12 lessons building a startup in Brazil

Insights from a “gringo” living in São Paulo

Imagine a group of Argentinean entrepreneurs in their early 20’s traveling to São Paulo for the first time, speaking little Portuguese, little money from their startup and a big dream to build a major e-commerce platform for small and medium businesses in Latin America.

After a couple of years coming and going from Buenos Aires to São Paulo, one of them (me) decided to move to the major and most exciting city in Latin America!

It’s been almost 3 years since I moved to São Paulo and I would like to share with you some of the lessons I’ve learned so far which, of course, are quite biased by our experiences from this adventure.

1. Everything is a cultural issue

As Erin Meyer suggests in her book The culture map, cultural differences are relative and exist all over the world, even in the same country. In my case, it is a comparison between Argentinean and Brazilian cultures.

You may think, as I did for a long time, that neighbor countries would not have relevant differences in how to communicate or do business. But they do.

“Mas aqui no Brasil, a gente…” — “But here in Brazil, we…” — , that is a common phrase a gringo (a foreigner) will hear from Brazilians when they try to do things different. This argument is related to the feeling that you do not understand their culture well. And it is sometimes true. In the following insights I will share in detail what I could learn from these cultural issues.

2. Trusting is relationship-based

Brazilians tend to trust others when they build a personal relationship. This is also true in Argentina, but these personal relationships have a more important role in Brazilian culture.

That is why partnerships -with a customer, a partner, an investor, or even your team- tend to be stronger and work better once you forge that personal relationship. Many times informal activities are the best option: at lunch, a coffee, a beer, or even a barbecue. Once you build that emotional relationship, you can communicate with people much better, at a personal and professional level.

If you’re coming from a culture which does not rely on personal relationships to work with other people, making time for those relationships has to be part of your agenda. Otherwise you will have trouble communicating with your people.

3. Deciding is top-down

Most Brazilian companies and employees are used to working with a top-down deciding structure. It is the same in Argentina and other Latin American countries. That means that most people expect to receive directions on what to do.

That could be frustrating when you need an empowered team to help you make the best decisions. And that transition can take a lot of time and communicational effort until they understand that your company needs something different.

Saying “I´m sorry” instead of “Excuse me”, sharing what you think it is best for the company and disagreeing with others has to be taught among your team and reinforced through time.

4. Communication has to be explicit

This may sound obvious to a lot of cultures. Explicitness is unnecessary in countries which have a deep cultural context, which is not the case of Argentina, Brazil or the United States.

The problem arises when you have a multi-cultural team, like ours, with people from Argentina, Brazil and other nationalities.

In order to avoid misunderstandings in multi-cultural teams, it is important to be clear on which kind of communication you will adopt: you should be the most explicit as possible with your team and everyone needs to understand and apply that rule.

It´s generally better to use a communicational style that´s completely objective and to define processes that over-communicate. Objective communication avoids messages with no context and free of interpretation, which can lead to confusion. Defining communicational processes allows you to avoid (or at least minimize) misalignment.

For instance, this could be applied when giving feedback to someone who is under-performing or even when you need to define owners and action items after a meeting. Make sure to recap everything that was spoken at a meeting and send a summary by email or have a shared document with all the information; it is also useful to make each owner (or stakeholder) write their own action items so you can confirm that everyone in the room understood the same. This sounds bureaucratic, but makes execution and communication more effective because everyone makes sure to be on the same page on what to do, when and by who.

5. Brazilians hardly say “no”

Even if it is a Não for them.

Argentineans are considered to be direct in their communication (even to the extreme of being tactless) and practical, at least in comparison to Brazilians; we try to go straight to the point.

Brazilians generally don’t and it’s really hard for them to say “No”. This makes negotiations and communications (of every kind) harder to understand and move on. After every meeting (or call) with someone, you feel that both sides are getting on well, aligned and are already partners. But it may not end up in anything specific or it may take a couple of meetings more to close something.

As some suggest (even many Brazilians with whom I’ve discussed this), it is because they avoid conflict; that is why you won’t hear many “no’s” from them.

Of course, these barriers can be broken at least with your team as I mentioned before, by building trust with stronger relationships with them.

6. Be prepared for brutal feedback (from your customers)

Despite Brazilians try to avoid conflict, they do convey their dissatisfaction towards a product or service when they have a non-direct channel, like email, app stores, social networks or sites like Reclame Aqui (the major complain platform in Brazil).

At Nuvem Shop (our name in Brazil; Tienda Nube for the rest of Latin America) we perceived the difference among other consumers in LATAM. Brazilians tend to send stronger and more demanding messages when they need any kind of support. Many other tech entrepreneurs I’ve talked to, which also have users in different countries including Brazil, have also seen this pattern.

Talking to a lot of Brazilians, including friends and customers, I got to the conclusion that this behavior could be because Brazilian consumers used to have a bad customer service for a long time and the only way (with no guarantees) to get what corresponds to them as consumers was by complaining to the level of threatening the company or person (that happened to us many times as well).

Though customer service in Brazil has been improving in the last 10 years or so, especially coming from new businesses and startups, that consumer behavior still persists. Building a personal relationship with your customers -even at scale- would help your business and society in general to keep changing that experience.

7. Learn the language

Yes, this one is obvious, but Brazilians really respect and appreciate when you try hard to speak their language. It’s about using the same social codes, including their sense of humor or gírias (slang), for instance.

This will allow you to connect with your users and your team better and, of course, build a stronger company culture.

8. Avoid commuting (for you and your team)

This probably applies to any place in the world. But in São Paulo and many other cities in Brazil this issue is particularly important due to its dense population and transport infrastructure.

You could avoid commuting living near your office. But this is not always a choice and for sure you cannot expect that from all your team.

So a remote dynamic company could be helpful for your team (and your business). Yes, I know, you want to work face-to-face with your team. I love/need that too, but I understood that this makes people work happier and more effectively. It is a trade-off and you can find something in the middle.

With a strong culture, the right processes and a result-oriented organization, you can make a remote dynamic company work and gain a lot of time from commuting.

9. Start in a co-working space

If you have a small team, you will definitely prefer renting some spots in a co-working office; it is easier and quicker to start and focus on the important stuff.

You won’t need to assign leases which are a real pain in Brazil, wasting time with furniture and acquiring basic services as internet (you will need more than one internet service provider to make sure you can work properly in São Paulo).

And, besides that, co-working spaces are a good place to meet other startups and people who are in the same situation as you are, including many locals which will have great knowledge to share with you.

This map of the Brazilian startup ecosystem could be useful to identify co-working spaces, accelerators and others entities.

10. Do the hiring yourself

If you are not fluent in Portuguese and do not have a strong professional network in Brazil, you will be tempted to try an HR agency.

In our experience, it did not work so well. It worked for a first pre-filter, but it is better to build your own leads (candidates) channels. You know better than anyone who is the right fit to join your team.

Here are some tips about recruiting channels in Brazil:

  • LinkedIn and Vagas.com.br worked quite well for commercial positions. Not Catho.com.br.
  • Universities: try USP, PUC and FGV as your best options.
  • As most of the cases, referrals from the team worked quite well too. And that is why those first people in your local team are so crucial.

Regarding labour contracts, you can offer labour contracts of 45 or 90 days.

Regarding compensation, companies offer the salary and some perks which are a legal obligation: Vale Refeição (VR) -money for your weekdays lunches-, Vale Transporte (VT) -money for commuting-. Medical plan is not required, but very valued by people.

11. Legal and Accountancy

Creating your company legally speaking can take months! So start as soon as possible.

  • You will need a R.N.E. (ID for foreigners) and C.P.F. You can get that on your own (it’s a bit hard and takes time) or with an immigration services agency (like Atene).
  • Register your signature at a cartório, you will need that for different bureaucratic documents (make sure you do that near your area of work).
  • Itau or Santander are the best options for banking (but do not expect an amazing service).

Opening bank accounts and moving money internationally is not easy (this also applies in Argentina). Make sure you hire good lawyers and accountants (really hard to find them) to make it work or, what it should be smooth and require little time, will be a nightmare and a bottle-neck for your business.

12. Be Brazil first

You may be developing your business in different countries, regionally or globally. In any case, if Brazil is in your roadmap, do not expect to develop that business with a foreign team. You need to think specifically for Brazil.

At the beginning of Nuvem Shop we developed different projects and tests for other markets like Argentina and once we tested their success, we brought them to Brazil. I did not work.

After a couple of years we changed our mindset.

We conceive products for Brazilians, we build products for Brazilians. We write emails in Portuguese (all our team learns Portuguese, not otherwise) and we understand the e-commerce ecosystem in Brazil. It is not an easy market, that is why you need to be Brazil first to become a Brazilian company.

Final thoughts

In spite of Brazil’s current crisis, we should know that it is still one of the fastest rising economies in the world and an amazing country. With +200 million people, the 10th biggest e-commerce market with nearly $20b in GMV, and an smartphone penetration expected to cross 50 percent by 2018, Brazil offers amazing opportunities for entrepreneurs from all around the globe.

All these challenges are 100% worth it and there is still a lot of work to do in this amazing country and in all the Latin America region.

I would love to hear your thoughts and experiences building your companies in Brazil. In case I can be of any help, please contact me at: alejandro@nuvemshop.com.br.