Special Edition: LatAm Tech Weekly goes to California
#41: The Brazil @ Silicon Valley event, what was discussed & insights from the ground
Happy Sunday!
This week I am writing from São Paulo, after an intense and useful 10 day travel. I started out in New York, as mentioned last week, and also spent 3 days in Palo Alto as I went to the Brazil at Silicon Valley Conference for the first time. First take: by far the best event for networking.
After its last edition in 2019, the event – or movement (as stated by its organizers) was highly expected. The mission is to foster Brazil’s development through innovation and technology. With that in mind, the Stanford and Berkley students come together to organize pro-bono a two day event with panels from 9AM-6PM with leaders of the tech industry discussing a variety of topics – from web 3.0 to climate change – always linking with what is happening in Brazil. The public is composed of founders, investors, entrepreneurs, executives, C-Levels, and decision makers. What I found interesting is that the event is able to put together an excellent Brazilian public all the way in Palo Alto composed of people that we do not usually see in these gatherings such as Marcel Telles, Carlos Brito, João Paulo Diniz and Eric Schmidt (through zoom). With that, key VC funds from the region are all drawn to the event, together with the local players that fly to California.
I will provide below a summary of the key panels, and general sentiment on the ground based on conversations with both founders and venture capitalists. Hope you like it! Next week I promise I will go back to my original format (already received a couple of emails stating that they miss the day by day news recap) 😊
Be sure to check out the job post section below, and feel free to send opportunities my way.
Please note that the views expressed in the content below belongs to me, and not to any organization, affiliates, or employees.
Insights:
Similar to what I felt in New York – investors in general are more skeptical and increasingly selective, even more so in the growth stage. When talking to early stage investors, they still seem very excited and willing to invest in the region. While in Palo Alto, I heard that apart from QED’s latest hire in Brazil, there are two other of the main US funds that are looking for on the ground investors in their teams. This is a sign that in general there is still a bullish sentiment. Talking to founders, the general sense of being cash conscious and focused on the operation was repeated consistently. By the way, we are starting to see the concrete signs that winter is here: according to the The Wall Street Journal, Swedish fintech giant Klarna is reportedly seeking a new round of funding that would lower its valuation to around $30bn, a significant decrease from the firm’s previous public valuation of $45.6bn.
Also this week, Y Combinator sent out a letter to its portfolio founders – advising them to “plan for the worst” as startups across the globe scramble to navigate a sharp reversal after a 13-year bull run. The letter goes ahead and suggests startups to cut their expenses and focus on extending their runways within the next 30 days. For companies who don’t have the runway to “reach default alive,” YC is strongly suggesting that they consider raising money.
In the crypto world, things are not easy too – after a year of record high token prices, this week the algorithmic stablecoin (or unstable coin?) terraUSD (aka UST) crashed, taking down approximately USD400 bn in crypto market cap.
To try to end this section in a more positive tone – this week General Atlantic acquired another chunk of publicly traded Locaweb – it now has close to 11% of the Company. The investment comes as publicly traded companies are trading at very cheap multiples, thus creating a buy opportunity. We should see other similar investments happening in the near future.
Brazil @ SV – Summary of selected panels (in chronological order)
AI, VR & The Evolution of Technology with Jaron Lanier (scientist at Microsoft) and Mat Velloso (technical advisor to the CEO of Microsoft)
- The current problem with Crypto is that people who are less wealthy and less informed are buying from the “creators” or from people who know them. With that, we get to a type of “Ponzi Scheme” – because crypto is clearly benefiting the creators more than society in general.
- It is true that the ability to move money around via Web 3.0 has helped Ukraine – but did it benefit more the oligarchs or refugees? Probably the oligarchs.
- “Open Source Movement” is highly beneficial as people build on top of what other developers have done. The “Web 3.0 movement” has real money, and people investing in tokens. In Velloso’s view, the ideal would be to combine the two and have the best of both worlds. That is, if you appreciate and use an existing code, you should send a token for the usage. Currently, a program called “Git Hub Sponsors” already allows for such transaction, but not many people do it. He thinks that if this was more broadly done, it would motivate even more developers to build interesting things and would generate a flywheel effect in tech in general.
- We are used to the all of nothing – black or white – even more so when we talk about tech. However, almost everything in life comes in the middle. It is not beneficial to push things to the absolute extremes.
Building the future through investing with Kevin Efrusy (Partner Accel) and Eduardo Mufarej (founder GK Ventures)
- “Why” invest in Brazil is more important than “how” to invest – the why is related to getting a thrill of creating jobs and opportunities, and seeing the ecosystem in the country evolve. Support and invest in businesses that improve society.
- One of the paths to resolve Brazil’s issues is through entrepreneurship. Politics in Brazil historically was avoided by Brazilians because we always thought someone would take care of it for us. And that was a really bad decision that has greatly affected us. RenovaBR is an initiative that is focused in training people to run for office.
- Even though we are in a “downturn”, both participants believe it is the best moment in ages to be an entrepreneur in Brazil. Technology has cycles – and despite the current challenges, Brazil still has a lot of problems to solve. Now, we have reached a point in the ecosystem that just trying to replicate a startup from the US is not the best decision – entrepreneurs should look at Brazil’s idiosyncratic characteristics and try to build companies that address local issues.
Scaling Global Startups with Antoine Colaço (Valor Capital) and S Cassidy (Ex President Latam Google)
- First thing you need to do if you want to scale your business: figure out yourself. Your strengths and weaknesses. Leaders underestimate this and knowing you self is the most important first step. You need to know your strengths, weaknesses and your super power. Leaders should have a high degree of self awareness and come to all meetings with a set agenda. No one has time to waste.
- The way to succeed in a expansion to new countries or regions, is send people from the core team first in order to set the tone of the culture of the company. After establishing in the new region, core team should make local hires on the ground.
- Diversity is a key theme – but very hard – even more so in selected ares:
o Diversity in Boards: easier, great way to experiment diversity first not within the company. Slots should be saved for diverse – in this case, quotas are good.
o Diversity in Executive Team: very hard, even more when you are scaling. Everyone is on a time crunch and has less time to try and focus on diversity.
o Diversity in CapTable: starts with the Angels, make sure your angels come from diverse backgrounds – this will be essential for the company in the beginning.
o Diversity in teams:
- Great careers are built on a portfolio of risks, not a single bet. Make good choices everyday.
Investing in Tecnology Startups with Monica Saggioro (Maya Capital) and David Krane (Google Ventures)
· The best companies are built in a foundation of focus and discipline.
· How is Google Ventures investors team is organized? Team1: human body / Team2: software / Team3: customer / Team4: frontiers. Investors are founders, physicians, scientists, designers, mathematicians, journalists, engineers, product managers, and researchers – diverse background to make the best investments.
· You generally get better insights if you have a small / lean team working with a big vision. Number of people in the team is NOT equal to better performance or more relevance within an institution. Usually leaner teams that deliver a lot and know how to work well is the best for the company.
Scaling a Brand Shernaz Daver (Khosla Ventures) and Mala Gaokar (Founder at Surgo Cap - ex Lone Pipe)
· Brand: It is not design, logo, etc. The only thing that matters is TRUST. It’s not one person’s responsibility, it is a sharing responsibility of the entire company , partners, employees.
· Founders are the best person to define the brand and tell de story. This should not be delegated. The founder needs to know what he/she wants for the company – and this needs to be explained to the marketing team. But, it starts with the founder and time effort from founding team.
· Every brands starts with a story and that’s why the founders are so important.
· To buy your product they need to know that you exist and why are you standing for. Example of authentic Brand: Patagonia.
· Gen Z has no loyalty to a brand, changes their mind every 6 months.
Scaling Companies within Companies wtih Carlos Brito (former CEO AB InBev) and Jeff Wilkie (former Amazon Consumer CEO)
- Cash Compensation and Stocks: even the most senior executive, if they have more cash as a short term incentive, sometimes they will not take the best decision for the company because of unconscious personal benefit. At the same time, if the incentive is fully equity, the team will always do their best to increase the value of the company. The mix is the best combination.
- Leadership’s most important aspects:
o Competence matters at any scale
o Courage and Leadership: things don’t always go right
o Communication: if you want to lead in scale you need to be good in communication
- Elements of a great culture are formed with the founding team. With time, the core principles may adapt but not change. The challenge of leadership as a company grows is to make sure that all company’s processes are with the principles in check. It is very important to hire “owners” – not employees.
- Jeff Bezos always said that software engineers are alchemists – Amazon has to constantly focus on hiring engineers in a great magnitude.
Metaverse, the new frontier with Manuel Bronstein (CPO at Roblox), Anthony Lee (Managing Director at Altos Ventures)
- The metaverse is the place to be when you cannot stay together in real life. It spiked during the pandemic, but remains very high. Currently Roblox has 55 million daily active users who play an average of 2 hours in the platform. If you look at the world map that is placed at the entrance of the Company and lights up in a region eveytime one gets online, you can tell what is happening locally just by looking at the map. You know when kids left school, or if there is a snow day in New York, etc.
- The first use case / experience of the Metaverse is games, but you can create numerous things with the Metaverse. For example, take the use case of schools. In the past we learned about Ancient Rome by reading books and maybe watching movies – our kids could learn about Ancient Rome actually visiting the place, walking around, interacting with local people… learning gets much more interesting.
Eric Schmdt – Closing Panel
- When questioned about valuation in tech, Schmidt said that technology just gets stronger and stronger – tech stocks trade as options and stable coins should be called “unstable”.
- The problem with blockchain is that we have not developed systems that are aimed to scale – this is a technical problem.
- New world order based on technology US x China:
o China wants to be the global leader in AI in 2030. – and the average 5G in China 10x more fast than in US
o TikTok is the #1 app in US - “We don’t want China winning that space and controlling an important information space in the US”.
o China is roughly only 2 years behind the US in critical matters such as AI, blockchain/crypto and synthetic biology. Even though the US is undoubtfully the leader when it comes to Research of these topics, China is catching up fast.
o The U.S needs to act now to make sure it continues to be the pioneer in these key fronts. If China wins the race, this could have important economic implications in world order.
- The problem in Brasil is more about the public sector than the private market. Choosing the right professional for president is key - because the country at its core is great: People, Culture, Size, Language and natural resources.
Final advice for Brazilian enterprenerus: Resolve a problem that matters in Brazil.
What am I reading?
Who are the most active VC funds in Latin America in 2022? - Bloomberg Linea
Canary, Maya Capital, and DOMO Invest lead with 12, eight, and seven deals closed in Q1 ‘22 respectively, out of 253 VC transactions total in the quarter. Kaszek Ventures led by deal volume at $533.2 million invested via ten deals in the first quarter.
What did I listen/watch?
JOB POSTS - NEW SECTION!!!
Here is what top tech companies are looking for…
Content Analyst- Education Journey
Head of Sales - Marvin
FP&A - Conexa Saúde
Corp Dev/ Head of M&A - Arquivei
Head of Branding - Beep
Growth Marketing leader - CapTable
*respond to this newsletter if you want to post a job or if you have interest on the openings above*
Quote of the week:
“A happy person isn’t someone who’s happy all the time. It’s someone who effortlessly interprets events in such a way that they don’t lose their innate peace.”
Eric Jorgenson, The Almanack of Naval Ravikant: A Guide to Wealth and Happiness
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