Sitting in his depressing office in Canada, the sign that Ilya Brotzky had been waiting for arrived in his inbox. It came in the form of an email from Melanie Edwards, the founder of MobileMetrix, a company which hires locals to collect survey data on demographics, health and data, which it sells to corporations and NGOs. They had met on one of his many flights between Canada and Brazil—she had asked him for the time—and now she was going back. Brotzky begged her for an internship.
"I didn't know what I was doing. It all happened really quickly. I guess I figured I could always come back," he says. He quit his job and bought a one-way ticket; a friend of a friend opened up his home in the favela Mungueira. He had to learn how to turn on a stove with a match, how to hang dry clothes.
A natural-born talker whose Portuguese kept improving, Brotzky eventually helped MobileMetrix land big deals here, but it wasn’t exactly the promised land. He had heard about the accelerator 21212 and was fascinated, but when he showed up at the Angel day, people surprised him by acting deferential. "Everyone here thought I was an Angel investor because I am tall and white," he says.
Now it was June, 2012, time on his visa was running out, and his giant life-hack felt like a failure. "I had been here five or six months and I was frustrated with life. I wrote a blog post about it called ‘letting go of the steering wheel.’ It was starting to get to me."
A friend asked if he wanted to go body surfing, because that’s what you do in Rio when life gets you down. Walking off the beach he saw a guy from 21212 who invited him along on an evening hike—Cariocas, as Rio natives are called, are an active bunch. On the hike he met Marcelo Melo, who had built a nascent portal for college students called Zona Universitaria, which had just gotten into the 21212 incubator. The first few weeks were rough for Melo; the founder of the incubator, Marcelo Sales, had been haranguing him to find a more extroverted cofounder.
"In the U.S., you can find a startup with three complete partners. They already have connections; their own network; they have friends on Facebook and Google," says Sales. "In Brazil it's really difficult to find that kind of team. If you are lucky, you will find a business guy or a good CTO. Zona Universiteria is a good example—Melo is a good CTO but we told him, you need someone who knows how to sell."
When 21212 inducted its entrepreneurs this spring, many were so nervous in front of investors they began literally shaking. Others couldn't speak a word of anything but Portuguese, and still others lacked complete teams. Six months later, as they prepare for their first demo day on October 19—which, like the incubator itself, is conducted entirely in English—Sales credits Americans like Brotzky for showing them how it’s done.
"We have engineering talent—what we need is intellectual capital. So we got students from all the Ivy Leagues come here to show the Brazilian entrepreneurs that they can have a relationship with Americans who will bring a new perspective. We're showing them they don't have to be afraid of American venture capitalists. You have been doing this for 50 years. It’s the only country in the world that knows how to scale innovation."
The 21212 program itself was a test case for the idea of pairing foreigners with Brazilians; it was cofounded with the American founder of Slingbox, Ben White, another Angel interested in Brazil's tech boom. The two founders, however, couldn’t find startups in Brazil that were secure enough to invest in—especially White, who lives in the U.S. and can't babysit his companies.
The first ex-pat that came to 21212 became a founder of BrightPop, a Square-like, mobile pay service. "You're dealing with payments, so you need a high-level CTO; trust is extremely important here," says Sales. "We found an American guy who was in love with a Carioca girl; he was here working for the wireless company TIM. After we saw what he could do, we said, this is really working."
With Brotzky as a newly minted cofounder of Zona Universiteria, that makes seven of the 19 startups in 21212 that have ex-pat founders. The two interns are both American-educated: LeRoy Cole, a Yale student from Long Island, and Lia Winograd, a Colombian at Tufts. These two college seniors have the non-trivial task of validating, or verifying the quality of, the ideas put forth by the startups here; a lot of money rides on their analyses.
Validating your idea—essentially, proving there’s a need for your startup—is even more vital for ex-pats here, whose assumptions about user behavior often get blown up in the face of real user feedback. "We went out and interviewed dozens of students, and now we've been working on the horizontal of career planning. There are lots of companies helping students get their resumes into a database, but theres no career services here—no one helping people figure out what they want to do. There's a really big gap in education here."
Comparable American companies include Noodle, Smarterer, and LearningJar. Like many of the startups here, it’s an American business concept, tropicalized.
In Brazil, there are two types of startups: copy-cats, and the ones that don’t get funded. Disruption rarely comes up in conversation here, since there are few established technology players to disrupt. "For disruption, you need media covering your innovation, and you need big companies embracing innovation to compete with," says Sales. "In many ways, the ‘venture’ part of ‘venture capital’ isn't here—just the ‘capital.’ So we’re not saying this is the Silicon Valley of South America—fuck that," says Sales. "We’re simply saying, look, we have a huge market where proven models will absolutely work—if we can put together the teams."
Every entrepreneur I spoke to down here had half a dozen more tropicalization ideas: rental car portals, online classifieds, financial management tools, tax software, online pet food sales, or contact lens delivery. But pick up a Brazilian business magazine, and you’ll see lots of coverage of American innovation, but little about domestic companies. "I use Bloomberg, Thomson Reuters, and CapitalIQ, and I am frustrated that every time I needed to do research for a client they didn't have the information I needed," says Ricardo Asse, the founder of a private equity and consulting firm here called Centria Partners. Using government data, he will launch a portal this month that will connect investors, officials, entrepreneurs, engineers, designers, marketers, and salespeople—like a LinkedIn for startups. "It will be a social network for everyone in the technology sector, but with more content," he says.
Content is one of many missing puzzle pieces here. In a copy-cat startup economy without the lore of Facebooks and Instagrams, startups here learn to live without reading inspiring hometown success stories or active message boards of developers. "I don’t have any Brazilian idols," says Daniel Avizu, cofounder of Zoemob, a kind of Foursquare for families. "There’s no one who I say, I want to follow this guy. Most people here just want to get to a comfort zone."
The list of pre-IPO startups in Brazil is a short one. But the Brazilian stock exchange is beginning to attract more of the new middle class to move their cash and savings from savings into to risk capital, say sources here. Zoemob is often grouped with other Brazilian hit startups like Fashion.me as being on track to go public. Still, Avizu confesses that his sleep is disrupted by frequent nightmares about failing. "One week you’re at the top of the wave, the next everything could change," says Avizu. "We move fast; we have bloodshot eyes. We fight every day for more users. American companies have really educated us this way," he says. "We have a saying in Brazil: Almost nothing is flowers."
Avizu, 33 and his cofounder Helio Freitas, 40, are both Brazilians who met at AOL during the early 2000s, "when it was burning down from the inside," as Avizu says. The two kept in touch and eventually built the MVP for Zoemob, which was inspired by retail customer tracking systems. At a startup event in Sao Paolo, Avizu noticed Brazil’s most famous Angel investor Cassio Spina in an elevator. "I saw him and thought: 'Now or never.' I turned around in the elevator and said, my name is Daniel, and my application has 10,000 users."
Spina saw something in Avizu that he had trouble finding in other Brazilian entrepreneurs, few as they are. "It’s easy to find people here who are good technically, but they just won’t listen to you. Surely less than 1% of the engineers I see are qualified this way. As you can imagine this process becomes much easier when we have people coming here from the U.S.," says Spina, "but what I liked about [Zoemob] was they had developed a prototype on their own, using only their own resources and time. They were open to advice. This is new in Brazil—that people would leave their jobs for a startup."
Even with funding Avizu and Frietas had trouble scaling because they couldn’t find talent. "I try to explain to the [candidate] what we are doing—some of them, their eyes start to shine, but many people yawn," Avizu says. They tried staffing agencies and filling out dozens of HR questionnaires, but still had to fire two out of three of their new hires.
"We are a five-person startup so we don’t have time to adjust: there is no space in the freezer," he explains. "We know in three days if they will work. Some people like to pretend to be busy; at a big company here you can retire on a nice salary like that. But in this company, there is no ‘I think.’ I say: 'Show me the numbers. And please no crying.'"
Here, metrics are a startup's sole guiding light in a startup economy short on conventional wisdom. Avizu first built Zoemob’s backend in Mongo, but after finding it didn’t scale, he was forced to tear it down in just five months. "We’re good at processing big data now—but it has been difficult to find [educational] material. The community here isn’t big and it’s not developer friendly." They tried to contract outside Brazil, but it was prohibitively expensive with taxes, so they taught themselves through trial and error.
Today, Zoemob's servers process between 25 and 40 million check-ins every day. Listen to the story told by the dashboard mounted in the company's all-white Sao Paolo office, and you'll see 2.5TB of upstream data dumping into Cassandra and MySQL databases built to mimic Facebook's. Avizu uses a memcached layer to store key values, RGS for SQL, and Amazon’s CloudWatch for monitoring the 30 to 90 off-site servers they run in parallel. The front-end of their site is written in PHP, the most common language among Brazilian developers, and the team has built apps for Android, Blackberry, and Symbian. The majority of Zoemob's traffic comes from the United States, the United Kingdom, and the European Union; Brazil is only their sixth-biggest market.
"This a country that is emerging in so many different ways—it's like a time travel machine for Americans," says Sales.
But the thing about starting up in Brazil is that you may never leave: either because you fall in love, or because it takes your company that long to find an exit. This place isn’t about making a quick billion; it appeals to people who are excited to make friends, reciprocate Brazilians’ overflowing admiration, and see what happens.
"In Brazil you'll be really excited about how easy it is to find intelligent people. We really think similarly to Americans; even the humor is similar," says Sales. "In business, our references are all American—we are moving towards high democracy, transparency, honesty. And you’ll acquire social skills that a more square country doesn't have in their roots. You’ll have the time of your life."
Meanwhile, Ilya Brotzky and his company's cofounder, Marcelo Melo, have big plans and dreams.
"We're planning for the next four years," the irrepressible Brotzky tells me. "There's going to be huge progress for startups here, expanding out of Brazil. As extroverted as I am, [Melo's] introverted. Looking back, I can see we were both looking for something."
Read part one here.
[Photos courtesy of: Ilya Brotzky, Chris Dannen, and Guto Azevedo]
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