Interview: Startups in Brazil — Now and the Future – Part Two

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This is the second part of an interview with Rachel Horta, CEO at ZAHPEE, based in Belo Horizonte, Brazil.

Elizabeth: Is Portuguese the preferred language to do business in or do most business leaders do business in English?

Rachel: Today, the majority of Brazilian businessmen speak English. The language is not a barrier to do business anymore. Nevertheless, speaking Portuguese can make the difference. Our language is rich and has several expressions and slang that changes according to the region you are in. That’s why only who people who understand our language are able to deeply understand a Brazilian citizen.

Elizabeth: Are there any unique cultural characteristics that are important to know when selling in Brazil?

Rachel: The Brazilian is naturally sociable. If you consider the Cristo Redentor in Rio de de Janeiro, you’ll notice that He receives everyone with arms wide open. We strongly value personal and professional relationships; we like to look into others eyes. So, to do business and be successful in Brazil it is necessary to build relationships.

Elizabeth: How mature is the software-as-a-service (saas) market and usage in Brazil today?

Rachel: The market of software-as-a-service (saas) is well developed and established in Brazil, becoming a present mechanism, practically, in all companies in the country. Research done by Gartner pointed out that in the last three years, around 71% of companies started to use this kind of software, mainly the small and medium port ones.

The high number of adherence to the saas is due to the fact that it can be provided by the Internet, and there is no need to handle distribution and installation by a professional. This way, it turns into an important business tool. In addition to that, comes the technological advance that made a great impact in the process, storage and safety increase that transformed saas into an excellent option for companies. These were the things that only got better throughout the years. Another interesting point that research demonstrated was that the Brazilian saas software market is focused on implementation of new solutions or replacement of the ones that already exist. This means it’s a market with constant updates and evolution to be invested in. Further research released by IDC showed that the cloud Market, which includes saas, is predicted to have annual growth up to 74% by 2015. With the concerns saas software faces, we highlight management in relation with clients (RWC), Enterprise Content Management (ECM) and chain supplies control (CSC).

It is necessary to point out that the use of the kind of system depends on the format and market in which the business is inserted. Some companies can migrate all their systems to saas software while others may integrate the older software models.

Elizabeth: What does the smartphone/mobile market look like today? How do you think it will evolve?

Rachel: In Brazil, the mobile Market is warm and expanding. As a matter of fact we are the fourth largest market in this segment of the world. The public preference for the device model is visible and has been growing at the rate of sales of smartphones and tablets, impacting the sales of PCs and notebooks. IDC, a consulting company, released a survey in 2012 showing that the sales of smartphones in the country increased 78% compared to the previous year. If we consider tablets, the growth was around 17%. These statistics are capable of redefining a market! That’s why a company that aims to grow must have this scenery in mind to invest in mobility and think from the mobile market to the usage of tools for this kind of device. For this reason, I believe we’ll have a strong and innovative market in the future. Some researchers claim that the Brazilian mobile market will boom. If the growth keeps up at this speed, in 2016 the Brazilian mobile traffic data will increase 19 times, being equivalent to a volume of 717 SMS million per second. Another expected change is the growth in connection speed, which would be 22 times larger than the current one, reaching 1.997 kbps.

Elizabeth: Are there regional differences between the different cities?

Rachel: Rio de Janeiro and São Paulo are already established markets, but we need to pay attention to the extremely creative markets. We received contacts from investment groups that are interested in markets out of these cities. Belo Horizonte, for an instance, the granary of startups of the city was first visible when the Akwan, created by Professor of UFMG, became acquired by a startup out of the USA which was acquired by google. A few years later, after a group of new ventures started to meet regularly in snack bars and restaurants of a region in Belo Horzionte and joked that the area was similar to the Sicilian Valley, in the USA. This was the beginning of the San Pedro Valley, an initiative of ventures who noticed the potential of innovation in the city. Nowadays, it is an auto-managed community for the startups themselves that act for common interests, looking for visibility, investment, validation of the ideas, solutions and consolidation. See a released article published in The Economist: Moreover, we have the C.E.S.A.R example, a private center of innovation which uses advanced engineering in Communication and Information Technology (CITs) to sort out complex problems for companies and industries in several areas, such as telecommunication, electronics, automation, commercial, financial, media, energy, health and agribusiness.

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ElizabethSelling as a startup vs a larger corporation – any challenges/advices to establishing credibility?

Rachel: The main challenge for any company, whether a startup or not, is to prove the value of its business for the customer. In the case of a startup, this stage is a bit tougher. Besides having to accomplish the obvious demands of presenting a good product/service and a consistent selling argument, it is necessary to show expertise in what they do. All these factors add value to the customer and our challenge is to pass on this information without counting on a strong brand or a successful background. This is why having a highly qualified team helps a lot in the process of selling a product/service.

ElizabethWhat’s the governmental impact? Are world cup issues or protests changing the landscape of an emerging market?

Rachel: I do not believe these facts impacted the market at the point of changing it. What can be noticed is a slight recoil of the investors, mainly the foreigners, who are more careful in noticing a political instability in our country. However, our market and economy is warm and strong enough to show that it is safe to invest in Brazilian enterprises.

Rachel: ElizabethCan Brasil be used to open the rest of South America?

l believe once Brazil gets established in the market, the entry in Latin America countries will become a natural consequence. In addition to the proximity of our markets, we think of Latin America as a huge and important economic block. Considering the good relation and business growth among the countries, companies and institutions, the market inclusion is an interest of everyone who is involved.