Demographics Are Dead: Long Live Event-Triggered Marketing

taxi-cab-381233

“I do not care if you are 25 or 65, if you want to summon a car to go from A to B right now, you are still my target customer.”

Do you know who—and where—your target customer really is, right now?

Chances are good you have no idea.

Once upon a time, marketing was focused solely on demographics—age, gender, income level, ethnicity, geographic location, or a combination of these things. But that was in the era of passive marketing. Think about all those wheelchair and pain-reliever commercials that ran during late-night Matlock and Golden Girls reruns. Billboards for chocolate and soda on the subway platform. You get the picture.

But that model is from the pre-mobile, pre-digital economy. The passive marketing era is dying a slow death, if not over completely. Instead, we’ve moved into an on-demand economy, where people frequently make snap buying decisions in real time. But these aren’t the typical mindless impulse purchases—they’re made in the context of digital information. People choose which restaurant to go to in a specific neighborhood by checking apps on their phones. They play mobile games like Pokemon Go searching for PokeStops around town that often lead them into specific businesses. They use mobile apps for tracking everything from personal finance (like using Mint to track how much they spend on groceries versus dining out every week) to how many calories they’ve burned in the past hour. Many shoppers in brick-and-mortar stores use their phones to get product information and even digital coupons from QR codes displayed on the shelf next to products they might want to buy.

Long story short, effective marketing just isn’t passive anymore. Consumers are taking an active role in every purchasing decision they make, and marketers who don’t understand that are going to miss the boat. Therefore, thinking of your customer in the old way or even by demographics isn’t going to work most of the time. The market is far more complex and niche-driven nowadays.

What often drives purchases in an on-demand economy is something called atriggering event. In a nutshell, a triggering event is something that makes someone want to buy a specific thing, in a specific place, at a specific time. You have a very narrow window to capture this decision—often mere seconds. How do you do it?

Today’s app developers use proprietary algorithms to determine what functions or content users will see when using an app. These algorithms adapt automatically according to the mobile data collected from the apps. This same process can apply to marketers.

Think about how smartphones work. Mobile data, GPS signals, digital calendars/clocks, and even face-recognition technology in apps like Facebook can provide a plethora of contextual information than can trigger certain actions at certain times and in certain locations—regardless of what demographic the smartphone owner is a member of. This is key to understanding or even creating triggering events that consumers will respond to.

Examples of Event-Triggered Marketing Opportunities

Nearby restaurants. Create contextual ad campaigns that promote a specific nearby restaurant at lunch time. Think “It’s 11:55 and you’re craving sushi. Guess what? You’re only 2 blocks from Sushi Naru, a Zagat-rated sushi bar that’s hot on Yelp.” The ad includes a digital 2-for-1 coupon.

Music suggestions while exercising. Somebody turns on their RunKeeper app or the GPS detects that they’re moving along a bike path at cycling speed—those can be triggers showing that the smartphone user is exercising. You can create a contextual ad campaign that is programmed to suggest a workout playlist from a music app when these triggers are met: “Hey, I see you’re working out. Have you downloaded Taylor Swift’s rocking new single yet? Here’s a sample.”

Tying rideshare apps with driving directions (think Mapquest, Google Maps):When someone looks up driving directions on one of the many digital map apps, it’s a perfect time to target them for a ride-share. How about this: “Do you really want to deal with all of that traffic and those tricky on-off ramps yourself? Sit back, relax, and call an Uber.”

These are all common, everyday situations in consumers’ lives that can be monetized if you know how the technology (and the psychology) behind them works. Rethink your marketing strategies away from old-school, passive demographics and towards context-specific, event-triggered campaigns, and you’ll find that you can move the needle a lot faster.

The Rise of Argentina’s Startup Scene

Startup Stock Photos

Right in the center of Buenos Aires, “Espacio Bitcoin” (Bitcoin Space) is a meeting Argentina’s Bitcoin community. It was started in early 2012 by Wenceslao Casares, an Argentinean entrepreneur who developed an online bank in the 90’s and today is the CEO of Xapo, a Bitcoin Bank.

At Espacio Bitcoin they organize developer meetups to share notes and information on this new technology. Franco Amanti, one of the leaders of the local Bitcoin community, set up shop there.  Franco is one of the founders of Bitcourt, a startup offering contract certifications in the blockchain, which is one of the tech infrastructure pieces supporting Bitcoin.

“Argentina and Venezuela are the two countries where Bitcoin is used the most”, Franco explains. It makes sense. Both Argentina and Venezuela have endured populist governments for years, closed economies and high inflation rates. However, winds of change are blowing these days. At least in Argentina. Mauricio Macri won the Presidential elections and became President in December 2015.  The son of an important Argentinean businessman, Mauricio is the former President of the Boca Juniors Soccer Athletic Club, one of the most important soccer teams in Argentina and former Mayor of Buenos Aires. Macri started his presidential term with measures to immediately open up the economy and insert Argentina once again in the global markets. These events have spiked interest in the Argentinean Startup scene, the only country in the region with companies that have IPOed in the NASDAQ. This article offers a glance into the who’s-who in the Argentinean Entrepreneurial Scene.

A Little Bit of History

In order to understand the Argentinean entrepreneurial ecosystem we need to start by looking at the 90’s when, after years of high inflation rates and a closed economy, Carlos Menem’s government propelled economic reforms to open up the country. This period coincided with the “Internet bubble” and Buenos Aires became the regional “dot com” hub . During that time, about 70% Latin America’s venture capital was concentrated in Buenos Aires. It was then that the equivalent of Silicon Valley’s “PayPal Mafia” was formed in Argentina.

A young group of entrepreneurs started the first “dot coms” in Argentina. Wenceslao Casares was one of them. Others include Marcos Galperin and Hernan Kazah, founders of MercadoLibre.com, eBay’s regional equivalent (where eBay is also a stakeholder) which IPO’d in the NASDAQ in 2007. Andy Freire and Santiago Bilinkis founded OfficeNet, which was acquired by Staples in 2004. All of them became inspirational entrepreneurial leaders in a country where, until then, people viewed the typical corporate managerial ladder as the only way for the middle class to move forward.

Silvia Torres Carbonell is the renowned Dean of the Argentinean Enterprise Institute (IAE) Business School, one of the most recognized schools in the region. She had a front-row seat overlooking  the growing entrepreneurial ecosystem in the region. “20 years ago people rarely talked about entrepreneurship” She comments. “But by the end of the 90’s  and the internet boom, becoming an entrepreneur became the path of choice”.

The 90’s did not end up well for Argentina. After a steep economic crisis, the country suffered a severe currency devaluation and defaulted on its public debts in 2001. In this traumatic context, Nestor Kirchner arrived to power, with a populist discourse aligned with Venezuela’s Hugo Chavez. Kirchner was succeeded by his wife, Cristina Fernandez. In a hostile environment towards private enterprise, business  froze. Even during this difficult business environment, an entrepreneurial group led by Martin Migoya, Guilbert Englebienne, Martin Umaran and Nestor Nocetti started the tech outsourcing company Globant, which IPOed in the NASDAQ in 2014.

Throughout this decade, the Argentinean entrepreneurial ecosystem has been propelled by its entrepreneurs’ creativity, the quality of the local universities and the difficulty in raising capital; mostly due to public policies working against foreign capital investment in the country. In this context of foreign investment capital scarcity, the successful entrepreneurs from the 90’s “dot com” era became the main suppliers of capital to Argentina’s startup ecosystem  

Accelerator & Investors

Santiago Bilinkis, Andy Freire and Pablo Simon have spent a lifetime as an entrepreneurial group. During the 90’s they founded OfficeNet, and office supplies retailer, which they sold to Staples in 2004. In 2013, they starter Quasar Ventures, working under the “startup studio” format. Quasar looks for high potential entrepreneurial ideas and then chooses a team to execute them and bring them to fruition. They take 45% of the equity and the entrepreneurs take 55%. Their offices overlook the River Plate soccer stadium one of the most popular soccer teams in Argentina. Some of the most successful Argentinean startups in the most recent years were born and incubated there.

“Avenida.com” is the local adaptation of Amazon.com. They raised a Series C round in November 2015. Overall they have raised over U$D 50 million to date. Restorando, a restaurant table-booking platform similar to OpenTable in the US has raised U$D 24 million. One of Quasar’s latest creations is Rodati, which aspires to revolutionize the way car are bought and sold in Latin America.

“Argentina has a very good talent pool and a much lower cost than Silicon Valley” says Santiago Bilinkis. “That is why it is a great place to set up a platform to develop new projects aiming at both the regional and global markets”.

Quasar’s strategy is regional. It usually takes an idea or business model that works somewhere else and adapts it to the Latin American reality. They start in Argentina and then scale regionally. If they achieve traction in Brazil, with a 200 million people market, they can aim for a strategic buyer acquisition.

Quasar shows a typical strategy followed by many Argentinean startups. In general, they try to replicate the success seen in other geographies. Very few try to innovate globally. However, we find these cases too! The most salient one in Satellogic, a nanosatellites company founded by Emiliano Kargieman.

Satellogic, Running the Space Race from Argentina

Emiliano Kargieman is a serial entrepreneur in cybersecurity as well as a Venture Capitalist. While attending Singularity University in Silicon Valley in 2010, he came up with the idea for Satellogic. It is Headquartered in Buenos Aires’ Palermo neighborhood, where half a dozen scientists wearing bunny suits similar to the ones you can find at Intel’s manufacturing facilities assemble satellites as small as a soccer ball.

“Developing and launching a traditional satellite takes about 10 years and hundreds of millions of dollars” Explains Kargieman. “We plan to launch a constellation of small satellites at a much lower cost, connect them and make them work as a network”. Over 100 satellites will continuously orbit Earth while taking High Resolution images. This way we will be able to take pictures of our planet in almost real time, for applications from marine routes optimization to oil pipes control and harvest yield computations.

Satellogic was incubated at INVAP, a state enterprise focused on space technology located in the Patagonia region. It has a distributed workforce in Argentina, the United States, Israel, France and the UK.

“This kind of infrastructure will change the way we related to our planet” states an excited Kargieman, a big fan of Stanislaw Lem, the Polish science fiction writer. “Space is going through a revolutionary phase. This industry is becoming much more competitive. A new space race”.

Venture Capital

Many startups in the Argentinean ecosystem start their journey applying to NXTP Labs or Wayra, Accelerator and Incubators that function with a similar format to Y Combinator. They take teams with some kind of prototypes or proofs of concept and invest U$D 20K to 50K in the venture. However, getting into one of these programs that not guarantee success. Problems arise later, when the need to raise a seed investment round of capital.

Mario Tapia, a specialist in the mobile market in Silicon Valley states: “a significant disadvantage for a startup located in Argentina is the lack of access to seed and angel investment financing”. Carlos Esnal, CEO of LugLoc, a company focus on luggage tracking comments: “in Silicon Valley, an idea written on a napkin can easily raise a million dollars. In Argentina, to get a million dollars the product needs to be much more advanced and show a lot more traction”.

These kinds of companies look for a seed investment round of about U$D400K to 600K. These amounts are usually raised from angel investment rounds in which each angle ponies up between U$D 50K to U$D 100K. The situation gets a little trickier if the company keeps growing to the point of needing venture funding.

“After the internet boom, when many funds from abroad came to invest, there was practically no venture funding in Argentina” comments Carolina Dams, Dean of Austral University’s School of Management Sciences and venture capital researcher. The VC funds did not trust Argentina which was nationalizing private pension funds and enterprises. One of the first post dot com bubble funds was CAP, which was formed by both private investors and the IADB.

“In 2007, when the CAP fund was launched, it was very hard to build a pipeline and deal flow because there were very few companies that fit the investment criteria for venture capital” points Manuel Mauer, CAP’s fund manager. “Today the ecosystem is much more developed, but still has its limitations. A traditional fund investment cycle of 6 to 7 years it’s usually too short for the timelines of a typical Argentinean startup. Moreover, there are very few potential buyers within the country to consider a strategic purchase of a company a viable investment exit”.

As opposed to many Silicon Valley funds, the CAP fund is a general fund, not specialized in any specific industry vertical. It holds investments in food, Telemedicine, Internet, and eCommerce. The CAP Fund participated in these investments with amounts from U$D 300K to 3 million. The ecosystem does not offer a big enough deal flow to justify specialization. The “Smart Money” and the experience to build companies with global ambition and not as abundant in Buenos Aires.

NXTP Labs

NXTP Labs is an accelerator created in 2011 by Marta Cruz, Ariel Arrieta, Francisco Coronel and Gonzalo Costa, following the Y Combinator format. They are Argentina’s most active early stage fund  and an important player in Latin America.

They have a portfolio of about 160 companies with founders from 15 different countries, with offices in Argentina, Chile, Colombia, Mexico, Uruguay and the US. NXTP lab invests in a wide range of tech companies, such a eCommerce, mobile, gaming, new media and digital marketing. They invest U$D 25K in exchange for 2% to 10% of the company. Fintech is one of NXTP’s latest vertical focus.

NXTP Labs is raising a U$D 120 million fund. “It will help us invest additional money (between U$D 1 to 5 million) in about 32 companies, of which 70% are coming from our current portfolio” Explains Ariel Arrieta, NXTP partner.

Wayra

Wayra started in 2011 as an initiative from Telefonica Group. It has offices in 14 cities in Latin America and Europe. One of them is in Buenos Aires.

Wayra invests U$D 50K in each startup that makes it to their acceleration program, in exchange for 7% to 10% of the company. It offers entrepreneurs a great channel to commercialize their products through Telefonica’s mobile platform.

Wayra’s program is smaller than NXTP’s. They have invested in about 36 companies, in batches of 8 to 10.

Within Wayra’s investment portfolio we can find companies related to Internet of Things (IoT), education platforms and Big Data eCommerce solutions.

Kaszek Ventues

Kaszek was started in 2011 by Hernan Kazah and Nicolas Szekasy, cofounder and ex CFO of MercadoLibre. While founded by Argentineans and having an office in Buenos Aires, Kaszek’s investment activity in Argentina is small. They raised a U$D 95 million fund mostly from capital from the US, which they investment in 23 companies. They raised an additional U$D 135 million in January 2014 which they are still deploying today.

Some of their investments in Argentinean companies include Eventioz (ticket booking platform for events and shows, similar to Eventbrite in the US), Restorando and GoIntegro (Corporate HR platform) Kaszek focuses on Series A rounds investing amounts in the order of U$D 3 million.

Human Capital

In November 24th, 1960, the first computer in Latin America arrives to Buenos Aires, where it was used for simulation processing. It was 18 meters long and was installed at the University of Buenos Aires. They named it Clementina, because each time it processed a program it chimed the tones of the popular Clementine song. Manuel Sadosky, the mathematician leading the team, is considered one of the fathers of Computer Science in Latin America.

Argentina was always an advanced country in terms of science in Latin America. Argentina is the only country in Latin America with 4 Nobel Prizes in science categories. Universities like ITBA and UTN train very good software engineers. Many of them end up working in Silicon Valley, where salaries are more than three times the U$D 30K per year usually earned in the Argentinean market.

If Argentina is to keep its engineers, its needs to set up enabling policies for startups and attract foreign capital for investment. This is the large task ahead for Mariano Mayer, a startup attorney. Mayer has led many city government entrepreneurial initiatives in Buenos Aires, which former Mayor is the current Argentinean president Mauricio Macri. Today Mayer is the leader and responsible for all federal policy related to entrepreneurship.

“Argentina currently ranks very low on the World Bank’s Doing Business index.” Says Mayer. “The first phase involves changing the norm to enable and make entrepreneurship easier”.

This is the work being tackled by the new Entrepreneurial Law, supported by the Argentinean Entrepreneurs’ Association. The Law aims to simplify the paperwork needed to incorporate a business and boost seed investments in particular and venture capital in general. We can refer to Chile’s success case to see that this is possible and the kind of benefits it can bring. In 2010, Chile launched “Startup Chile”, a program that offers companies U$D 40K without taking any equity in return for companies to set up shot in Chile for at least a year. Many Argentinean entrepreneurs are heading over to Chile to start their companies, taking advantage of the seed investment in a country open to capital markets, with a clear legal framework and economic stability.

Startups Future in Buenos Aires

In the movie The Third Man (1949), the character played by Orson Welles says: “Italy, for 30 years under Borgia ruling, it went through war, terror, murders and blood baths, but it also produced Michelangelo, Da Vinci and the Renaissance. Switzerland, on the other hand, enjoyed a lovely time, with 500 years of peace and democracy, and what did they produce? The Cuckoo clock”.

Argentina’s history seems more similar to that of Italy than Switzerland, both because of the origins of its immigrant population as well as a recent past marked by blood and terror from a dictatorship ruling the country between 1976 and 1983.

Argentina provides contrast. At the beginning of the 20th Century, Argentina was the 8th richest country on Earth. After that it suffered decades of economic stagnation and political instability since the 1940s with Peron coming to power. After the steep crisis of 2001, it went through Kirchner’s populist ruling. Now, Mauricio Macri’s new government promises a new alignment with the West and an open economy to help boost the entrepreneurial ecosystem.

In their book Startup Nation, Dan Senor and Saul Singer study Israel’s success case in entrepreneurship, a country that has massively developed its entrepreneurial ecosystem in the last 20 years. The authors note that one of the key elements of Israel’s success is Chutzpah, the Hebrew word for a concept that could be translated as the “creative energy to overcome obstacles”.

Pablo Brenner is a Uruguayan engineer who lived in Israel during the time the entrepreneurial ecosystem was forming there. Today Pablo is  the General Manager for Globant Uruguay: “There are some similarities and differences between Israel in the 90’s and Argentina in 2015” Pablo notes. “Both Israel and Argentina have good scientists and universities. “Chutzpah allowed Israeli companies to attain goals that seemed impossible to reach. Argentina is, without a doubt the country with most chutzpah in the region”.

Argentina’s history is one of individual’s success and collective failure. The land of Messi, Pope Francis and Jorge Luis Borges. While its citizens and venerated around the globe, Argentina has lived through decades of economic stagnation since mid-20th century. The new government promises economic integration with the rest of the world as well as setup the conditions for a country of 40 million entrepreneurs. This promise gives hope to many in this land known for its lands and beef, but which has much more to offer to the tech world.

AUTHORS

Federico Ast. Studied Economics and Philosophy at the University of Buenos Aires. Enterprise Management PhD Candidate at the Argentinean Enterprise Institute (IAE) Business School. Entrepreneur, consultant, investigator and journalist specialized in tech companies. @federicoast

Leandro Margulis. Industrial & Systems Engineer. Yale MBA. Entrepreneur, investor, consultant and business accelerator in Silicon Valley and emerging markets. @leanmarg

Plug and Play Technology Center Mexico Day

Plug and Play Mexico Pitch Day

A new wave of latino startups rolled into Silicon Valley this past week to pitch at Plug and Play Technology Center for what was called Mexico day. These explorers came to look for their opportunity and freedom as did Cristobol Colon a little over 500 years ago in these same months of the year.

[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9735801429_62c2408d04_b.jpg]1620
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9735804175_b9a45448be_b.jpg]250
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9739044386_4dec3e240e_b.jpg]220
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9739044008_3d80214fb4_b.jpg]230
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9739039818_7003606e87_b.jpg]150
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9739039726_c9991342b5_b.jpg]170
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9735805885_e26c1bf296_b.jpg]110
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9735805561_f674aaf598_b.jpg]100
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9735805373_75ddda4ca7_b.jpg]150
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9735804787_cd95a7886f_b.jpg]100
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_img_3025.jpg]170
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_img_3020.jpg]150
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_img_3014.jpg]140
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_img_3011.jpg]120
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_img_3008.jpg]140
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9735806409_f7247e7676_b.jpg]90
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9735806973_25a975f8fc_b.jpg]100
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9735808655_85f5791f66_o.jpg]100
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9739045362_184189e6aa_b.jpg]130
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9739046880_4de6ffebe3_b.jpg]50
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9739047336_48839162ae_b.jpg]80
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9739047834_c736e081bc_o.jpg]20
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9739049808_264930114b_o.jpg]30
[img src=http://svlatino.com/wp-content/flagallery/plug-and-play-mexico-pitch-day/thumbs/thumbs_9739044438_37a5bc27cf_b.jpg]40