 great awesome welcome back to the Nordics to Jay my home markets what we're going to speak about is your home operating markets the emerging markets you were on stage talking about Frontier car group two years ago at slash since then you've joined us as a venture partner but after a couple of weeks there was something there was something new going on and now we got the opportunity to back your second venture Mirama and I'm betting that you will be one of the if not the fastest growing unicorn in in Latin we'll be discussing your emerging markets obsession why they're interesting what an expansion looks like and what we're expecting to to see in emerging markets in the future great but before we do that and to give us a little bit of context today you grew up in Texas you lived in Berlin you've been operating across countries in Asia, Latin and Africa what is your connection to emerging markets and what really attracted you to them where does this obsession come from? that's a good question thanks Magda and it's cool to be back in person at a conference yeah the last conference I actually spoke at was slush two years ago which is really exciting but you know I'm American and I grew up always in the US went to college in the US and my family is originally Indian by descent and you're growing up I spent a lot of time in various emerging markets just with family or on you know my parents had a different kind of vacation standard and so you know what I kind of fell in love with is opportunity in these places right like in emerging markets even in a place you know let's take China and India away for a second because they're more developed as emerging markets but frontier markets you know Mexico, Indonesia, Nigeria etc you could transform industries you know it's you could you could change how people transacted you can change how people lived and so the marginal impact you could make was I thought tremendously higher in emerging markets that was one two there was less competition I mean let's call a spade a spade you know there was there was the ability to go in and work in complex markets you did it less competitively and then third you know we're all here like we all entrepreneurship is for impact but it's extremely lucrative too you know there's there's the ability to transform industries from massive populations so yeah that's why I started my last company that's why I started this company yeah I mean you know at bolder than our primarily strategies mainly to around to invest around European-born businesses and but we see an increasing number of European companies doing what you're doing to move into moving to emerging markets and a couple of examples is I mean Joker in the quick remorse true color Revolut Luno and of course from your car group and Marama and there's lots more and yeah the interesting thing is that just looking at the venture venture space and the venture funding it's in Africa and Latin specifically it's up six acts in 2021 from 2020 which I mean we've seen venture funding increase in Europe and US as well but six acts exist and we're not even at the at the end of the year still still one month to go so I think it's it's pretty impressive what do you see in the in the venture and investing landscape in Latin as well I think I think that we we got unbelievably lucky Magda with the time and and that's kind of partially I attribute a lot of success to the luckiness of timing that's just a general comment not just with us but you know listen I think we started in 2016 in April of 2016 so not that long ago and at that time like you could count on your fingers how many investors were touching places like Sub-Saharan Africa or Southeast Asia or Latin America like there are there were two VC funds in Latin that were covering the region and they were small like there were 200 300 million dollar funds and the US firms were not touching Latin European funds were not I do attribute like Europe has had an emerging market bug for longer you know there are funds five six years ago that were looking but not huge and honestly part of the reason we based ourselves in Berlin was because it allowed us to have access to global capital and Baldurton you know we were very fortunate back to our series a TPG did our series B and then we sold the company four years later you know we sold it to process you know a Dutch company that's publicly traded and so Europe was our was our capital base and honestly it was an advantage it was a massive advantage because we were the only company in Latin America Africa or Asia that had access to 200 250 million dollars of equity you know within two years and so any other competitors that could come in never could have that kind of capital you know and so we could come in we could expand quicker than them etc now there's even more capital coming it's still an advantage less so we're lucky we've raised you know over 300 million dollars of equity in 11 months since we started the new company and this company is way better back than any other company in Latin America and you commerce and so you know we're also fortunate to have capital as an advantage not the only advantage but that's a fundamental shift I would say the two hottest regions in the world to invest in right now for VCs are Europe and Latin America like I think universally just looking at the six X metrics you'd see that in two regions which is Europe and Latin America and you see lots of firms targeting those regions like like Balderton and and yet talking about timing what so what has happened in Latin America that made it such a much more interesting markets for for founders like you to I mean I think I think what's what's so interesting about like a lot of emerging markets like is that there's this there's this really interesting flywheel that's happening it's not just true about Latin America it's true about so many regions of the world this is a crude kind of flywheel there's more parts of it but like four four parts right and one is people are getting richer like they're getting a lot richer you know Mexico's GDP per capita has increased tremendously in the last five years but you know just emerging markets in general for example like they used to command 10 20% of the global GDP now they command 40 to 45% of the global GDP you know within the last 15 years and so people are just getting richer and when they get richer they transact more they transact more online retail whatever it is which the second part of the flywheel is that companies come in to try to make things more online tech you know displaces outdated kind of processes and that's kind of where we got lucky and get to play in the third step is VCs come in they say holy shit like there's so many interesting companies starting we need to invest in them and then talent comes you know I'm American and I would say that there are what 34 unicorns in Latin America we'll have a big announcement next week about this but the 34 unicorns in Latin am probably 14 to 15 of them are started by non-Latin American people but their entire teams are there and talent that used to go from emerging markets to the US or to London to start companies it's now the opposite US and British entrepreneurs and German entrepreneurs are going to Mexico or Indonesia to start companies and I think that that's a very cool trend and that just flywheel is very positive and keeps going round and round and round so that's an emerging market kind of theme in general yeah I don't know if I didn't answer your latin so what you're saying is basically that yours you think it will continue to grow even faster and you know the numbers that we're seeing now is totally just the beginning oh I mean it's crazy like I think some of the biggest funds in the world will announce offices in Latin America Southeast Asia they already have you saw QED announced an office in Africa you know Sequoia wrote a great blog post about why Latin America is the next frontier of investing you know I think it's I think it's it's bound to happen I think Latin America because of its proximity to the United States because of the massive population universality of language across most of Latin AmEx Brazil that's just the most exciting region I think to me in the world and then Southeast Asia would probably be next but it will absolutely continue to grow awesome so moving on a little bit too this is also about but sharing sharing knowledge to founders that are also thinking about expanding to to Latin and would be really interesting to hear I mean some of the some of the learnings about you expanding and operating into into emerging markets maybe from from starting with from your car group and later talking about Marama as well there was a frontier car group I mean the the president the premise of the company was basically as people get richer like what I said earlier they're transacting and a purchase somebody makes is a car like a car is a massive thing that somebody buys and if you think about it for most purchases especially a car it is a much higher percentage of your net worth in an emerging market than it is in a developed market and cars are actually more expensive than you know Honda Civic for example in the United States which may be 30 grand you know would be 50 to 60 grand in most emerging markets because there's lots of import tariffs so it's you know when people would not buy new cars they would buy used cars so FCG the premise was we were going to be the first transactional marketplace that has trust transparency financing insurance logistics warranty built in rather than just going on Facebook marketplace to try to buy a car and I think what what I learned from that experience we ended up becoming the largest used car marketplace in most of the countries we operated in you know when we sold we were about 4,000 employees operating in 13 countries and so you know in most of these countries we were the largest car marketplace but I think the biggest learning I saw is that the emphasis on trust and transparency in localization is you can't overemphasize it you cannot and I the caveat so there's three learnings built in there one is you have to have a local team I know I said earlier that international entrepreneurs are coming in but our entire team for example at Marama with the exception of me is Mexican or Brazilian or Peruvian or Chilean or Colombian and I have personally gone down and moved to Mexico City but you have to be on the ground and you have to take a local mindset because just copy and pasting a model it's rarely been successful like everything has a nuance number two is that the emphasis on trust is 10x the emphasis on trust in the United States right like in FCG for example a car is a big purchase and we thought if you could just do it online I a car Vana in the US we could do great but what we learned in six months was that it's too big of a purchase where people need to physically touch the asset talk to somebody in order to purchase and so we built stores it's a bigger deal it's a much bigger deal but that's true with cars but even now we you know Marama operates e-commerce we're building the largest e-commerce brands in Latin and that could be anywhere from buying a pot or a pan all the way to buying a you know $1,000 treadmill people still want to touch products they want to talk to people still retail is a bigger more important step still than purely online and so at FCG we had to build stores you know when we sold the company and even today you know now FCG integrated within NASPERS and has become OLX's automotive division we have 550 physical stores you know with employees that operate there that are open just like you know a local store that you would go to at Marama we are opening warehouses we are opening physical showrooms for most of our brands because we have to things are just different and consumers demand more trust and transparency than they do in developed markets and I think number three is that you have to think very much about payments and infrastructure when you build companies you know you can't just rely on things are going to work I'll give you an example many brands in the United States on or Europe on Thrasio or Perch or Celerax or many of these great aggregators they rely on Amazon's fulfillment but Amazon and Mercado Libre's fulfillment in Latin America sometimes doesn't work they'll just lose products it's okay it's still a work in progress but you have to think one step beyond and that's why you have to basically build more things yourself than relying on on other parts of the stack in the ecosystem so the trust issue maybe comes from somewhere totally totally I mean up until recently a lot of food delivery or e-commerce was cash on delivery you know and like you couldn't leave a treadmill on the side of somebody's stoop because it'll just get taken and so you know things like few things you don't think about you know they're there things you have to worry about when you build a company in the market it's really interesting I mean those that is how it looks like in Europe when e-commerce penetration increased and it wasn't that many years ago where people are like no I actually don't want food delivery because I want to be able to touch the tomatoes and and now I mean with just just looking at that space it feels like people have overcome their their fear of not being able to touch the tomatoes totally totally that's changing to an emerging markets which I think is amazing like people are transacting end-to-end online that's why I mean e-commerce in Latin America was the fastest growing region in the entire world in 2020 again in 2021 it grew 40% this year faster than China faster than India faster than Southeast Asia US Europe slat and and you know you have five dominant platforms versus one there's lots of great tailwinds just like what you mentioned and talking a little bit about expansion and and how you thought about it with with fcg their first markets where Mexico Nigeria Turkey and Indonesia and when we were chatted before I said like you started with planting flags there and then expanding from there would love to hear a little bit more about the strategy behind that what choices you made and and how you thought about yeah you mentioned a little bit about building teams locally but you know how did it work from a cultural perspective mixing local teams with more international talent where maybe there is a little bit there is a smaller pool of start-up people to or operators to to to take from you know so yeah we we when we started fcg in 2016 we started in those four countries right Mexico Turkey Pakistan and Indonesia and then shortly after Nigeria as well and so four or five countries and the the thesis then was we have no idea which ones are gonna work or not you know we know there's amazing opportunity we spent months kind of scouring the world and picking these markets given the lack of transparency lack of competition but massive market size and we knew almost like a basket of currencies like some are gonna be successful some aren't and so we basically you know said if a region is successful there will probably lots of peripheral countries where we could use this as a flag or a beachhead and move you know regionally and so in Latin America we ended up expanding to Chile Peru Ecuador Argentina over time we expanded to India we expanded to Ghana and Kenya from Nigeria and I think I think we were pleasantly surprised it worked more places than it didn't work and but I think I think what we found very quickly was that the ability to raise capital the ability to be successful in a close proximity region allowed us to get the best of the best talent the best of the best yes there is less talent especially in technical roles in these places that's changing but I think your the vision the ability to raise capital stories of success if you can you can attract that best talent and and if you can get them then you have a moat over anybody else in the market just inherently at Marama I mean I'm very biased obviously but I like to think we have the best e-commerce team in the entire region of Latin most come from Amazon or Mercado Libre or fa la bella like some of the biggest e-commerce companies locally they've all built brands before and you know that's that's allowed us to scale some of the best brands in Latin America because of that team and yeah hopefully answers your question yeah definitely yeah you're talking a lot about like the size of the market opportunity but actually emerging markets it's not necessarily a case that a big population means a big opportunity for your business so and I had a couple of discussions with founders in emerging markets about actually assessing the market opportunity how how did you think about it specifically for for Marama and I mean I think you're so right there's huge populations is not necessarily big market opportunities right I mean you have to look much much more granularly and there's small things that could have a market just fall apart in terms of opportunity like this funny example is in Turkey you know Turkey was a market that we failed in at FCG and we shut down Turkey was the one market we shut down because you know when we the process to transact a car there you know as funny as it sounds requires so many government steps notarization of documents and that's changed now by the way that the convenience that we were trying to offer the on-demand way to buy and sell a car it fell apart it totally fell apart cash flows you couldn't transact and you know move money easily it took two to three weeks to transact and consumers would rather go to a dealership go the proper way because they knew that those government processes would get taken care of so it was just something we could not find a way for technology to disrupt and so it just wasn't worth it and we decided to shut down Turkey and focus our efforts you know in other places that's actually really interesting because Turkey's I mean is a part of Europe in a way and it didn't work I think it's a great great example and talking a little bit more about e-commerce specifically the perception of e-commerce in emerging markets is maybe a little bit challenging unit economics because the just the value of the basket is usually much smaller than than it is in in the Western countries it's a discounting driven culture like how have you what have you done to overcome that and is that what you're seeing in in Latin as well yeah I mean listen I think I think Marama and you know Marama is our business model is kind of two-fold one is how do you grow whether we purchase or whether we build them from scratch some of the biggest most trustworthy brands in Latin America and then number two is how do you build in underlying tools the underlying infrastructure to scale brands from one country to a next to the next you know I think the big observations we had is that there is not a single billion dollar direct-to-consumer brand in Latin America today not a single one you know the US you have all birds you have Peloton you have Warby Parker you have some great brands not a single one in Brazil or Mexico there will be there will be three to five billion dollar brands created over the next couple years it's not a matter of if it's a matter of when and I think that the barriers are capital tech and team which is what we're trying to build and own many of those brands that go forward I think the cool thing is is that realization that it's not an if it's a when because consumers transact locally they like local brands the number one selling treadmill in Mexico costs $250 it doesn't cost $5,000 like a Peloton right and so people need to transact locally and I think that that's a very interesting shift because the bulk of the population can't afford international brands and local brands have been hindered by e-commerce right you know infrastructure not being there capital not being there and that's what we're trying to build and have you know be able to do number two is that the best brands only operate in one country they do not operate across many countries in Latin America people think about it as just one region because the Spanish is Spanish but it's different countries with different supply chain no shangan you know it's very very very different countries different currencies whatever and so the ability to take a brand from Mexico to Chile for example it's way harder done than said you know you have to set up first mile warehousing last mile new marketing etc etc etc and have people on the ground but we can automate that you know that's something that we can do as a company where you can start selling in a new country overnight and basically 20 exercise of your business if you want to do that in every country in Latin America and so you know I think I think that the tailwind that we were facing was people's ability to transact locally in these markets and you know this is why this is that that's the tailwind that's attracted such great investors into the region is that it's such a such a unique market where people like to touch and feel local things and then our headwinds were the lack of capital the lack of technology the lack of infrastructure you know tough government regulations in a place like Argentina but if you can use tech to disrupt all of those you know you can build enormous brands and help other brands expand pretty quickly and talking about infrastructure as one of the barriers it can also be an opportunity because I mean in many of the Western markets you can you rely on existing infrastructure which is great but it also means that you have to adjust to it in I guess in markets where there's a little bit less infrastructure I mean both from like a data and software perspective but also the physical infrastructure you can perhaps leapfrog a little bit have you seen any any of that in totally like I'll give you a funny example I mean we own the number one baby brand and most of Latin America today you know the company's gonna do you know close to a hundred million dollars of net revenue next year and like 20 million of EBITDA his dollars and the way that this company does demand planning today or not today about six months ago before before we've integrated our technology was we would walk around the warehouse and literally count the number of items that are left and basically say okay you know we have five strollers left so we should probably go on WeChat and order them with our supplier I mean it was done in such a manual way and now we've obviously automated demand planning automated kind of supply demand curves and such that we can reorder on demand but that's not true with this is the biggest baby brand in Latin America I mean if you think about that it's so web 1.0 because there are five platforms they're selling through Amazon Mercadolibre, Falavela, you know lino back in the day etc etc most don't have fulfillment so they do it themselves there is no platform or no tech which integrates supply and demand across the platforms it's a mess it's a mess and so you know we were we were lucky enough to be able to do that but that's why physical and technology kind of blend and you can create a big business in emerging markets that way great thank you so much Suje this was the second time hoping to see you back in the Nordics a third time in the future as well thank you thanks a lot thanks Slash