming up in Colombia while you were there?  What are the leading countries within Latam?
• El Salvador very recently announced that Bitcoin will be an official currency, marking it the first country to make the coin legal currency.  Is this the first country of many to set their reserve currency to Bitcoin?
• You recently tweeted about a common problem you see with early-stage startups in LatAm — messed up cap tables with aggressive angels taking 40%+ of the company at formation. This, of course, is a major deterrent for future VC investors. Is this a fixable problem and, if so, how do you help w/ cap table issues?
• Advice for founders launching a startup focused on Latam market?
• Me too tech strategies in Latam that have worked in the US?

Guest Links:

• Brian’s Book
• Latitud
• LinkedIn
• Twitter

The host of The Full Ratchet is Nick Moran, General Partner of New Stack Ventures, a venture capital firm committed to investing in the exceptions.

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Transcribed with AI:

0:00
Brian Requarth joins us today from Sonoma. He is the co founder of latitude, a firm focused on helping build the next generation of iconic tech startups in Latin America. And he’s also author of Viva the entrepreneur founding, scaling and raising venture capital in Latin America. Prior to latitude, he was co founder and executive chairman of Viva real, Brian, welcome to the show. Hey, Nick, thanks a lot for having me. It’s a pleasure. Yeah. Tell us a bit about the background in the founding of Viva real

0:29
Yeah, the background is, I’m a gringo that ended up in Latin America. I got my car drove from California to Costa Rica bought a one way ticket to Bogota, Colombia. You know, I was visiting a woman that I’d met in San Diego, she likes to say that she imported me to Colombia. And then I ended up, you know, living living in Latin America for plan was to stay for a few months, a few months turned into 13 years of living in the region, six and a half in Colombia, and six and a half in Brazil. And I needed to pay the pay the bills, so I did a few startups. And now I do primarily some investing.

1:07
Got it? And that’s with latitude. Yeah, can you give us you know, the brief overview and thesis at Latitude?

1:12
Yeah, I mean, that the thesis is really born out of just the experience of being part of an ecosystem that didn’t have, frankly, a lot of support. And it was very nascent when I started. And so, you know, the angel investor ecosystem, the venture ecosystem was very underdeveloped. And you could argue that it’s still underdeveloped today, when you look at the amount of dollars that go in and the size of the market, but it’s more mature than it is today. But I found it was a very lonely process. And I wanted to build a community of other entrepreneurs. And so we built this, we kind of three parts to what we’re building at Latitude, we have a cohort based program, which is equity free, founders join. And you know, we kind of handpick top tier founders that are high potential. And we basically run them through a six week program where they connect with each other connect with mentors. And then we ended up getting a pretty good peek into who’s building what and we end up investing in a handful of those companies. out of our rolling fund, it was the first rolling fund on angellist, in Latin, in Latin America, one of the first outside of the US. And then we also simultaneously build a bunch of products that reduce friction for founders. So it’s a fun, but it’s kind of a hybrid approach of a fund, an edtech meets, you know, a product lead product, you know, driven company,

2:33
got it in all the founders are based in Central or South America, I assume all the

2:38
founders are building companies that target the market in Latin America, which is anywhere from Mexico, down to you know, the tip of Argentina. So it’s, I would say a bulk of our companies come from Brazil, it’s just the largest market with the most robust kind of, you know, venture backed ecosystem. And then Mexico, Colombia, kind of, you know, two and three in terms of markets, but we we have founders from this cohort from 16 countries. And, you know, really, there’s, there’s tons of opportunities in the whole region.

3:08
Very good. So, you know, before we talk about all the investing stuff, I want to kind of roll it back here and get into your story of founding a company, right, you, you founded this company, Viva Ryall focused on Brazil. I think the company resembles Zillow or Trulia. But of course, for the Brazilian market, you know, what were the primary differences.

3:29
The primary difference was number one. In the US, you have this MLS system, right, we have the central repository of data, when we got to the market, I noticed that I got kind of take advantage of the process, right, I was trying to find a property at the time I was living in Colombia, and there was just no information available. So I ended up getting charged by a real estate agent to see a data set on a piece of paper of the inventory that I was interested in, which blew my mind, but I was staying in a really crappy place. And I was like, needing to move. So I reluctantly paid the agent the money, but I felt pretty bad about it. And that was a great seed, you know, to want to, you know, not have that happen to other people. So I ended up reading a case study from Mercado Libre and massive business. For those that don’t know, it’s, you know, an $80,000,000,000.70 $80 billion market cap company, kind of a fusion of eBay and Amazon for Latin America. And And so yeah, that was the the genesis of building the company. But the main difference is just like there wasn’t even the data online. And so our first job was actually digitize all the offline inventory to build a central repository, which is like Canvas nuts to do.

4:45
But you did it.

4:46
Yeah, we did it. We did. Okay, we went when we left the company, we had 7 million properties in Brazil, you know, in our in our, you know, kind of our database and yeah, we became the kind of the go to place to start your search for property,

4:58
and I assume you brought On some external funding,

5:01
we did we did we, I couldn’t raise money for the first couple years, I got my butt kicked, you know, came across 30 nose and there wasn’t much of an ecosystem. Everything kind of changed when I ended up finding my first kind of angel investors guy by the name of Greg Waldorf, who was the first investor in Trulia. And then a guy by the name of Simon Baker, who was the former CEO of a similar business in Australia, which is a $10 billion market cap company, the two of them kind of like, I’ve been kind of skating for a long time and not able to, you know, make anything happen, just kind of family and friends scraping by. And then when they came on board, the floodgates opened, I met all the VCs, all of a sudden, I was kind of Christen does it an opportunity, you know, after hustling for two and a half years, and then I ended up raising from the top two venture funds in Latin America. You know, kozjak admonishes which are kind of like the call it like the Sequoia or the Andreessen of the region. And, and coincidentally, the founders of Kazakh were the founders of Mercado de Ray, which was kind of the inspiration for why I started my business when I read a case study from Stanford. So it all kind of came full circle for me, and, and I guess the world opened up a little bit.

6:16
It’s so funny how this industry is still so heard, like, in general, I’m based in Chicago, you know, we’ll invest in a company that’s between the coasts somewhere, and then all of a sudden, the company gets into yc. And then it’s this feeding frenzy, right, or we find a notable tier one seed c plus series, a investor, and then all of a sudden, something that went from kind of, you know, an afterthought for many becomes like this super hot company that ends up on like, the cover of TechCrunch is just kind of funny how things turn.

6:48
It really it really is, you know, it there, the psychology is fascinating. And if you can, you know, I was raised by to know, my parents both studied psychology, and maybe I was psychoanalyze a lot as a kid. But it allowed me to really understand people dynamics, and I think that if you can understand that, and be a good executer, it’s your benefit.

7:08
So you guys launched in Brazil, and you continue to focus focus there, you know, throughout the growth of the company,

7:14
why we originally launched actually in all in several countries in Latin America, at the same time, I quickly realized that we should go a be all about Brazil, given the large market opportunity. So I ended up moving to Brazil, in January 2011. And after spending, you know, six years in Colombia, and we went, you know, we went for kind of full focus on that on that market.

7:38
Very good. So you wrote the book, you know, what, what was the goal on writing the book, Viva the entrepreneur,

7:44
when I look at the region, and I look at the, you know, my personal experience, I was very alone, and I felt like I could have saved a lot of time with if I had someone to share their experience with me. And I could see that happen, that gap of experience and information close when I brought on some really close people to help me that had been in the trenches before. And so it was my objective in writing the book, it was the book that I wish I had when I started my journey. And so that was kind of the main primary motivation, I actually, I had been taking notes throughout my, you know, my journey in Latin America, just because there was a lot of crazy stuff that happened. And I’m like, this is this is something that, you know, is, is wild. And I think I should document some of this. So I got to have the perspective that someday I’d want to share the show the experience, but you know, the book is not a victory lap at all, it’s it’s much more of a hard thing about hard things meets venture deals for Latin America. And so, you know, I tried to dig deep and, you know, be authentic in my journey, and then also shed some light on some of the, you know, everything from the psychology of entrepreneurship, to scaling, and then peeling back the layers on the fundraising game, which, you know, is a learned skill.

8:56
Yeah, you, you know, you actually address mental health in the book, he addressed the challenges and co founder relationships. Can you talk a bit about, you know, these challenges and how, maybe early stage founders should prepare for them?

9:11
Sure, and, you know, not just early stage founders, the the psychology of running a company, I mean, it’s, it’s hard, it’s like, you know, it’s, it’s very stressful. I like to say that your, your best day and your worst day, sometimes that’s the same day, right? And so, you need to be really well equipped and prepared for that to endure the, you know, the, the difficulties of the journey. And so, you know, I recommend, you know, one of the things one of the reasons why I started the community aspects of latitude, which is, you know, our cohort based kind of education is, it’s really about I mean, we obviously provide great information, mentorship, and we bring in our network, but what’s amazing about it is what the real value oftentimes is just the connection with other entrepreneurs, people that are in the trenches that are, you know, knee deep in in the chaos ability a startup and having an empathetic listener, that maybe is one or two steps ahead of you on your journey is incredibly valuable. I was very fortunate that when I was running Viva, in Brazil, I had a group of entrepreneurs, we would get together once a month, we called it The Breakfast Club, it was an opportunity to share our experiences about talking about investors talking about, you know, stock options, talking about things that we were going through. And it was almost like an informal board of advisors or Board of Directors, where they just had the best interest in giving you feedback. And so that was something that was very useful. And something I wanted to recreate with, you know, with what I’m doing at Latitude. You know,

10:39
you’ve got this focus on helping founders, you know, focus on Latin America, both with latitude. And in the book, of course, you know, what are, what do you think are some of the unique headwinds and challenges that Latin American focus startups face?

10:55
I think that historically, the biggest headwind, in my opinion was capital. And that has been recently, the gap is close, I’d say that there’s still a fairly disproportionate amount of capital that goes in with the opportunity. And that’s, but that’s closing fast. You know, today, if you look at India, it’s twice, you know, Latin America is twice as large as an aggregate, yet, it receives half of the venture funding. So there’s still a gap there, I wouldn’t say it’s the obstacle for building a company. I think, historically, the other big obstacle has been talent, there has been a natural kind of, you know, occurrence, where the top smartest people, they go work in banking, or they go work in, you know, they get lured over to join, you know, Google or Facebook or, you know, or, you know, a company in Germany, and, and they want to, you know, they want to have that that experience. And so that’s something that has historically been challenging. When I look at the vintage of entrepreneurs that have come out over the last couple of years. And I look at the quality of the teams that are being built, I’m less worried about it, there was never a lack of, you know, capable people. But there was a, I think, there wasn’t a network effect where you have, you know, what you see now like new bank, I don’t know if you saw this, but Berkshire Hathaway invested in a company in Brazil, right? That that’s crazy, like a tech startup, you know, a pre IPO tech startup, like that’s something that Warren Buffett almost has never done. And now, you know, they’re taking a $500 million dollar bite out of a neobank in Brazil. So that trend that’s happening now, this spawns a bunch of things, when you think about great companies being built, it attracts a lot of capital, when you’ve got a lot of capital going in, you’ve got more startups being created, you have more stars being created, you have more talent that is flocking to the startups, they’re leaving McKinsey or they’re leaving the investment bank, or whatever it is, then they’re part of executive teams, they then scale. And then they become angel investors and, and the the cycle kind of completes, right. And so I would say we’re currently at this, you know, the virtuous cycle is kind of been kicked off in Latin America. And it’s been about two decades of, I would call it relatively tame, and not a lot of activity. And when you look at it from a comparison on even comparing Southeast Asia, and so we’re now kind of at an inflection point that is a sparking this interest. And I think that, you know, that’s a that’s a critical moment for the region.

13:21
Yeah, a mutual contact of ours, Enrique dupa gras from brax. Of course, you know, left I think, chill a right to go to the States. He had had some modest success in South America Before leaving, how to stem the tide. You mentioned this, but how do you send the tide of talent leaving to come to the states to pursue

13:42
when Enrique was on my podcast? Recently, he I asked him kind of the same question. And he said, it’s forcing entrepreneurs locally to think bigger, right? It reminds me I went to China in 2015 or so. And I remember going there and meeting a bunch of entrepreneurs there. And just the scale of the ambitions was just much greater. And so the along with the capital influx that I’ve seen in Latin America, I would say one of the biggest adjustments or changes has been a mindset shift right, about what’s capable, what’s possible, what are we capable of? What are the opportunities, and one of the things that it requires is you need success stories, right? You know, there are a founder that looks at, you know, an Amazon or, you know, fill in the blank of top tech company in the US. It’s, it’s, it’s hard, it’s unrelatable. Right? It’s, it’s hard to, and so when I read this case study for Mercado Libre, and I’m seeing Marcos got badeen, this guy from Argentina, built this massive company that went public on the NASDAQ. And, you know, today is one of the most valuable companies in the world that all of a sudden sends a message Oh, this is actually possible. And so I think that the key to, I guess fend off that, you know, these, the brain drain that happens is that one there’s a recognition that the opportunities are immense in the region, and And also the motivation to improve, you know, social mobility by building disruptive companies that uproot, you know, entrenched banks or other players, is highly motivating for a society, right? Because, and you’re gonna find entrepreneurs that are that are thinking bigger than they thought, historically. And I think that’s going to fuel a whole whole new wave of innovation, and then there’ll be actually capable to pay the salaries and be more competitive. And that’s going to just bring more wealth to the region.

15:29
Yeah, couldn’t agree more. Is it? I’m curious, was Robbie coming up in Columbia, when you’re there? And are, you know, is Brazil and Colombia? Are they kind of leading the charge for Latin America at the moment? Or what are some of the you know, the the tech centric areas and

15:45
I think that the Brazil is the by far the largest tech ecosystem, just by sheer numbers in terms of GDP and you know, people and, you know, middle class, etc, I would say, on I wouldn’t say on the heels, but in a, you know, not too far distant future a few years behind, I would say, Mexico would be the second tech ecosystem that is on the rise. If you look at the kind of FinTech space in Mexico, it’s going through kind of a revolution. And that’s, I think FinTech kicked it off in Brazil, and then you saw prop tech follow you saw, you know, a handful of other sectors follow, I think Colombia is an incredible place, because it’s not a very large country, if you think about it comparatively, you know, it’s, it’s less than half the size of Mexico. And, you know, less than a quarter of the size of, you know, probably a quarter size of Brazil by population, and even less by the GDP. So, but there’s incredible talent that’s come out of Colombia. I mean, you know, I mentioned nubank already, David Velez is from is from Colombia, the rapi, guys, Sebastian and C, mon, I got to see them when they were, you know, just coming out of yc. And they, you know, they were with me at endeavor, we went through the same class of endeavor endeavor, for those listeners that don’t know, is basically the globe, a global movement of entrepreneurs in emerging markets. And now they have some operations in different places in the US, but I mean, they’re in 40 countries, you know, some of the most incredible entrepreneurs around the world are, you know, part of the community. And, and that’s something that, you know, I got to meet them through through endeavor. And, yeah, I mean, that the talent is pretty impressive. When you think of Colombia, it’s interesting. There’s, it’s, it’s not a perfect parallel, but it has some risks slightly resembles Israel from the fact that it’s a small domestic market, yet, all the entrepreneurs from Colombia, they just build for the region, right, Robbie being the first one to really like, demonstrate that. And, you know, we saw a little bit of that with Argentina back in, you know, the Mercado Libre, early days desk, pay God, which is a travel site that was you know, it was a did went public. And so, and Argentina would build for the region. So it’s interesting to see that comparison. Mexico and Brazil are larger domestic markets. So it’s similar to the US from the standpoint of like, why would I go to Canada, if I can just, you know, try to own the US market? And you see that, that resembles a little bit more, particularly Brazil, and maybe less so Mexico? Also the language barrier, right? I mean, when you’re going into Brazil, it’s a whole new language. Portuguese is not Spanish. And I, but I see more entrepreneurs from outside of Brazil, going into Brazil, then Brazilians going to other markets. And that’s probably related to the size of the market.

18:25
Got it? Get it? We saw it news recently that El Salvador announced that Bitcoin will be the official currency, I believe making it the first country to make it its legal currency. Do you see this as the first country of many to set their reserve currency to Bitcoin or other crypto?

18:43
I think for the listeners that aren’t really on the kind of crypto train yet, or, you know, the Bitcoin train, I think it’s, it’s something that, you know, I was lucky enough to have wences casados as an angel investor in my company, if there’s any bitcoiners listening, they probably know wences. Because wences was like the evangelists of Bitcoin in the Silicon Valley, back in 2011 or 12, early early days. And he, you know, so I kind of got a little exposure that, unfortunately, not enough exposure from an investment standpoint, but, you know, because I took me a while to kind of, you know, register, but I think that the differences when you come from a country like Argentina, where if I go back to when I lived in Argentina, I mean, the reality is, when I was there, the dollar was marked at the pesos one to one ratio. I haven’t looked recently, but I think it’s like 100 or 100, and something right pesos, and there’s the black market and there’s the, the the tourist market, there’s, it’s all it’s all screwed up. Right? And so when you’re come from a country, like Venezuela, where when I was in Colombia recently, and I talked to a Venezuelan taxi driver or Uber driver, and, you know, he proceeded to pull out a bill of his pocket and it was 100 you know, what, livadas which is the the currency there? And he was like, yeah, this is worth point 0001. Penny, now, that really changes your perspective about currency and monetary policy and, and the central bank. And so I think that I’m not a futurist. So it’s hard for me to give you a prediction of what’s gonna happen in the future. But when you have these very unstable currencies, and very challenging situations, having a decentralized currency makes sense to people that are from those environments. And, you know, I talked to my neighbors about this, and they’re like, that’s ridiculous, like, the dollar. It’s, it’s, it’s, it’s, it’s, it works. And it’s, but you know, not everyone’s currency works. So long winded way of saying, I do think, and I, by the way, I listened to the live, you know, on Twitter, there was, you know, they’re kind of Twitter spaces. And I listened to the, the announcement live, right when, when the president of El Salvador was on Twitter with like, 20,000 people, and I listened to the whole thing. And it was kind of a moment of excitement. So I would say that I think it’s a very interesting, you know, step. And I do think that there’s going to be, I think it’s the start of something. But I mean, for those that have been following Bitcoin for longer, it’s just kind of like the next step for most for most people.

21:21
You know, FinTech in general seems like a sector or a segment of tech that would lend itself well to a lot of emerging ecosystems. What do you see in Latin American Do you think FinTech is, is one of the larger opportunities?

21:36
It’s by far the anchor for the venture ecosystem? Because it’s just, you know, it’s obviously a large sector. And and then, if you look at the existing incumbents, I mean, let’s take Brazil, for example. Brazil is a country. It’s one of the most lucrative banking systems in the world, I think it is the most lucrative if not a top three. You know, Brazil, globally. Yes, it’s dominated by five banks. There’s five banks, they have 90 plus market share. And so anytime you have monopolies of you know, a few few players, you’re gonna get terrible service. I mean, the NPS of a bank is it’s far in the negatives. It’s extremely expensive. I remember having a conversation with my dad when I was living in Brazil. And, and I was talking about interest rates. And he’s like, so what’s the interest rate look for like, on a credit card, you know? And I was like, it’s like, 15% 16%. And he’s like, Oh, that’s not bad. And I was like, a month. And then he’s like, wow. So, you know, I think that those are all recipes for incredible disruption opportunities. And so I think that the opportunity, I mean, there’s a company that was recently in our cohort, it’s called pummelo. And the former, you know, it was the former CEO of the largest Neo bank in Argentina. They carved off it was another early employee from Mercado pago, which is the PayPal of you know, of Latin America. And they carved off in their building an infrastructure, you know, play where it’s, you know, kind of FinTech as a service. So, you know, the, the enabling companies that are not fintechs to become fintechs is an incredible opportunity. And so that’s really an infrastructure opportunity. And that’s a massive, it’s a massive market. So it’s kind of like speaking of market, it’s like marquetta for Latin America. And, you know, I don’t know who said it, maybe it was like Bill Gurley or somebody, but like, you know, every, you know, every company is gonna become a FinTech. If somebody said it, I don’t know who said it. Yeah, I’m probably falsely attributing it to Bill Gurley. He does say some smart stuff. So, you know, it’s kind of like Mark Twain, right, Mark Twain gets a lot of credit for things. And, you know, he had some really smart things to say. So, you know, I think that that’s, you know, it’s the anchor for the ecosystem. And to me, it’s kind of like the gateway drug for Latin America for global investors, right? Because, you know, I, you know, QED, which I, you know, I’ve been close to them, and I’ve co invested on stuff with them, but QED, kind of stumbled on new bank by accident, right? They, and they, you know, they’re like, Oh, this looks interesting. Let’s put a check in and then, however, many x later, and so that all of a sudden, that guy that gets you kind of hooked, right? Like, yeah, you have an amazing, and then you know, other other, you know, firms come down. So I think that that’s, that’s, you know, the FinTech is the entry has been the entry point to Latin America, that has spawned, and then you know, you stay for the edtech. You know, you stay for the you stay for the prop tech, right? But the FinTech has been really the, you know, it’s been the gateway to the region for global investors.

24:47
Is that a primary area of interest for latitude, you know, as you’re cutting checks at the pre seed seed stage?

24:53
Yeah, I mean, absolutely. I mean, fit Paul Metallo is a company that we saw, and we you know, we were the first check in and then, you know, we were fortunate to You know, to be there, and then you know, index and mohnish. She’s and, you know, Max, Max left skins firm sci fi and a bunch of other people piled on and it became a, you know, a $9 million seed round. And yeah, that’s, we like that, right? I mean, it’s a nice market for our fund. And it kicks off the network effects and the virtuous cycle of, you know, you come to latitude, you, you know, you launch your company, and then you raise $9 million, doesn’t happen to all the startups that go through. But yeah, that’s how the venture game works, right? People want Sequoia because they invested in, you know, Google and an X company afterwards. And then, you know, besides being incredibly good investors, there is the network effect. And the virtuous cycle that happens in the eyes of founders

25:42
are good. Brian, you recently tweeted, a common problem that you see with a lot of early stage startups in Latin America’s these messed up cap tables, right, aggressive angels taking 40% plus of the company and formation stage. I saw some of this in Chicago of all places, when I moved back here in 2012 timeframe, there was a lot of that going on, before things kind of normalized. You know, this is a issue in a deterrent for a future VC investors can in some cases can screw up the company. Is this a problem that’s fixable. And, you know, what do you do? Or is there a way to help address some of these cap table issues?

26:20
Yeah, it’s it’s a common problem. I think it’s a bit less common today in Brazil, because the ecosystem is more sophisticated, I see it more in other markets, but it happens everywhere. And really, the the investors are actually not really angel investors, they’re, well, I mean, by definition, they’re not angels, because they’re there, they’re screwing the cap table up, but they’re doing it unknowingly. Many times. And they’re really, typically just very wealthy people that have been highly successful in other businesses, right. And I mean, if you think about it, if you’re the company, like I’m just going to make this is not a target on anyone specifically, but let’s say that you, let’s say you own a paper mill, from like, 1912, in Brazil, and you know, you’ve got a few billion dollars, you know, of assets that you’ve accumulated over a decade, over a century, you’re used to just buying companies like, right, like, your DNA is like, just go buy the company like, and so if you’re a, you know, executive, and when these companies or, you know, part of a family office, you’re not familiar with the asset class, unless you’ve planned for you owning 2%, or 1%, or 5%, or 10%. It’s, like unattractive. And so it’s really an education that needs to take place. And so we’re just at the early cycle of the region. And so, you know, I’m not super concerned about it. And to answer your second question, my advice to founders, well, first of all, I’m trying to educate founders on how to manage their cap table better. So they don’t get into these sticky situations. And then, if it’s happened, I mean, I’ve probably helped, I don’t know, 15 or 20, founders, renegotiate their, their, their, their capital stack. And, I mean, it’s, you think you’re getting a good deal by buying 50%. But you’re really just killing the company. And so I’ve had to talk to some investors explain it, and educate and, and in some cases, you know, the founders, like, Hey, listen, I’m just gonna leave, like you, you know, you bought you, you know, it’s my mistake, but I my opportunity cost is too high. So you, if you want to take the company, go ahead, you put 100k, you own 50% of it, if you want to run the company, go ahead. But no executive or family office or, you know, they’re going to know how to do that successfully. So it tends to be, you know, it tends to get sorted out over time. But it requires a little bit of patience and communication.

28:41
Yeah. Yet, it’s, I guess it’s understandable in a way, you have a lot of people that have been successful in business and have been majority shareholders in those businesses. And then they see a young opportunity and they want to take a huge position, and they don’t quite realize that’s not they’re not bad people.

28:58
They’re not bad people. Like they’re not. They’re not bad actors. They’re just they’re unsophisticated investors.

29:04
Although there, there are some cases. I mean, I know some, some notable VC brands that used to, they used to love the four on four or the five on five where they take,

29:14
we don’t want to, we don’t want to sugarcoat it there, there is some, you know, bad actors out there. And, you know, those firms don’t usually do well, right. They kind of you know, fall out of favor pretty quickly. Because reputation is everything in this game and word spreads lightning fast. It’s it’s faster than a WhatsApp message.

29:33
I feel like NPS score and NVC is more important than than it ever has been. Brian, any. What advice would you give to founders that are launching startups focused on the Latin American market?

29:46
Yeah, I think that, you know, first off, be clear about whether you want to raise venture or not, and whether you’re going after a venture backed company or you’re building a lifestyle business, that’s like one of the first conversations I have with entrepreneurs, assuming that you you know, see opportunity that’s large. I mean, I think that choosing our market is pretty important. You know. So it’s very hard to raise venture if you’re building for a tiny market. I think that, despite the kind of general wisdom on markets, I do think that there’s some beachhead markets that can allow you to expand. You know, there’s there’s a handful of companies that have started in Colombia and then gone to Mexico shortly after. And then, you know, I guess other advice would be, you kind of set the template for your business, in the first investors you bring on board, right? So really getting that right, and bring on the right partners early on, is absolutely critical. Because if you start from the wrong foot there, it’s very hard to clean up later. I don’t know if there’s any other advice? What What do you think what advice that you think is applicable to, to those early stage founders kind of kicking off? their, you know, their journey?

30:53
Well, I mean, we invest, largely speaking in the middle of the country, right? Not in San Francisco, New York City, with some exceptions. But when we talk about that, and think about that, we say, you know, what are the primary advantages that founders in those regions get? Well, network density, it starts with that, whether it’s capital networks, or talent networks are, in some cases, access to customers. So part of what we’re building at New stack, and what we try and do is bring the advantages of network density to founders that are in areas that don’t have that, like, you talked about, sort of this, you know, mind collective of founders, I think you call it The Breakfast Club, I mean, small things, there are small wins that can be had by getting people together in a safe space, to trade ideas, right? There are advantages, my firm can can bring the founders in Minneapolis by helping to connect them to the coast, or helping them identify really great talent, not b minus or B plus but a plus talent that maybe they wouldn’t be aware of, you know, because there’s not a bunch of tech people within a stone’s throw of their office. So that’s the way that we think about it and approach it at New stack. But I’m not, I’m not going to pretend that founding a business in Chicago, or Minneapolis is the same as doing one in Mexico City. It’s a different market.

32:12
I think it’s interesting. The you spawned a thought for me. I mean, I think that one of the things that I advise founders is, and one thing that I mean, it’s not even necessarily advice for founders, but something that I’m more usually more generally more interested in is, you know, build something that has local moats, right? And, you know, what’s your, what’s your wedge there? And, you know, if you’re building a productivity tool, you’re going to be competing with engineers in Poland, right, or wherever Romania. And so what are the network effects that allow you to have your wedge into your local, you know, Mexico, City Market or lamb market? And so I think that’s something that’s interesting. And I do think there’s some parallels with like, being in a non, you know, New York, you know, San Francisco market, right, like, so regardless of the Chicago or you’re in, you know, I mean, like, Chicago is a pretty large tech center. And, you know, you’ve one of my good friends was one of the first employees at grub hub, you know, and I remember when they came out to the west coast, and he opened up the whole West Coast. And that’s, uh, you know, it’s a, it’s a pretty awesome company that was built there. I think that and it’s, you know, there’s great universities and talent, but I think that all those things apply to Latin America, where it’s not a hub, comparatively to the valley or even New York, but there’s incredible talent, there’s great universities, so like, find your, you know, find your competitive edge.

33:31
How do you feel about the meaty strategies, right, so tech companies that have worked in the States, but maybe they’re localized to those markets for whatever reason, and spinning up those strategies in, in, in Latin America.

33:46
love hate relationship, but probably more love. I do think that it’s effective from a narrative standpoint. Unfortunately, the development of the of the of the venture ecosystem is relatively new, relatively new, right? I mean, there’s some, there’s some investors that have been around for over a decade now. And they’ve got pretty amazing experience, but it’s, it’s relatively nascent. And so I think investors by default, they’re, you know, they’re, they like, they don’t want to look stupid, right? Like, you know, I mean, that’s it’s, so when you when you’re like, Hey, this is the instacart for fill in the blank country. It’s, it’s something that is very, it’s de risked some degree, I tend to think about it in in, there’s a, one of our LPs. He’s the founder of NSX. James courier. He likes to talk about breathing new energy into ideas. And for me, that’s the X Factor in terms of a differentiator. So I think that you can start by being inspired by an existing you know, incumbent play in a developed market, because there’s a lot of lessons to be learned there. I mean, my business was a copycat of, you know, a handful of Mark real estate, classifieds business globally. And then I think that we kind of evolved the business slightly And the real value creation happened in the prop tech sector in Brazil, not from us. I mean, we kind of kicked it off. And we built a large, you know, hundreds of millions, you know, dollar business. But the companies that come after they solve the deeper problems that were unique to the region. And they, they’re they’re building multibillion dollar companies. And so I think that that’s a good starting point. And but it goes back to like, the classic kind of like, what’s the problem you’re solving. And if the problem is different, because the dynamics of the market are different, your solution should be different, as well. So I think it’s a starter pack. And then to build, like, you know, if you want to play on Advanced mode, you need to be solving the real problems.

35:47
And for the entrepreneurs out there, how active Are you guys going to be at Latitude, what sort of checks and who should be reaching out to you for funding,

35:56
the way we think about latitude is, we are the starting point, you know, we want to make it so it’s almost irresponsible, to start your journey as an entrepreneur, somewhere else in Latin America. So that’s, that’s the way we kind of think about it. So we have our fellowship. And it’s great, because you’ll see executives that, you know, early data science person at at one of the largest tech companies in the region, and they were part of the growth story, and now they’re ready to carve off and start their own business, maybe they, you know, maybe they made some money on an exit or, and now they’re, they’re ready to go out and invest in their next thing. But they need the network, they need the advice, they need the community, they need the support, sometimes they need capital. And so we want to be the starting point of your entrepreneurial journey in Latin America, that’s, that’s who we are. So anyone that’s looking to start a company, we also have a companies that are, you know, already formed and have their first team and have their first product, maybe they’ve found product market fit. So we have kind of two tracks. One is just like, literally, PowerPoint. And the other one is, you know, you’ve got your, your founding team, you’ve got maybe some customers, you’ve got some product market fit, or some validation of what you’re building. And, you know, we’ll be involved in both of those. So our check, you know, we literally launched this fund two months ago, so the fund actually was started because I found myself doing way too many Angel checks. And, and I’m like, I’m gonna run out of money at this pace. And so I called upon a few of my friends that are founders. And I know that they’re active angel investors, and sometimes they’re just too busy to be looking at every deal. And I hit him up for some money. And I said, Hey, you want to toss a little check in I’m going to do a little rolling fund, you know, fast forward, we have 40 LPs, they’re all founders of top tech, you know, companies or executives that, you know, global companies that have operating experience. And that’s combined with GPS of top to your funds, Excel, you know, and effects I mentioned fJ labs, which is a marketplace investor globally, that’s invested in 600, marketplace, businesses, and a handful of others. And that’s put us in a position to really be able to leverage a network as well. And so yeah, that’s that’s kind of where we are. So if you’re listening to this, and you’re an entrepreneur, you could be based in Dayton, Ohio, I don’t care if you’re if you’re focused on, you know, the market in Latin America, you were probably a great fit for you to start your journey. Because, you know, you’re, you know, you think about capital, you think about advice and network, we’ve kind of unbundled the advice in the network. And we’ve created an amazing process for acquiring that. And then we’ve just laid it a little bit of capital on top.

38:39
Okay, and then finally, Brian, what’s the best way for listeners to connect with you?

38:44
Yeah, find me on Twitter. You know, Brian, record is my handle. You can add me on LinkedIn, I’m less active there. But probably Twitter’s The easiest way to connect. And yeah, and if you want to learn more about our fund, you can go to fund dot latitude without the E at the end. It’s in Spanish, la TTU de COMM And that’s a rolling fund. It’s, it’s a 506 c reg, so I can actually solicit capital publicly, there you go. It’s pretty awesome. So if there’s anyone that wants to pop on and write a small check, if you want some to buy a basket in Latin America, feel free to hit me up. Well, Brian, it was a lot of fun to

39:22
talk, you know, best best luck with the fund and all the investment efforts. And hopefully, there’s a lot of Latin American focus startups that you know, get to partner with you and in build the next big unicorns coming out of the region. Hey, thanks

39:34
a lot for the time and appreciate the conversation and please let me know if I can help you in any way. Thanks, Brian.

Transcribed by https://otter.ai