When student chairman Anibal Ramirez introduced the Latin America 2000 conference's first panel session, he remarked, "We have seen the effects of the Internet in the USA and Europe. Will this happen in Latin America?
"Is Latin America ready?"
The answer was an effusive "yes" from a panel of experts, who nevertheless qualified their response with a number of insightful caveats.
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Latin America is ready for the Internet, so long as Latin Americans can entice skeptical and even ignorant investors, said Gina Sorice, Vice President of Investor Relations for Starmedia Network, an online media company geared toward Portuguese- and Spanish-speaking populations around the world.
"One money manager on Wall Street said to me, Latin America? That's that big blob south of Texas, isn't it?'" she related with a laugh.
Turning Local
While they predicted the consolidation of three or four pan-regional companies, the panelists agreed that honing in on a local community is an overriding vision for smart operators. Mihai Crasneanu, Vice President of Advertising and E-Commerce for Universo Online (UOL.com), Latin America's largest portal and Internet service provider, said his company is establishing a network of local portals. UOL has launched sites in seven countries, including the USA and Spain. "In each country we build our own company: build it from scratch with local people and content," Costa told the group. "Today, a Mexican has the feeling that UOL is Mexican."
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Francisco Javier Ros, Executive Vice President of the telecommunications giant Telefonica Internacional, said his company aims for niche opportunities while counting itself a true multinational, with business in Spanish- and Portuguese-speaking countries from Argentina to Puerto Rico. "We take the local values of each country for content, and also take best practices from another country," Ros said.
"Latin America is not one market," noted Jorge Forteza, Managing Director for Latin America business at Booz-Allen & Hamilton. "It's at least three or four radically different markets. Mexico will be major. Brazil is a continent by itself with many language barriers. Argentina and Chile could be integrated with Brazil. It would be an oxymoron to be a pure Latin American player."
"There is no specific Latin American product. If you think you can translate something from Puerto Rico and pipe it down to Chile, it's not interesting to them."
For Oracle, Inc., the answer for Latin America is to adhere to its strength: building the software "guts" of the Internet, said the company's Senior Vice President for Latin America, Sebastian Gunningham. He said Oracle is there in about 90 percent of the world's public dot.coms. "People who made the money during the Gold Rush were the ones who sold the picks and shovels and jeans," he observed. "That's what Oracle does for the Internet."
Going local does have its limits, added Gunningham. Thanks to a stronger infrastructure and a higher standard of living in the major cities of Latin America, people in cities will have the potential to access the Internet fairly easily. The prospects for distant towns and villages are another story, he noted pessimistically.
Social Evolution
The new business environment spells marvelous opportunities for social advancement in Latin America, according to Sorice. No longer does your career depend, she observed, on what your last name is, or on whether the president of a company likes you.
And these changes are happening fast, added Gunningham. "You will see a speed in re-educating everyone," he predicted. "If you have a son who wants to be a civil engineer, you want to kill him."
Panelists also noted that entrepreneurs have a major role to play in raising the profile of the Internet so government officials can't miss the potential for their economies. Ideally, panelists said, governments will focus on education as a result. According to Crasneanu, people will have access to a different kind of wealth and job, and thus have the possibility to change their lives. "Entertainment is the nice part," of the Internet, he said, adding, "We have big problems in human resources. Finding people to work in the Internet is really a challenge. Most of the time we just steal people from competitors or traditional companies." Only education, he said, can produce the right manpower.
Gravity vs. Vision
Panelists did acknowledge that talent and capital are essential for building the Internet anywhere in the world, so the prospects for the Latin American economy are obviously going to affect their plans. According to Forteza, it is important to look hard at the income levels in Latin America. Where potential Internet-penetration figures for the United States always assume that prospective users have an annual salary of $40,000 and up, he said, to calculate potential users for Latin American the figures need to start from as low as $10,000 annually. And the number of Latin Americans who even earn that much is very low.
"We can turn the mathematics any way we want," Forteza told the audience. "But we can't defy the law of gravity here. We have to be aware of the numbers so we can do some decent searching and planning."
UOL's Crasneanu offered a more optimistic approach. Companies need to work from the numbers that are available, but shouldn't be strapped by them, since figures change on a daily basis. "We have to predict something, and I think these are logical numbers," Crasneanu said. "But I think in five years' time we can forget about these [forecasts]. You have to rely on intuition. In five years, people will be laughing at us that today we talk about Internet access, when for them it will be a seamless process.
"You can't separate Internet access from any other kind of access radio or TV or entertainment and communication," Crasneanu said.
Opportunities certainly exist for those with sufficient foresight, according to the panelists. People who control elements of the supply chains have a much more powerful role in Latin America than they do in the USA, noted Gunningham. As in the United States, said Forteza, there will be layers of opportunity. If most of the heavy action is concentrated in major markets such as Brazil and Mexico, then there should be more space in other countries for local start-ups to mold themselves possibly as affiliates of multinationals, with room to branch out.
"There will be lots of nooks and crannies," he predicted, "for smart local players."