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Co-founder at Babycub (www.babycub.com.br). Currently living in Rio de Janeiro. I was born in São Paulo, Brazil and grew up in the U.S. Formerly investment banking at JPMorgan and private equity at Prospect Partners. I'm a Cleveland Browns fan and an avid runner.

Proudest career accomplishment?

I was busy filling out and preparing our Angellist profile for Babycub, and one of the things they ask for is your greatest professional accomplishment.

There were a few things I was contemplating, but I naturally started Facebook-ing in order to gain clarity on this.

I’d been tagged in some photos announcing that Retalhos Cariocas the group I’d worked with up until last year, had won the SEBRAE Business Women of the Year for the state of Rio de Janeiro. (SEBRAE is the small business organization in Brazil, the equivalent of the SBA in the US).

Woot! Having been a part of RC is my answer…really happy and proud of them. (Read more about my experience with them here).

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Babycub & Wittlebee: How higher comparative cost of clothing affects our strategy

Babycub vs. Wittlebee

We chatted with Sean Percival (founder/CEO of Wittlebee) recently, which was really cool of him to do. He provided some useful advice and was supportive of our efforts. How he´s grown Wittlebee (and dealt with the growing pains) is impressive. Due to how far ahead they are relative to us, and because of the similarities between the American and Brazilian markets, we have the benefit of being able to observe how they deal with certain issues that we also face, and to see what works and what doesn´t. It´s like an enormous A/B test…it´s useful.

But the Brazilian market isn´t exactly the same as the American market, and we don´t have the funding they do. Plus, starting up in Brazil has its own unique challenges. It´s important to keep the focus on our own market, on our own customers and their feedback, and on our own limitations and challenges.

More than any other, there’s one significant factor that affects our product and strategy and will result in us looking different from Wittlebee, and that’s the higher comparative cost of clothing in Brazil. Here’s some background:

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Why the Brazilian online kids’ clothing sector is a great market to invest in

Here’s the research I did a little while back on the market that Babycub operates in. I’m not posting our SOM/financial model calcs here, but big picture-wise, online sales of kids’ clothing in Brazil is a great market to be in…arguably the best sub-segment of Brazilian e-commerce.

We’re going after a slice of 5 million moms with young kids (0-14) in Brazil’s economic classes B & C that purchase online. Between them, they currently purchase over R$200 million of kids’ clothing online, which is estimated to grow to R$700 million by the end of 2017.

Here’s my analysis (and sorry, I didn’t include my footnotes/sources in this post):

The total overall market for kids’ clothing in Brazil is big and growing…

Total Brazilian kids' clothing market

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I think the “it’s tough doing business in Brazil” thing is well-known by now. Before our new site goes up, I thought I’d write out a very specific list that detail the challenges we’ve faced. Although I’m too in the weeds to see this now, maybe one day I can look back and appreciate just how Herculean an effort it’s been.
Yes, it takes a long time to register a business here…I think in our case it took 6 weeks.
We got robbed by 2 police officers at gun point while on a business trip. Months after the fact, I’m still flabbergasted this actually happened…if we fail, I will always have this story to tell.
There’s no payment solution that integrates directly on your site that doesn’t require the user to create an account with the payment solution provider. You’ve got to contract (most likely) Cielo, which is a slow, bureaucratic monopoly if I’ve ever seen one. This took 3 or 4 weeks.
There’s no off-the-shelf recurring payment solution like Recurly or Chargify; existing options need to be manually integrated. Here, there are probably 3 or 4 options, including Adyen (which we tried but wasn’t sufficient) and CobreBem.
So you need to contract and manually integrate all this, but the process of contracting the payment provider, recurring payment solution and anti-fraud service can each take a month to do. It’s not because the testing and approval process actually takes this long, it’s because it takes this long for these providers to do it; i.e., the customer service and tech support are horrible.
There are approximately 139 official holidays in the Brazilian calendar. You need something tomorrow? Sorry, it’s a holiday…you’d get it on Monday instead, if it wasn’t a holiday also. You’d get it on Tuesday, if the tech support lady hadn’t decided to take Tues-Fri off to take advantage of the long weekend. This was a real occurrence with ClearSale (our anti-fraud service provider): what should have taken less than 24 hours took nearly 14 days to resolve. Astonishing.
Talent is an issue. I can’t speak for São Paulo, Campinas or other areas, but I do think that talent is tough to come by in Rio. I’ve been lucky (but also really persistent) in assembling our team; Claudia (ex-Microsoft and Monitor Group) is in many (ok, most) ways much better than I am, and our developer (and hopefully our future full-time CTO) is incredible. Also things ARE slowly changing; there are a lot of startup accelerators, notably 21212, popping up and doing a lot of good for Rio. But there’s no doubt that supply of high-caliber people is just not as abundant as in other startup hubs.
I’m sure there are some other things I’m forgetting now. One point I’ll close with though is that these obstacles, if overcome, can become a protective barrier against other potential startups.

I think the “it’s tough doing business in Brazil” thing is well-known by now. Before our new site goes up, I thought I’d write out a very specific list that detail the challenges we’ve faced. Although I’m too in the weeds to see this now, maybe one day I can look back and appreciate just how Herculean an effort it’s been.

  • Yes, it takes a long time to register a business here…I think in our case it took 6 weeks.
  • We got robbed by 2 police officers at gun point while on a business trip. Months after the fact, I’m still flabbergasted this actually happened…if we fail, I will always have this story to tell.
  • There’s no payment solution that integrates directly on your site that doesn’t require the user to create an account with the payment solution provider. You’ve got to contract (most likely) Cielo, which is a slow, bureaucratic monopoly if I’ve ever seen one. This took 3 or 4 weeks.
  • There’s no off-the-shelf recurring payment solution like Recurly or Chargify; existing options need to be manually integrated. Here, there are probably 3 or 4 options, including Adyen (which we tried but wasn’t sufficient) and CobreBem.
  • So you need to contract and manually integrate all this, but the process of contracting the payment provider, recurring payment solution and anti-fraud service can each take a month to do. It’s not because the testing and approval process actually takes this long, it’s because it takes this long for these providers to do it; i.e., the customer service and tech support are horrible.
  • There are approximately 139 official holidays in the Brazilian calendar. You need something tomorrow? Sorry, it’s a holiday…you’d get it on Monday instead, if it wasn’t a holiday also. You’d get it on Tuesday, if the tech support lady hadn’t decided to take Tues-Fri off to take advantage of the long weekend. This was a real occurrence with ClearSale (our anti-fraud service provider): what should have taken less than 24 hours took nearly 14 days to resolve. Astonishing.
  • Talent is an issue. I can’t speak for São Paulo, Campinas or other areas, but I do think that talent is tough to come by in Rio. I’ve been lucky (but also really persistent) in assembling our team; Claudia (ex-Microsoft and Monitor Group) is in many (ok, most) ways much better than I am, and our developer (and hopefully our future full-time CTO) is incredible. Also things ARE slowly changing; there are a lot of startup accelerators, notably 21212, popping up and doing a lot of good for Rio. But there’s no doubt that supply of high-caliber people is just not as abundant as in other startup hubs.

I’m sure there are some other things I’m forgetting now. One point I’ll close with though is that these obstacles, if overcome, can become a protective barrier against other potential startups.

According to Facebook, 33 million users comprise Latin America’s economic powerhouse, otherwise known as Brazilian women ages 18-34. According to the IBGE (Brazil’s census bureau), there are 29 million women in this age group.
Obviously an egregious omission by the IBGE of millions of lonely, bikini-clad, stay-at-home Brazilian women whose occupation is anonymously Facebook-friending lots and lots of men.

According to Facebook, 33 million users comprise Latin America’s economic powerhouse, otherwise known as Brazilian women ages 18-34. According to the IBGE (Brazil’s census bureau), there are 29 million women in this age group.

Obviously an egregious omission by the IBGE of millions of lonely, bikini-clad, stay-at-home Brazilian women whose occupation is anonymously Facebook-friending lots and lots of men.

Cuteness!

There’s nothing like making Brazilian moms happy. Seriously, it’s an awesome thing. 

We received a lot more photos from our happy moms. Check them out on Babycub’s Facebook page. They’re reeally liking us (so far). (Or click to see some after the jump!)

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We started taking some pics of our meetings with sales reps and our day-to-day in general. Enjoy!

What I’m up to now

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I’ve been pretty busy the last few weeks, so apologies for not posting anything for a little while. It’s been a bit of a whirlwind, thanks to a new business I am working on.

Every now and then, I like to test different business ideas, and recently I’d been testing various subscription models. One idea demonstrated great results. It was a subscription-based baby clothes business (a Brazilian version of Wittlebee), where we send customers a monthly box of clothes that grow as their kids grow.

In 36 hours, the facebook page generated over 1,100 likes, and the site generated hundreds of email signups. (The site isn’t pretty, but it communicated our value proposition well enough.)  This was just over 2 weeks ago.

I got in touch with a former coworker who also happens to be a partner of a local mobile-app development business. I was excited to learn that Lucas Thevenard, a member of this mobile-app business, believed in the idea enough that he wanted to dive into this venture with me as cofounder. I’d talked with him a bunch of times over the previous months, and I knew that he was a very smart and motivated startup guy.

Last week, we started working out of an office in Centro. There are some administrative things that need to get done, but as far as operations go, our goal is to ship fast and learn. When possible, we’ve been trying to get as much feedback as we can.  

I wanted to end this post by mentioning why I’m motivated to do this. The infant clothing (and textile/clothing industries in general) are very expensive in Brazil due to taxes and regulations (e.g., the import tariffs instituted last year), and also due to antiquated supply chains. There are layers upon layers of middle men in the supply chain, each of whom mark up prices by as much as 100% or more, and none of whom are incentivized to change this status quo. This all results in clothes that are actually more expensive than those in the U.S., and this represents an incredible cost burden for Brazilian parents. There’s no reason why this has to be, and if we do our jobs well, we’ll make a few parents very happy. (Hopefully, lots of them.)

Immigration, courage, and a new perspective

Sixty four years ago today, my dad was born. And four years ago today, he passed away.

I’ve been thinking lately about how my own recent experiences have taught me more about him. (I suppose this is true for a lot of people when they think about their parents over the passage of time.) But in this case I’m talking about being able to relate to the challenges faced by immigrants, and more specifically to the challenges faced by adult immigrants, which my dad was when we moved to the U.S. 

Kids can adapt to new environments quickly, as I did, but the experience is different for adults. My dad was 34 when he moved to the U.S.; I happened to be around the same age when I moved back to Brazil a couple of years ago.

You need to master a different language and relearn all the mundane things of day-to-day life, like where to shop and where not to, how the banking system works, taxes, cell phone plans, which brands are good and which aren’t, and dozens of other little things necessary just to get through your day and keep life running smoothly, all of which function a little differently than what you’ve been accustomed to, and none of which you anticipate.

And then there are the slightly more important things, like reconstructing your personal life, making new friends and reestablishing your professional career.

Everything changes. Moving to a new country is generally fun and challenging in a good way, but it’s not easy. It can be exhausting at times, and on the rare occasion it can suck.

Four years after his passing, I’m starting to appreciate the challenges my dad must have faced. I don’t feel guilty about this, but I do feel sad. If he were still around, it would have been interesting to compare and contrast our opposing experiences. The discussion would have been fascinating; U.S. vs. Brazil, culture, economy and technology of his day vs. mine. I bet he would have had lots of useful advice. 

More than anything though, I would have told him how much I admired him. Whether through nature or nurture, I got my sense of curiosity and the tolerance to push my own boundaries of comfort from my dad. But none of these things matter much without the courage to go out and chart one’s own path. Without my ever realizing, I learned this by watching my dad repeatedly demonstrate it himself. I’ve always been proud of being my father’s son, but this newfound perspective makes me more so.

Retalhos Cariocas

I should have written about my work with Retalhos Cariocas a long time ago, but better late than never.  Retalhos Cariocas is a favela-based microenterprise in Barreira do Vasco, São Cristóvão, Rio de Janeiro, comprised of 5 enterprising women that make sandals and other fashion accessories. In November 2011, they were selected to be in inaugural Rio de Janeiro class of Goldman Sachs’ 10,000 Women Initiative. Here’s an old photo from last year when a film crew from one of the local TV stations stopped by to do a story about the girls.

When I arrived at RC in July 2010 they were losing money every month and the outlook, in stark contrast to their fabrics, wasn’t particularly bright.  But within a year, we increased the top line by over 250% and took profit margins from less than 0% to over 50%. We did this through painstaking monitoring and cutting of operating costs, improved vendor selection/negotiations, better product and inventory management, and lots of other operating changes. 

The most significant of these changes was the creation of a new distribution channel using resellers (like Avon sales ladies). In less than 3 months, we developed a network of 30 sales people, along with appropriate inventory control and risk management tools, operating procedures and marketing materials. Moving a mountain would have taken less effort, but sales shot up. Read more about this here.

In another post, I’ll talk some more about the business challenges that these girls are facing, specifically on the sales & marketing front. In this day and age, even RC and other favela-based microenterprises can take advantage of the abundance of cheap/free startup tools and apps, like online store setups, marketing (even they can do cheap A/B split testing) and social network engagement tools and techniques.  In particular, lean startup methods can be valuable, and arguably more so for them considering the cut-throat nature of fashion/retail and their limited financial budget.

I’ll also talk about MarlandiaShop, run by Marla Guttman who sells Retalhos Cariocas’ products in NYC. Marla was here in Rio this past week and we had a great meeting to discuss opportunities. You can follow her tumblr blog here.

I’m a shitty writer, so I couldn’t do justice to the story of these Retalhos Cariocas girls. They are awesome, and luckily there are many other fine people that have written about them, and written about them well.  Check them out:

Forbes.com series herehere, and here
The Rio Times
Look Magazine
Highsnobette
The Andean Collection