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Posts Tagged ‘Wall Street’

Brazil: The New Home of Financial Innovation?

Brazil is sort of a strange country to throw into the “emerging market” category. It’s not a particularly young country like India or Israel, nor is it a country like China or Russia that embraced capitalism fairly recently. Brazil is as old as the US and has had a decently built out infrastructure of things like roads and phone lines for some time.

Yes, it’s a growing country with a young and stabilizing democracy that has a long way to go in terms of technology, modernization and bridging a quality of life between very wealthy and very poor. In that sense, it shares enough in common with emerging markets that Wall Street, at least, tosses it in the “BRIC” bucket. Indeed, Wall Street has had a way bigger crush on Brazil to date than Silicon Valley.
That seems to have had two effects on the startup scene in Sao Paulo. The first is that there’s a good deal of innovation in the finance space. Banks in Brazil had to become advanced, many people told me, because of the runaway inflation that plagued the country for so many years. As opposed to other huge markets like Mexico, China or India that lagged in the adoption of checking accounts and other basic services, in Brazil you had to have your money in the bank, because the value of cash changed so rapidly.  So it’s no surprise more of those there’s-a-better-way spin-offs have come in finance than, say, Web 2.0 or mobile. (There’s a ton in agriculture and other sectors outside the cities too, but more on that in a future post.)
My favorite finance company that I met during my February trip to Brazil is called Crivo, and it left me wondering if that great wave of finance innovation might come from our Southern neighbors, not us.

Crivo has developed a way to do lightning-fast, three-second credit checks. Its servers pull information from a variety of sources, including all the places you’d expect but but also sources like utility records to verify an applicant’s address or ensuring that their phone number doesn’t just go to a payphone. “Even a single piece of information can be useful in detecting fraud,” says Daniel Turnini, one of Crivo’s founders. (Pictured above, on the right, with his co-founders.)

There’s nothing like a FICO score in Brazil so, in the past, credit decisions were made based on negative data and positive data. In other words you are “good” or “bad” in the bank’s eyes. There’s little record for positive data in Brazil, because the wealthiest people don’t want how much they paid for a house or a car in public records. It’s a security issue, Turnini says. That only leaves negative data.

So if there’s no information about you, it’s assumed you’re a good credit risk. But miss one payment and you have a “dirty name,” Turini says. It’s a flawed system. Many good credit risks (indeed I’d bet most people) have missed a payment before, and it’s a huge assumption to make that someone with no credit history would be a good borrower. In recent years there have been banks, insurance companies, and similar institutions vying to cash in on Brazil’s emerging middle class and increasingly wealthy upper classes, but had no real way of knowing how to extend credit.

Sound like great timing? It would have been if Crivo wasn’t started in 1998. Back then, few banks in the US would have been early adopters of something like this, let alone banks in Brazil. (Ok, most banks in the US still wouldn’t be.) Nailing that first customer was near impossible. The founders kept thinking they were on the right track because potential customers would freak out when they saw how quickly the software worked, but they’d never quite pull the trigger on a purchase. Always hoping things would finally click the next year, the founders kept bootstrapping the company. Finally, it did. Toyota’s Brazilian financial arm bought their software and used it to rapidly approve people for loans, beating other car makers who were flooding into the growing market. The company has been on a sharp growth rate for five years now. They did roughly $12 million in revenues last year, and expect that to double in 2010, Turini says. Crivo says it has more than 80 employees and 100 customers today.

There are clear ripple effects if Crivo does well. More people getting credit cards helps grow spending and ecommerce, more small businesses can get loans, and more people who can’t afford to pay in cash can buy houses – to name just a few advantages. We’ve seen the benefits of “greenfield markets” when it comes to innovation in telecom and even physical infrastructure, like roads and trains. Might Brazil be able to come up with some greenfield solutions for finance? It’s easy to see how a FICO score could be improved on and, ahem, really easy to make the argument that way too much credit has been extended in the US in the last ten years. But while we have a system in place, who is going to upend the apple cart and force widespread-adoption of a newer, smarter system? It’s South Korea and telecom all over again.

Yes, I realize that to many tech entrepreneurs, the idea of a country amassing an army of middle managers sounds about as appealing as a resurrection ship of Cylons. But a lot of the most talented local entrepreneurs, managers and even investors I met in Brazil had spun out of a year or two in consulting and finance.

An example was Diego Simon of VivaReal (pictured right, working in his tiny home office), a broad Latin American real estate portal that has increasingly been focusing on Brazil. Neither of the founders are Brazilian – or even live in Brazil – so finding someone like Simon was essential. Entrepreneurs from other South American countries say selling to Brazil as an outsider is harder for them than selling to China. That makes Simon exactly the Droid any company like VivaReal is looking for: He had experience running his family’s business, worked a stint for a multinational but left because he wanted to do something vaguely entrepreneurial – although he didn’t know exactly what. I’ve never been particularly bullish on real estate portals, but if VivaReal does well, it will be in no small part due to Simon criss-crossing Sao Paulo in his Fiat extolling the virtues of online listings under the auspices of a common culture and language.

The problem is—like in China and India—the allure of the multi-national paycheck and prestige is strong in Brazil. The management expertise may be there in greater numbers, but convincing someone to take a gamble on an unproven startup for stock is as hard as it is anywhere in the emerging world.

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Sony plans new mobile initiative to take on Apple

Perhaps stirred by Apple’s claim of being one of the biggest mobile device companies in the world, Sony is planning a number of new devices and services to compete with Apple’s iTunes Store, iPhone, and iPad. That strategy will revolve around what’s currently being called Sony Online Service, along with smartphone and tablet-like devices meant to connect to it, according to a recent Wall Street Journal report.

Sony plans to launch its online media platform, aimed squarely at Apple’s iTunes Store, later this month. The iTunes Store includes the App Store (which offers apps for the iPhone, iPod touch, and now iPad) and iBookstore (which will offer books for the iPad later this month) in addition to music, TV, and movies. Sony Online Service is expected to offer much of the same music and video content, as well as Sony’s back-catalog of PlayStation games.

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Rupert Murdoch confirms WSJ for iPad

Filed under: Apple Corporate, Multimedia, Rumors, iPad

Rupert Murdoch has confirmed, in a Q & A following his announcement of a New York ‘metro’ section for the Wall Street Journal, that an app for the iPad is under development (WSJ story here, behind the paywall). There’s an iPhone app available now, and it’s expected that the iPad version will expand upon it, with attention being paid to the iPad’s big screen.

What’s most interesting about this story is the extreme secrecy with which Apple is handing the process. it seems that WSJ developers do have access to a pre-release iPad, which Murdoch confirms is “kept under padlock and key.” Not only that, but an Apple employee turns the key every night to confirm that the iPad is where it should be — locked up tight, safe and sound. Not even preferred developers have earned Apple’s full trust.

Apple paranoid? We can’t imagine such a thing.

[via MacNN]

TUAWRupert Murdoch confirms WSJ for iPad originally appeared on The Unofficial Apple Weblog (TUAW) on Wed, 03 Mar 2010 12:30:00 EST. Please see our terms for use of feeds.

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Escape from New York: Is the Valley Necessary?

In an effort to highlight some of the emerging tech centers across the world we’ve written on a number of cities for our Never Mind the Valley series. We’ve featured the funding and opportunities available in places like Washington DC, Bangalore and Beijing. Our intent has never been to create regional rivalries, but rather to highlight the diverse landscape of the tech world in general. That being said, few stories got as much attention as the piece on New York as passionate East Coasters rallied around their hometown. Despite what seems to be a surge of love for the Big Apple, SpeakerText CEO Matt Mireless recently pointed out the shortcomings of the New York tech scene and announced his exit to the Valley.

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Similar to Yammer CEO David Sacks’ move from West Hollywood to San Francisco, Mireless is moving his company to where he believes he can find more opportunities. In an article for Business Insider, Mireless explains that while legendary VCs like Chris Dixon and Fred Wilson are in New York, they are only a fraction of the investors that companies are pitching.

He writes, “In reality, the capital markets in NYC are flooded with Wall Streeters turned venture capitalists. These are people who know how to analyze and pick in assets, not people who know how to build companies. These are people who do dumb s@#$ like ask about pricing for a premium version of a genuinely novel product (in a category with no existing market) that hasn’t even launched yet…in the first meeting.”

On top of the shortage of experienced tech VCs, Mireless complains that New York has a weak angel network with only a few groups to pitch. Because of this, entrepreneurs only have a few shots to get their pitch right and they’ve got little opportunity to drive competition when negotiating deals. Mireless believes the result is lower valuations and slower deal cycles. He also believes that because Wall Street has skewed programmer expectations in regards to salaries, it’s very difficult to find talent who will take a pay cut in exchange for equity. A month ago Venture Hacks’ Naval Ravikant also made the case for startups to move to the Valley. Nevertheless, Hunch cofounder Caterina Fake makes the case for New York adding that the city needs a billion dollar company exit in order to free up some talent and resources.

While we’ve seen our fair share of non-Valley startups succeed and grow, it’s interesting to see so many tout the opportunities of the region. Having covered so many startups, we know that you can pen a deal through your global and online network. But is it possible that just as certain employees and partnerships are more appropriate for a particular stage of the product lifestyle, that certain locales are more appropriate as well? Let us know your thoughts in the comments below.

Photo Credit: Epicharmus / Michael

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The tweet that made Steve Jobs furious

Filed under: Apple Corporate, Rumors, Steve Jobs

Apple doesn’t have a huge social media presence. There’s an iTunes Facebook page and what can arguably be called a MobileMe blog, but that’s about it. However, they do monitor the likes of Twitter, like any self-respecting company would, and a recent tweet reportedly ticked off Steve Jobs but good.

While publicizing the iPad, Steve met with a number of tech writers in New York including Wall Street Journal editor Alan Murray, who sent the following Tweet:

“This tweet sent from an iPad. Does it look cool?”

According to Vallyewag, the tweet infuriated Steve Jobs and was soon deleted. When Valleywag followed up with Alan to ask about the incident, he replied by simply saying that he can’t discuss it.

Apple is notorious for great design, extreme secrecy and what many have called paranoia. Teams working on unreleased products are kept under a “cone of silence,” and Steve has reportedly gone off on high-profile members of the press who had written disagreeable reviews of Apple products. This seems like another example.

Lest you think Steve is just a big meanie, he gets it as much as he dishes it out. In rather not-safe-for-work terms, Steve shared with the panel of journalists the flavor of some of the angry emails he’s received from disgruntled fans after product announcements. We’ll let you read that on your own.

[Via MacRumors page 2]

TUAWThe tweet that made Steve Jobs furious originally appeared on The Unofficial Apple Weblog (TUAW) on Mon, 08 Feb 2010 21:00:00 EST. Please see our terms for use of feeds.

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Google To Unveil Broad New Social Product Tomorrow

Google is planning to unveil a broad new social product on Tuesday that will integrate with at least two existing Google products. Some details emerged earlier today on the Wall Street Journal (“a new feature that makes it easier and faster for users of Gmail to view media and status updates”), but our understanding is that the product goes well beyond a Gmail integration.

As I wrote last night, there is still a lot of room for improvement in online social services. Status updates, photo and video sharing, review and location based content are not only decentralized today, but are becoming overwhelmed with spam and other noise.

The Google event begins at 10 am. Tune in to TechCrunch for live coverage.

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Could iPad prices drop the way the iPhone did after launch?

Filed under: Hardware, Retail

Looks like they might. That’s the opinion of a note out last night from Credit Suisse quoting meetings with Apple executives. The Wall Street Journal this morning quotes Senior Analyst Bill Shope as saying “While it remains to be seen how much traction the iPad gets initially, management noted that it will remain nimble (pricing could change if the company is not attracting as many customers as anticipated).”

This is a similar situation to the original iPhone launch in 2007, where the original price quickly dropped US $200 from the original $599 retail. Agitated early adopters got a $100 Apple store credit from Apple.

Apple will be watching sales of the device carefully in the early days, and the company appears to have enough margin built into the iPad to take some hits if it is slow moving.

On the other hand, if the iPad blows the doors off Apple stores in sales, don’t expect any discounts soon.

TUAWCould iPad prices drop the way the iPhone did after launch? originally appeared on The Unofficial Apple Weblog (TUAW) on Mon, 08 Feb 2010 14:00:00 EST. Please see our terms for use of feeds.

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Charlie Rose hosts Mossberg, Arrington, David Carr on iPad (video)

TechCrunch editor Mike Arrington has become a regular on the Charlie Rose. In his sixth appearance on the show, he joins Wall Street Journal gadget overlord Walt Mossberg and The New York Times’ lyric poet of media reporting, David Carr.

The three-way interview is nearly 25 minutes long. If this were a weekday, I’d tell you which thirty seconds to skip to. But it’s the weekend. Kick back with your non-tablet computer and watch the whole thing.

p.s. If you’re wondering what happened to Arrington’s CrunchPad tablet computer, VentureBeat reported that Fusion Garage, the company he partnered with and now accuses of stealing the business from him, has inked a partnership with Malaysian cellphone company CSL Group. The CrunchPad, renamed the JooJoo and boosted from Mike’s $200 price target to $499, supposedly reaches the hands of people who pre-ordered one later in February.

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