Latin America equals (Digital) Growth

When Marc Andreessen wrote “Software is eating the World” 10 years ago, ‘the world’ usually refers to ‘all industries’. But it turns out it’s also true in the geographic sense, and Latin America is no exception.

Digital Latin America

When Marc Andreessen wrote “Software is eating the World” 10 years ago [in 2011], ‘the world’ usually refers to ‘all industries’ (which is true). But it turns out it’s also true in the geographic sense, and Latin America is no exception.

Latin America’s Digital Transformation is well underway. For specific examples, just look at Mexico today and how different it is vs. only 10 years ago where new digital entrants (many of which didn’t even exist) changed the rules of the game: think of the difference in price, selection, convenience, speed of Amazon and Mercado Libre vs. Liverpool, Uber vs. Taxis, Netflix vs. Televisa, Twitter and Facebook vs. newspapers, WhatsApp vs. SMS and phone companies, and so on. Can you imagine going back to that old world? I can’t. And it doesn’t stop there: 10 years ago there was no Conekta, Konfio, Kueski, Clip, Albo, Arcus, all of them companies solving real problems, plus many others that we haven’t heard of.

More interestingly, this Digital Transformation will only keep on accelerating. There is now a critical mass of digital and entrepreneurial infrastructure that has created a tipping point. Again, think of today vs. 10 years ago: everyone now has a smartphone, there are now several (online and offline) payment options, people now spend more time on digital than traditional media, entrepreneurs can access local and foreign VC funds – none of this was really available 10 years ago.

This is to say: A lot has been done, but there’s even more to come. Even better, we can see what’s coming. The US and the UK have traditionally been several years ahead of emerging markets, but Asia has been catching up quickly (and in some cases is ahead, like China with digital payments). Latin America has usually been a few years behind, but at every step, we could always see what would happen next with increased internet penetration (e-commerce, digital media, digital payments, smartphone adoption, and son on). So what comes next (which is another way of saying, ‘what problems haven’t been solved’)? Better, cheaper, and more accessible access to financial services, education, healthcare, day to day purchases, more transparent media – in short, many of the things that are taken for granted in developed economies.

Most of the stories in the local and international press focus on infrastructure, energy, and manufacturing, but underneath the surface there are entire industries being remade thanks to technology, and it has been improving the lives of millions of people. Most people reading this initially are probably  friends from the technology/startup/venture capital world, and will think to themselves: ‘We already know this’. But this is the irony: in certain circles (and for sure the millions of people using digital services every day), everybody knows this, but among mainstream media/traditional investors/government bodies/many international investors and global capital markets, this is not the story that’s being told.

I would even go one step further and argue that the fact that we’re not there yet is actually a good thing: this is the time to invest [‘Buy low’] before everyone else rushes in. Just like 10 years ago Software was eating the world, now Software is eating Latin America: Entire industries are being digitally remade, and this offers the greatest opportunity for growth. So remember: The real growth story in Latin America is Digital Growth.

Crises are the best time to introduce big changes

“Major disruptions usher in new paradigms, in part to handle problems we never had before (e.g. an entire nation trying to work from home), in part because they break up the status quo such that inertial resistance to the new, the stuff that governs the Technology Adoption Life Cycle, is materially weakened. Ironically, that means coming back from a crisis is actually the best time to introduce wholesale changes. If you do not take advantage of this opportunity, if you simply restart the old engine, not only will you miss the window, you will marginalize your company’s future. The new paradigm will spread, faster than you expected, and by the time you realize you have to catch up, it likely will be too late.”

via the great Geofferey Moore https://www.linkedin.com/pulse/mobile-first-cloud-now-zoom-geoffrey-moore/

Crisis

Individuals are better at developing ideas, groups are much more efficient at recognizing the best ideas

“Amazon involves the group, but only once the ideas are out there. Research tells us that while individuals are better at developing ideas, groups are much more efficient than individuals at recognizing the best ideas and figuring out how to implement them.”

Via Ben Bashaw https://slab.com/blog/jeff-bezos-writing-management-strategy/

groups vs. individuals

The Innovator’s Dilemma in action: NO ONE can beat Amazon at their game

“The genius here is breathtaking. Walmart can’t follow, as they don’t own their distribution for last-mile commerce. Outside of Walmart, few firms have the balance sheet to pull this off. Maybe FedEx, UPS, or Prologis? But it’s unlikely they could make this sort of investment, this fast — it would be perceived as reckless.”

Via Scott Galloway https://www.profgalloway.com/the-fourth-great-unlock

amazon

Shrinking a Market

“In just three years, leveraging a disruptive technology (CD-ROM), cost infrastructure (licensed content versus in-house editorial teams), distribution model (retail in computer stores versus a field sales force) and pricing model ($99 versus $1000), the encyclopedia market was cut in half. More than half a billion dollars disappeared from the market. Microsoft turned something that Britannica considered an asset (a door-to-door salesforce) into a liability. While Microsoft made $100M it shrunk the market by over $600M. For every dollar of revenue Microsoft made, it took away six dollars of revenue from their competitors. Every dollar of Microsoft’s gain caused an asymmetrical amount of pain in the marketplace. They made money by shrinking the market.”

Via Margins https://themargins.substack.com/p/links-on-the-margins-april-30th

editions-Encyclopaedia-Britannica

A lot of what we learn is unplanned

“Wondering if a lot of the benefit of proximity is intangible – it’s about the stuff you overhear and your peripheral vision. So, it doesn’t show up in what ‘I did today’, and you seem to be productive, but it does show up in ‘what I learnt this month, or this year’”

Via Benedict Evans https://twitter.com/benedictevans/status/1262814660018999298

vision

 

Today’s Innovations Are Tomorrow’s Baseline

[Tony Hawk and skateboarding] is an example of something vital to progress in virtually every field: Innovation works like compound interest. Today’s group uses yesterday’s hard work and discovery as a starting point to build off of, rather than a finish line. It took an eternity for one person to master the 900 because there was no one else to watch or mimic. Tony Hawk was alone, like a tinkerer. Today’s skateboarders have a set of directions. They can watch videos of Hawk and say, “Look how he did it. Look how he bent his knees and tipped his shoulder.” Not to mention the motivation of, “If he can do it, I can too.” It’s a roadmap of how to do something, versus the black hole of doubt Hawk faced when trying something no one had before.

Via Collaborative Fund https://www.collaborativefund.com/blog/todays-innovations-are-tomorrows-baseline/

tony hawk