MercadoLibre Pioneering the Next Wave of LATAM Developers | 🎙 The Nearshore Cafe Podcast

Welcome everyone to another episode of Welcome to the Nearshore Cafe podcast. I'm Brian Samson, your host, longtime nearshore entrepreneur. This podcast today is presented by Plug Technologies, plugg.tech. Plug is a great way to find software developers and more all over Latin America, connecting them with US companies. If you are interested in just this whole ecosystem of software developers in Latin America, this is going to be the right episode for you. I get asked all the time, okay, like, well, we understand there's talent in Latin America, but where are they coming from? And this is what I want to get into today. So let me, let me get right into it. When you think about Silicon Valley, for example, you're trying to self-select and identify certain companies, certain areas, certain schools that people maybe get their start. And it's almost this validation, this kind of stamp of approval. For a long time, I was a head of talent in San Francisco. For growing tech companies, and we quickly try to right-size what the biases were for hiring managers. And some wanted the Google engineers or graduates from CS from Stanford or MIT or Berkeley. Some wanted more of the early-stage startup experience or Meta back when it was a small version of Facebook. This move fast and break things mentality. So kind of the academia model versus this model, whatever. But the broader takeaway is they wanted a stamp of approval. They wanted other people to kind of take the chance on these engineers, train them, develop them so they were ready for their companies at the time. So what does this mean for nearshoring? Well, there's still experience of companies that are looking to nearshore, and they're, they're trying to understand, like, are these engineers any good? You know, who's hired them in the past? Where have they worked before? How do I know they're going to be right for my company? And the best thing I can talk about is a company called MercadoLibre. So if you're not familiar with MercadoLibre, it's actually the largest online e-commerce company and payments ecosystem in Latin America. Covers 18 countries. In 2023, Time included MercadoLibre as one of the 100 most influential companies in the world. They have 100 million active users and one of the largest engineering teams in the entire region of Latin America. Over 15,000 software developers work for MercadoLibre, 6,000 just in Argentina. So how did they get started and why does this matter? So right away in 1999 when it was founded, it was in Argentina. who was actually attending Stanford. 25 years later, you know, they're coming up on their 25th anniversary here in 2024. But it was funded early on by JPMorgan, Goldman Sachs, GE Capital, Santander. 2001, eBay actually purchased a stake, which they held on to until 2016, and they're still collaborating to this day, even though eBay sold their stake. It has presence all over Latin America. For financial and legal reasons, their headquarters are in Uruguay and Delaware in the US. And speaking of the US, although MercadoLibre is a Latin America tech success story, they were NASDAQ's first Latin America tech company. They're very big on this ecosystem. And I like this because you think about what happens to graduates of, say, Stanford, and they go on to Google or Meta or OpenAI now, you know, these larger tech companies. They kind of like make their rounds, they have some success, and then they go ahead and start new companies. Well, at the same time, and Google and these other major companies, they're investing in early-stage startups, maybe in hopes to build relationships to acquire them later. They're incubating talent, and it all kind of pollinates, and success stories, they, they take their earnings, they invest elsewhere, they start new companies, and that's how these ecosystems are started. You think, I, we talk about Singapore a lot as an interesting country, Singapore has tons of capital, but they still need more of these success story companies where the knowledge can be populated and like cross-pollinated all throughout the region. But Latin America has that, many, many companies. But today we're talking about MercadoLibre. So MercadoLibre has this MELI, L-I, Commerce Fund. Invests in many tech companies and commerce companies all over Latin America. And they're also a strong acquirer. So they acquire a lot of these early-stage startups. They build relationships. Many of these are even alumni engineers who started in MercadoLibre, had success, learned about innovation, software development, professionalism, product development, new ideas. They start their own thing. A couple years later, Mercado Libre invests in them. A couple years later, Mercado Libre acquires them. And people are often motivated to start new companies once they, they know that there's potential acquirers. There's an ecosystem for that. What's Mercado Libre doing today? Uh, they've got major offices, of course, in Argentina where they started. Cordoba, as well as Buenos Aires, São Paulo, Brazil. In fact, they invested $1.8 billion just in 2021 in their Brazilian operations. Bogotá, Colombia is another newer office. They have 5 main products, but the, the MercadoLibre platform for buying and selling goods is the number 1 product. And Mercado Pago is also a primary product. That's their fintech application. What I like about their ethos, and I think this drives continuous innovation, is they talk about continuous beta. So you think about like beta, this is the beta version of our product. They're just always in continuous beta, and beta means it's always ripe for the next incremental improvement. It's, it's never finished. You know what else this sounds like? Amazon. At Amazon, it's always day one. To give an example of the size of MercadoLibre today, it's in the top 5 market cap of e-commerce companies worldwide. So speaking of Amazon, eBay, MercadoLibre is right there. It's in the top 60 of market cap of tech companies worldwide. Now you're talking about the FAANG companies. You know, MercadoLibre is living in this world. And the top 250 market cap of all companies worldwide. So this is in the Fortune 250. Massive company, all started with Stanford and Argentina connections, blossoming out of Argentina. The size is just tremendous. So I want to take a second here. In 2020, $14 billion USD in revenue. $2 billion of that was profit. Incredible. This is a monster of a business. Their TAM, total addressable market, $5 trillion. As you look at a 500 million dollar, a 500 people, 500 million people region in Latin America. The growth comes from adding new people to the platform, but just like Amazon, as it becomes a way of life, you order more and more and more from the platform. So the average buyer, uh, in 2019, they were maybe making about 4 purchases every quarter in 2019, so a little bit over one time a month they would buy. Off of MercadoLibre. Today it's over 30 times a year. So about 7 times every quarter. You know, that's, that's quite a bit. Almost 2.5 times every month they're making a purchase from the application. This means a lot of goods are being shipped. Over a billion items were shipped from the platform in 2023. And they've also built a great ecosystem of delivery. Fulfillment and delivery are just as important with e-commerce. And 76% of those orders were delivered within 48 hours. Back to that Mercado Pago product. It's quickly become one of the top fintechs in all of Latin America. It's used all over the place. It's the number one fintech. In Argentina and holds one of the top spots in nearly every other country in Latin America. And how do we measure that? With monthly active users. It's a, it's a huge success story. They have 20 million users in their credit portfolio. And tying this all back to engineering, well, they hire a lot of developers. 15,000 developers, as I said earlier, but that's up 8 times in 5 years. So they keep investing. A lot of times tech companies will hire a bunch of engineers, then the next big wave is sales and operations. But MercadoLibre continues to invest, train, develop software engineers. Who then go out to populate and pollinate smaller companies, go work for US companies in a nearshoring capacity. And they learn a lot about product development and innovation. MercadoLibre is actually invested in product development. They've increased their investment by 10 times in the last 5 years. That means they, they really take innovation seriously. And this is how product managers, UI/UX designers, software developers, quality assurance engineers, DevOps, site reliability— these are the kinds of companies where they all get their start. And MercadoLibre is right up there with the top companies in Silicon Valley. So if you see an engineer that has ties to MercadoLibre, chances are they can hold their own. And that's where software developers come from in Latin America. Thanks for listening today. This is the Nearshore Cafe podcast sponsored by Plugg.tech. It's a great way to connect software developers and more all over Latin America. I'm Brian Samson, your host. Thanks for listening, and we'll see you next time on the Nearshore Cafe podcast.