Choosing Mexico for Tech Businesses
Last week I had the pleasure of participating in the panel LATAM Entrepreneurs at the Startup Grind Conference in Mexico City with Lynne Bairstow from MITA Ventures and Bill Cilluffo, QEDInvestors. Although not from the region, each panelist shares an interest in the Mexican Market as an investment opportunity for technology companies. For those that missed the conference, here is a recap of my perspective on the main topics addressed:
Why Mexico ? Tell us your story and take us through the reasons why you choose this market to start your business.
In Conekta, we are an online payments platform and we are focused on growing the digital economy. We help thousands of merchants from the government to the biggest travel and digital goods companies in the country. We solve the complexities around online payments for local merchants increasing our customers sales and lowering chargeback levels. We power a lot of the services that the population uses daily…. But what I’m most proud about is the fact that Conekta is technology 100 % built in Mexico for the Mexican market. Probably the only thing not Mexican about Conekta is me and also my Canadian partner. You might be wondering what are a bunch of Canadians are doing in Mexico building payments tech … for us we shared the perspective that Mexico is one of the best places in the world to build a tech company. If we backtrack 7 years when I met my cofounders studying engineering at the University of Waterloo in Canada, the decision was clear to focus on Mexico. We wanted to build a company with a big impact on the economy. On a personal level, I was working on a messaging app that later became quite successful. Unfortunately it wasn’t something that I felt I could dedicate the next 5 or 10 years of my life to, because that is how long it will take when you are working on something meaningful.
Paul Ahlstrom has a great analysis that goes into the macro indicators of why Mexico as opposed to other emerging markets which I highly recommend checking out. My partners and I did our own analysis which was enough for us to pack our bags and head south. Six years later, it continues to be one of the best decisions that we could have made. Even though we didn’t know what the final solution would look like, and it did change several times, we knew that Mexico would provide the right environment for building a meaningful business in the long term.
What are the unique challenges for tech startups in Mexico?
The senior talent pool. In Mexico, there is not a lot of precedence for what we are doing. There is no Google, Twitter, Facebook or Intel of Mexico. Globally and in Silicon Valley, these companies produced great senior leadership teams as well as business mentors that later went on to play key roles in the early stages of startups. A senior talent pool will help guide a junior yet hungry team navigate through the myriad of decisions required to operate a startup and keep a team honest about the errors that they might be committing.
It’s important as an entrepreneur to recognize the challenge of attracting a talent pool and be very proactive about creating an ecosystem around your company that stimulates and supports growth.
What are the unique opportunities for tech startups in Mexico?
In Tools of Titans, Tim Ferris talks about the importance in reaching a company’s first 1,000 customers. Without unpacking what this milestone entails, I’ve found that if you approach a customer with an earnest desire to listen to them and to improve some aspect of their business, magic can happen and lasting business relations can be made. In Mexico, once you build a solid foundation for trust, a converted customer can become a customer for life. Being this customer focused is not easy but local merchants are in a great disposition to become your commercial ally.
Where word of mouth heavily used in Mexican business culture, I’ve seen that this nuance translates into higher acquisition cost with a correspondingly longer lifetime value. The takeaway for startups:
Focus on building an excellent product “a la vanguardia” with a great customer experience post-sale.
How should Mexican startups approach growth and get assistance to scale?
I’ll elaborate on the first challenge I mentioned: the senior talent pool. You will need to figure out a strategy to build a solid senior management team and mentor ecosystem around the company. With regard to hiring, “don’t settle”… especially when so much of your focus is technology and when the company’s most valuable capital enters the door at 9 am and leaves at 6 pm (or much later in the case of developers). Everyone should have a hiring mentality.
The second area is fundraising with a particular consideration for follow up rounds. One major hack or tip is to look for local investors at the early stage. In Conekta we are fortunate to have incredible local investors, who have helped us from everything to hires, commercial connections and local know how. Several years ago I wouldn’t have said this but today you are not restricted to Silicon Valley and will find favorable terms from sophisticated local or LATAM investors.
Originally published at https://www.linkedin.com on January 16, 2017.
